Should John Mack forego a bit more than his bonus?

Morgan Stanley’s fourth-quarter loss of $3.61 per share was so far off consensus estimates, the firm is almost unrecognizable from the one analysts thought they had under the microscope.

Write-downs are now $9.4 billion, slightly higher than the latest revelations for Merrill Lynch, and on a par with those for Citigroup.

John Mack’s done the decent thing and relinquished his bonus while pointing the finger at “isolated losses in a small trading team.” But the case against Mack himself is compelling.

- He encouraged the firm to move further into the mortgage market, according to Financial News after describing the bank as “under-represented” in the area back in 2005.

- He pushed Morgan Stanley to move further into prop trading and, according to The Wall Street Journal, accused the firm's traders of “losing their swagger”.

- He didn’t keep a handle on risk and, again according to the Journal, allowed now deposed co-president Zoe Cruz to ride roughshod over “key decision makers involved in vetting mortgage trades.”

Not everyone thinks it’s Mack’s fault. Chief Financial Officer Colm Kelleher expressed “total conviction” about Mack, whom he also said was the man to lead Morgan out of its little “hiccup”.

So, what to do? Dump Mack? Or smack him on the wrist and tell him to do better next time? Let us know what you think.