Fannie Mae (FNM) and Freddie Mac (FRE) had their CEOs pushed out by the government this weekend. They will get fat pay packages and can go on to live in massive homes and become high-paid consultants. The head of Washington Mutual (WM) was keelhauled yesterday. He was replaced by the head of commercial mortgage broker Meridian Capital Group.

The board and CEO of Wachovia (WB) are about to bring in a new CFO, hoping to get Carlyle Group’s David Zwiener to take the job. He is likely to get a nifty pay package for signing on to a sinking ship.

The parade of comings and goings of executives at banks, mortgage companies, brokerages, and insurance firms does not appear to have had the intended effect. Merrill Lynch (MER), Citigroup (C), and AIG (AIG) have engineered changes at the top. None of them have had any earnings recovery. If anything, their write-offs have grown and their stocks have fallen further. Apologists on the boards of the corporations would say that these recent troubles are not the fault of the new generation. But, there is not much evidence these latest regimes have done any good.

The trouble with bringing management into these financial operations is that they are in no position to fix what cannot be fixed. Almost all of the big US banks and brokerages made the same mistake at the same time. They are joined by a number of their overseas peers. For awhile it looked like Goldman Sachs (GS), home of the most ingenious people on Wall St., would dodge the trouble. Now analysts think Goldman will be pulled into the ugliness in the next quarter or two.

It is in the nature of company boards to feel that they have to do something when the stocks in their firms are down 80% or 90%. It at least puts a new coat of paint on the house. It makes them looks responsible. The old rascals who ran their operations don’t get to use the executive wash room any more, but that doesn’t fix the problem.

Wall St. will have to face the fact, and may have already done so, that every CEO at a major financial institution made errors in judgment along with the senior people who worked for them. The mortgage markets looked so good that they would have appeared irresponsible to sit on the sidelines and leave all that money for someone else.

The cycle of blame is in full force. By the time every CEO in the industry is replaced, the market may have fixed itself. The demand for housing will turn up at some point. All the management changes in the world can’t alter that timing.

Douglas A. McIntyre

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