If it were for an ORSE / NTPI or some such, the XO and engineer or weps officer or ops officer would be gone as well. My guess is that this is about command and not just some lesser thing.
My guess is that he did something which improperly hazarded the vessel. That could include things like diving too deep or revealing your position to the enemy.
Loss of Confidence would have to be related by some of the other officers aboard ship. Certainly, the XO or COB would have some input in the decision or information pertaining to the incidents.
You have to have the right mentality to be a bubblehead in the first place. Maybe he couldn't cut it.