Lehman gives Erin Callan, Joseph Gregory the boot

Six months after anointing her one of the most powerful women on Wall Street, Lehman Brothers (NYSE: LEH) removed Erin Callan as chief financial officer as the bank struggles to weather a severe financial downturn.

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The bank’s chief operating officer, Joseph M. Gregory, was also forced out.

Today’s shakeup comes several days after the nation’s fourth-largest investment bank reported a $2.8 billion quarterly loss - its first ever since the company went public in 1994. The stock has lost more than 60 percent of its value so far this year, and the price of shares continued to tumble today.

Ian T. Lowitt, 44 , now the chief administrative officer, succeeds Callan, and Herbert H. McDade III, 48, global head of equities, succeeds Gregory, Lehman said in a prepared statement. The changes are effective immediately.

The bank said Callan, a 42-year-old tax attorney who has been a prominent spokeswoman, would rejoin the investment banking division. Gregory’s fate was not immediately clear.

Lehman Chief Executive Richard S. Fuld Jr. said in a statement that McDade was the right man for the moment:

“Bart, who has been my partner for 25 years and has proven himself to be the firm’s best operator, is the right individual to take on this responsibility and lead the firm to the next level. His experience in both fixed income and equities capital markets will benefit the firm, especially during these challenging times.”

He also expressed regret about ousting Gregory. “Joe has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a firm,” Fuld said. “This has been one of the most difficult decisions either of us has ever had to make.”

Lowitt has been an executive president of Lehman Brothers and co-chief administrative officer since 2006. He has a degree in electrical engineering from the University of the Witwatersrand in Johannesburg, South Africa, and a masters in economics from Oxford University.

McDade, who has been global head of equities for Lehman since June 2005, has been with the firm since 1983. He is a member of Lehman Brothers’ Executive Committee, and has a B.A. from Duke University and an M.B.A. from the University of Michigan.

Lehman shares closed down $1.05, to $22.70.

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