Just three days after announcing its first quarterly loss as a public company, Lehman Brothers is shaking up its management in the face...

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NEW YORK — Just three days after announcing its first quarterly loss as a public company, Lehman Brothers is shaking up its management in the face of tumbling stock prices and persistent questions about the firm’s viability.

Lehman — the smallest of Wall Street’s major investment banks after the near collapse and buyout of rival Bear Stearns in March — said Thursday that it is replacing Chief Operating Officer Joseph Gregory and Chief Financial Officer Erin Callan.

Callan has been the public face of Lehman Brothers since being promoted to the CFO position in December, defending the firm’s performance to analysts and investors.

Gregory will be replaced by Herbert McDade III, 48, who has led Lehman’s equities division since 2005. Ian Lowitt, 44, who has been the firm’s co-chief administrative officer for the past two years, is to succeed Callan and will join Lehman’s executive committee. Callan will join the firm’s investment-banking division in a senior capacity. The changes are effective immediately.

Lehman’s Chief Executive Richard Fuld Jr. said in a statement that “this has been one of the most difficult decisions either of us has ever had to make.”

“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,” he said.

But Fuld said McDade, who also served as the global head of fixed income and debt capital markets in the investment-banking division since joining the firm in 1983, was the right person for the job now.

“His experience in both fixed income and equities capital markets will benefit the firm, especially during these challenging times,” Fuld said.

Lehman’s shares have suffered the steepest losses among the Wall Street investment banks this year — down more than 60 percent — amid questions about the firm’s leverage, or borrowing levels, and the values it has put on mortgages and other assets.

On Monday, Lehman announced it was raising $6 billion in capital to shore up its books, but the stock has continued its downward spiral as credit-rating agencies and analysts cut the firm’s rating.

Bill Smith, chief executive of Smith Asset Management, said Thursday morning that the firm had no choice but to make the management moves. In making the changes, Lehman joins other Wall Street firms that have announced management shake-ups amid multibillion dollar losses in the credit crunch.

“Shareholders in the investment community completely lost confidence,” said Smith, who said he sold his Lehman shares this week because of a lack of confidence in management.

“Basically everything that’s come out of her [Callan’s] mouth in the last six months have been dead wrong — the fact that literally until Monday they were saying they didn’t need to raise capital, but they keep doing it. There was a disconnect.”