Petróleo Brasileiro S.A. (NYSE: PBR), or Petrobras, is living up to the fears that investors should have had all along. When the stock rallied on rumors that Grace Foster would be forced to resign as chief executive officer of the Brazilian oil giant, 24/7 Wall St. warned that the ouster might not help Petrobras. Then the news that Foster and five other executives were resigning did nothing to help the stock. Now we have word of a replacement, and Brazil is living up to its reputation: more and more disappointment ahead.

Petrobras shares were down handily on Friday on news that Aldemir Bendine of Banco do Brasil is the current top choice to run Petrobras as CEO. The board was set to announce a replacement on Friday afternoon.

So, what is wrong with a bank CEO running an oil company? Well, for starters the industries are night and day. Would J.P. Morgan and Exxon Mobil shareholders be thrilled if Jamie Dimon and Rex Tillerson decided to swap jobs to see if they knew how to run the global powerhouses as well or better than the other?

In the warning that dumping Foster might not have been the right move, it was not about the scandal. It was that Foster was always said to be on solid terms as a friend of President Dilma Rousseff. Petrobras is not a traditional operating company for equity investors. They are last in line when it comes to sharing the wealth, and Brazils politicians get to dictate the pricing and terms Petrobras can charge for its oil.

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Then there is the issue of debt. Petrobras has debt out the you know what. Much of the debt is also in dollars, when most currencies have fallen against the dollar. How will the company pay down debt when it is forced to operate in non-market pricing structures and when the currency risks are so great? And what about the giants preferred share class here on top of that?

With a key bank head potentially running Petrobras, it seems that the game of socialists versus capitalists is not going to get any better for Petrobras shareholders. That being said, Petrobras is unlikely to be led by anyone that has any chance at all in standing up to the Brazilian government.

If you want proof that things are worse, just look at the reaction: American depositary shares were down 9% at $6.47 in late morning trading on Friday. Its 52-week range is $5.79 to $20.94.

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