Known in financial circles as Mack the Knife for his cost-cutting tactics, Mack -- the North Carolina-bred, Duke-educated son of Lebanese immigrants -- will remain as chairman of the firm. Current co-president John Gorman will become CEO on January 1, while the other co-president, Walid Chammah, will become chairman of Morgan Stanley International, CNBC reported Thursday afternoon. Mack's contract was set to expire next year, and Gorman had long led the list of potential successors.

Gorman will be tasked with continuing to integrate Smith Barney into Morgan Stanley, as the faltering bank increases its focus on less risky asset management business. Morgan Stanley paid Citigroup $2.7 billion for a 51 percent stake in the the storied asset management house in January.

After being pushed out of Morgan Stanley by Philip Purcell in a bitter power struggle in 2001, Mack returned to replace his former adversary in 2005. But Morgan under Mack became heavily leveraged, deeply invested in risky mortgage-related products, and was badly wounded by the collapse of the housing bubble. Nevertheless, it survived last year's meltdown and remained in existence, buying Smith Barney from Citi in January.

On Mack's watch, Morgan Stanley's share price has declined by over 30 percent -- and fallen 26 percent this year alone. But among all of the former titans of the pre-2008 Wall Street era -- an era defined by speculation, leverage, and an unhealthy reliance on supposedly fool-proof financial models -- Mack was one of the last men standing -- not broke, perhaps, but badly bent.

And in a deft move revealing a smart reading of public sentiment, Mack became one of the first Wall Street CEOs to forgo a bonus, amid a climate of growing public outrage over the millions lavished on some of the very same financial wizards whose complex mortgage-related products fueled the crisis.

Mack leaves the top executive post of a firm which must now navigate uncharted waters -- a new era in which the locus of financial power has shifted from Wall Street to Washington, as the Obama Administration seeks to crack down on the excesses that led to the financial collapse. In that sense, there is a logic to his exit. Mack's tenure on Wall Street is concluding, but perhaps more importantly, the era during which Mack and his peers ruled Wall Street like kingpins has come to a close.

If Mack's greatest legacy is nothing more than the continued existence of Morgan Stanley, for that, many of the company's employees and shareholders will be grateful.