In any world other than the one created by Wall Street, the resignation of E. Stanley O'Neal, the chief of Merrill Lynch, would have been a foregone conclusion. A week ago, the firm reported the largest quarterly loss in its 93-year history, as a staggering $8.4-billion write-down on investments in junk mortgages and tricky debt obligations contributed to an overall loss in the third quarter of $2.3 billion.

And yet, it appears that O'Neal's fate was sealed only after the Merrill board learned that he had authorized merger discussions with another bank without first seeking board approval. If the board had liked the merger idea, would O'Neal still have his job?

O'Neal's departure notwithstanding, accountability is in short supply on Wall Street these days. Most major banks have reported deep profit declines recently, including Citigroup, Bear Stearns and Bank of America. In all those cases, the declines resulted from problems that their chief executives should have been able to spot a mile away - and that no one believes have been vanquished for good. But no other head of a major American bank has as yet lost his job in the unfolding debacle.

The credit crunch, and the strains it imposes on the markets and the economy, will not be eased until investor confidence returns. It is not confidence-inspiring to see major financial institutions being run by the same people who were at the helm when the problems now wreaking such havoc were in the making.

Clinging to the old guard also runs the risk of dragging the problems out, which further impairs confidence by leaving investors to wonder how much worse is yet to come. A new chief executive who bears no responsibility for a firm's previous losses is likely to be more nimble in confronting the mistakes of the past, unencumbered as he or she would be from the human tendency to hide one's failures.

There are almost certainly more financial shocks to come. As The New York Times' Vikas Bajaj and Edmund L. Andrews reported last week, at this juncture, economists expect that the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion. The question is whether more chief executives will pay for those and other losses with their jobs. The boards of America's commercial and investment banks need to focus on the best way forward, rather than on the best spin for a bad situation.