(January 25) – “John Mack, one of the most powerful executives on Wall Street, resigned as president of Morgan Stanley Dean Witter & Co. after losing a power struggle at the big securities firm,” writes Charles Gasparino in today’s Wall Street Journal.

“The departure, effective March 21, follows escalating tensions between Mr. Mack, 56 years old, and Chief Executive Officer Philip Purcell, 57, and doubts that Mr. Purcell would make good on a private agreement to turn over control of the company to Mr. Mack over the next two years, according to Wall Street executives. Neither Mr. Mack nor Mr. Purcell returned telephone calls for comment. A spokesman declined to comment on the circumstances surrounding Mr. Mack’s departure.”

“Robert G. Scott, 55, the firm’s chief financial officer, has been named to succeed Mr. Mack. Stephen S. Crawford, the firm’s chief strategic and administrative officer, will succeed Mr. Scott.”

“The departure is a blow to what has widely been viewed as among the most successful financial-services marriages in recent history. Since Morgan Stanley merged with Dean Witter in 1997, the combined firm’s stock has nearly quadrupled, compared with a rise of three times for one of its biggest rivals, Merrill Lynch & Co.”

“Mr. Mack’s move comes at a sensitive time for the firm. Morgan Stanley has been among the hardest hit by the recent market zigzags and reductions in once-profitable lines of business, including Internet public offerings and junk bonds. Late last year, the firm announced that earnings for the third and fourth quarter were down by a total of about $90 million because of soured junk-bond deals it holds on the books.”

“Now, the question is whether Mr. Mack’s decision will trigger further departures at the firm. ‘The biggest risk for Morgan Stanley is that key people will follow his lead,’ said Amy Butte, a securities-industry analyst for Bear Stearns Cos. ‘I think it’s a high probability and a major risk’ for shareholders.”

“Wednesday, Morgan Stanley shares fell sharply after the Dow Jones News Service reported Mr. Mack’s departure. In 4 p.m. New York Stock Exchange composite trading, Morgan Stanley stock fell $2.56 to $84.25.”

“In a news release, Mr. Mack said he would work with Mr. Purcell to ‘ensure that there is a smooth transition in the leadership’ of the company. He added: ‘I will assist [Mr. Purcell] with client relationships and commitments and in communicating the transition to our employees.’ “