For only the second time in his long financial career, John S. Reed (search) on Friday walked into the New York Stock Exchange (search), and began what will likely be one of the most dramatic periods of change in the 211-year-old institution's history.

Reed, 64, arrived several days earlier than expected, entered the exchange as interim chairman and chief executive about an hour before the close of business on Friday, as a growing number of officials close to ousted Chairman Richard Grasso (search) are expected to leave in short order.

Late Friday, Reed met with two NYSE officials likely thought to be on the hottest of seats — co-Chief Operating Officers Catherine Kinney and Robert Britz.

People close to the exchange said Reed's expected housecleaning will likely include those directors and executives most closely associated with Grasso.

"I expect that, one way or the other, many of the board members will disappear promptly — and they should," John Gutfreund, former chairman and chief executive of Salomon Brothers, said in an interview with Reuters on Friday. "He is a smart fellow, I don't think he will be bound by the varied parties."

An NYSE spokesman declined to comment on the futures of Kinney and Britz.

As far as the board goes, one member who looks to be on particularly shaky ground is Kenneth Langone. On Friday, the AFL-CIO labor confederation urged his immediate removal from all NYSE board committees.

Another expected board departure is Goldman Sachs Group Inc. (GS) Chairman and Chief Executive Henry Paulson, though the timing will depend on a reform process at the NYSE, according to a person familiar with the situation.

In a letter on Thursday to members of the exchange, Reed made his priorities and timetable clear. He said the exchange will "embrace and make appropriately transparent new governance procedures" and "install a permanent senior management."

He said the exchange will move forward quickly, but changes "must be done well" in the wake of Grasso's resignation last week, caused by the furor over his $140 million compensation.

The AFL-CIO, whose affiliated unions sponsor pension plans worth about $400 billion, said unless Langone can demonstrate he took "meaningful steps to responsibly structure Grasso's compensation," he should not be nominated for a new term as an NYSE director.

The question might be moot. Langone cannot be renominated because he is serving a third consecutive term, the maximum allowed under NYSE rules. His two-year term ends in 2004.

A spokeswoman for Langone said he stood by his previous statement that he would not resign. An NYSE spokesman declined to comment on the AFL-CIO's call. The AFL-CIO also urged five public companies, including General Electric Co. (GE) and Home Depot Inc. (HD), not to renominate Langone as a director.

On Thursday, H. Carl McCall (search), who led the exchange briefly after Grasso resigned, stepped down to allow Reed to "be free to do whatever is necessary to restore the integrity of the NYSE."

Reed, who made a clean sweep when he became chairman of Citicorp in the 1980s, is expected to quickly do the same at the exchange, people familiar with the matter said.

"His appetite for going into situations and understanding quickly is very high," said Thomas Jones, former executive vice president and chief financial officer at the old Citicorp.

In the 1980s, working with his predecessor Walter Wriston, Jones said Reed was one of the first to recognize that for a big commercial bank its consumer business need not be an afterthought or stepchild, but that it could be profitable.

Jones said Reed will have very definite ideas of what he should do when he starts work.

"I don't think that (bringing in a batch of consultants) would be his style," Jones said. "John is a very good thinker for himself. I think he might reach out to a few people."

Whatever Reed decides to do is likely to be under the watchful eye of William Donaldson, chairman of the U.S. Securities and Exchange Commission, who is expected to meet with Reed at the SEC on Monday morning.

Donaldson, himself a former head of the exchange, was among the first to question the size of Grasso's payout, which was announced on Aug. 27.

On Monday, Frank Ashen, an NYSE executive vice president who was closely involved with the details Grasso's compensation package, announced his retirement.

Goldman's Paulson is pushing a plan that would exclude listed securities firms like Goldman — and other public companies for that matter — from having seats on the board.

Other leading Wall Street firms are likely to support the proposal, the source familiar with the situation said.