Shake-up at H&R Block

The tax-preparation company, H&R Block, announced yesterday that its Chairman and CEO, Mark A. Ernst, has resigned from both of those posts.

Ernst has been replaced as chief executive, on an interim basis, by Alan Bennett.

The new chairman is Richard Breeden, and that (for proxy partisans) is the story here.

Breeden has wanted Ernst out of the way for some time. Breeden, who was the chairman of the Securities and Exchange Commission through most of the administration of George H.W. Bush, has been keeping busy recently as the manager of a hedge fund, aptly called Breeden Partners. In that capacity, he's been a very activist stockholder in a variety of the companies in his fund's portfolio.

One of those companies, of course, is H&R Block. And Breeden's contention is that under Ernst, the company has drifted from its moorings as a tax-services company, ineffectively dabbling in other fields. He's presumably going to be a back-to-basics kind of chairman.

Breeden's unhappiness on this point appears to have preceded, but it was certainly fed by, this summer's subprime mortgage crisis, which hit H&R's mortgage lending unit especially hard.

One analyst is quoted in today's WSJ saying: "H&R Block has delayed recogizing the losses in their subprime businesses ... because they were trying to get the sale done with Cerberus."

Cerberus. That darned dog shows up everywhere, doesn't he?

But congrats to Breeden, and I hope his victory doesn't end up giving him indigestion. I may need the services of the company he's now heading ... next March or thereabouts.

I wish everyone celebrating the holiday tomorrow the best for the long weekend. You'll hear from me again here on Sunday.