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The Banking Clown Show Continues

Since nearly every financial institution has become the bearer of bad news in the past year, what would normally be astonishing developments have become standard affairs. Check out these two examples:

More troubles, Lehman?
On Thursday, embattled investment bank Lehman Brothers (NYSE: LEH  ) , which has fought tenaciously to hold down its reputation amid mounting losses and short-seller attacks, announced it would replace its CFO, Erin Callan, after just seven months on the job. She'll be replaced by Ian Lowitt, Lehman's former co-chief accounting officer. Adding to the shakeup, former president and Chief Operating Officer Joseph Gregory will be replaced by Lehman's former global head of equities.

While Lehman didn't give an explanation for Callan's demotion, it isn't breaking news that she had had the spotlight pushed in her face lately. Callan's tiptoeing behavior became the centerpiece of hedge fund manager David Einhorn's short-selling attack, in which he hinted that her lack of balance-sheet transparency and holes in accounting methods proved Lehman's woes were likely much greater than was being reported. What had been reported, by the way, was pretty bleak, but the lack of complete fallout raised a few eyebrows, given that Lehman's business model looks eerily similar to Bear Stearns'.

Eight hundred million reasons for buyer's remorse
It seemed like a great idea at the time. Less than a year after purchasing Old Lane Partners for $800 million, Citigroup (NYSE: C  ) has given up and decided to close the hedge fund co-founded by its current CEO, Vikram Pandit. Old Lane took it on the chin over the past year after top executives, including Pandit, departed, and a brutal credit market spooked investors. In April, nearly all of Old Lane's assets -- save for those held by Citigroup, Old Lane founders, and employees -- ran for the exits.

Old Lane's demise isn't all that surprising, really. Much of the hedge-fund allure comes from independence and the lack of bureaucratic hurdles imposed by large corporations, like Citi. Nearly every publicly traded alternative asset manager -- from Fortress Investment Group (NYSE: FIG  ) , to Blackstone (NYSE: BX  ) and Och-Ziff Capital (NYSE: OZM  ) -- has lost substantial value since becoming a public organization. Whether that's a product of the soured market or a sea change in culture imposed by their new bosses isn't clear; it's likely a bit of both. But it's hard to argue that a company can take a truly unique approach to investing when it's held down by the short-termism of public markets.

For more Foolish banking news, check out:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Fool has a disclosure policy.

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