There have been two shifts in the leadership of major banks marking further casualties in the on-going housing/mortgage/credit/foreclosure crisis. There were two other developments in the fortunes of an investment bank and a home builder that show that the situation is far from stable.

On Monday Wachovia Corporation, one of the nation's largest banks, ousted its chief executive officer G. Kennedy Thompson as problems at the bank continued to get worse. Thompson's removal as CEO follows by less than a month his loss of his position as chairman of the board.

Wachovia's board was said to hold Thompson responsible for, among other things, more than $5 billion in recent mortgage-related write-offs. Thompson also earned no points from the board or from stockholders for his 2006 acquisition of Golden West Financial for $25.5 billion. The California mortgage lender had specialized in risky option payment mortgages and has contributed much toward the negative news plaguing the bank.



Of course in banking there are no real losers (well, maybe the investors in Bear Stearns) and Thompson is walking away with an exit package worth $34.5 million, mostly in accumulated stock. The former executive had earned $44.3 million in salary since 2000.

In another crisis-driven personnel move Kerry Killinger of Washington Mutual Inc. has lost his title as chairman of the corporation. He will retain his position of Chief Executive Officer.

Two months ago WaMu received a $7 billion capital infusion from TPG, a private equity firm and has slashed its dividend and is closing offices and laying off thousands of employees.

In other financial news, Lehman Brothers Holdings is reportedly going to announce its first quarterly loss since the firm when public and is considering raising billions of dollars in fresh capital.

Wall Street was estimating that the amount Lehman is shooting to raise is likely to be $3 to $4 billion which suggests that the investment bank's quarterly loss could be in excess of the $300 million that analysts have been expecting. The funds would likely come from issuing shares of common stock which would further dilute the value of stock held by current stockholders.

While Lehman has raised $6 billion in capital in the past year (largely through the sale of preferred stock which does not dilute shareholders holdings) and is now allowed to borrow directly from the Federal Reserve, some investors feel that the firm is holding excessive mortgage-related securities relative to its size.

On Monday, ratings firm Standard & Poor's and two other Wall Street analysts cut long-term debt ratings on Lehman. S&P also cut ratings on Merrill Lynch and Morgan Stanley but focused particularly on Lehman which it said could experience a "relatively meaningful deterioration" in earnings for the second quarter which just ended.

The firm holds billions of dollars in commercial real-estate assets and leveraged loans and is expected to face further write-downs on these portfolios.

Finally, home builder Toll Brothers announced that it will show a second-quarter loss on write-downs from the flailing housing market.

The home-builder which specializes in the high-end market, reported a loss of $93.7 million or $0.59 per share, compared with net income of $36.7 million or $0.22 cents a share for the same quarter in 2007. The results, however, were better than anticipated; analysts on average had predicted a loss of $0.87 per share.

Revenue was down 30 percent to $818.8 million from $1.17 billion one year ago. Net signed contracts declined 44 percent and cancellations were down 20 percent. Inventory backlog, considered one of the keys to recovery, was down 50 percent to $2.08 billion.

A company spokesman called on Congress to enact incentives that would bring buyers back into the market and stop falling home prices. The company favors a tax incentive for those who buy homes within nine months of the passage of the legislation which, Toll said, would create a sense of urgency in the market.