Maybe Martin Sullivan, like the other big-name financial bosses that have been tossed into the mortgage market volcano, just wasn't tough enough.

Sullivan may have been an affable lifer at American International Group, which he joined at the tender age of 17, but like so many other C.E.O.'s, didn't ask the hard questions of underlings who led him into a credit default swap position that became a $20 billion sinkhole.

A few of them, former chief financial officer Steven Bensigner and financial products boss Joseph Cassano, paid with their jobs, but they left behind a staggering giant where morale is as frayed as the balance sheet.

Now Sullivan has paid with his as the A.I.G. board met Sunday and named Robert Willumstad C.E.O. after weeks of lobbying by dissident shareholders and angry directors such as Eli Broad.

Willumstad was C.O.O. and president at Citigroup and played a key role at its Travelers' division. Steven Bollenbach was named lead director.

The battle-hardened pair will be pressed to turn A.I.G. around as the real estate market and the prospects for financial firms remain shaky. The shares are down more than 50 percent in the past year, to a nearly 11-year low.

Sullivan enjoyed the fruits of the mortgage business. In 2006, the first full year after he took A.I.G.'s reins, the firm's profit hit $14 billion, while the financial products unit—the one responsible for the mortgage-derivatives business—saw a 47 percent increase in operating income, to $949 million, from the year before.

Sullivan didn't ask, or at least didn't ask hard enough, how those numbers were hit. After promising late last year that the company understood its exposure, all he delivered in 2008 was a string of large write-downs to A.I.G.'s credit-swap portfolio.

Maybe he was too busy worrying about the specter of his famous predecessor, Hank Greenberg. Ousted in 2005 amidst an Eliot Spitzer crusade and accounting scandal, Greenberg still sat atop Starr International, A.I.G.'s largest shareholder, and made a hobby of criticizing the firm's management at many levels. Last month, he said the company was "in crisis."
 
But Greenberg wasn't alone. In May, Broad, along with fund managers Shelby Davis and Bill Miller, said that "significant and immediate changes at both the management and board level are clearly called for."
 
Sullivan sparked the ire of investors when he began backtracking from a December meeting at which he told investors he was confident in how the firm managed its credit default swap holdings. By May, however, the firm had racked up $20 billion in write-downs on those derivative positions and is now being investigated by the Securities and Exchange Commission and the Department of Justice for overstating the value of its credit default swap contracts.

Like Chuck Prince at Citigroup, Sullivan's failing was that he was a mere functionary when a true visionary was needed—both to deal with Greenberg and to grasp and manage the complexities of the firm's balance sheet. As Felix Salmon pointed out last week, the best defense a Sullivan flak could muster up was the company had filed audited financial statements during his tenure.

Sullivan joins Citigroup chief Chuck Prince, Merrill Lynch boss E. Stanley O'Neal, Morgan Stanley president Zoe Cruz, and Lehman Brothers C.F.O. and C.O.O. Erin Callan and Joe Gregory as high-profile financial C.E.O.'s who have lost their jobs in the subprime-mortgage meltdown.