One heads a> federal agency that many people have never even heard of. Another has a huge government job that didn't exist a year ago. And a third isn't just one person but a collective of millions: the factory workers who together make up one of the most potent forces in the world economy.
We call them our Power 30. Each year our staff digs through their notes, a year's worth of clips and the far reaches of the Web, and interviews dozens of executives, analysts and investors. The result is a list of men and women to watch in the coming year, the people whose actions will signal or even cause changes in everything from the money supply and Medicare to the Nasdaq. In other words, the folks who will be touching your pocketbook -- whether you realize it or not.
This year more than a third of the Power 30 will get their paychecks from Uncle Sam -- not surprising, given that 2010 has been the year of reform. But the list also includes the chief executive of a grocery chain who has managed to gain attention -- and a fair bit of criticism -- for attacking health costs at his company, the leader of a firm given up for dead barely a year ago, and a widely watched bond-market guru who attracted billions of dollars just months after he was booted out by his previous employer.
Some you know all too well. (How could we leave out Ben Bernanke or Warren Buffett?) Others you'll get to know in the months ahead. For an early look at this mix of the famous and not-so-famous, read on.
Photos: Getty Images>
EXTERNAL OBJECT PLACEHOLDER: src=http://online.wsj.com/media/swf/VideoPlayerMain.swf height=272 width=384Sheila Bair
Bair, 56, the nation's top banking regulator, now has additional powers to seize and liquidate failing financial firms under the new financial-reform law. Her top priority these days: keeping tabs on the growing ranks of ailing banks. There are currently 829 banks on the FDIC's "problem list," up from 702 at the end of 2009.
Director, Division of Enforcement, Securities and Exchange Commission
Mary Schapiro might run the SEC, but many Wall Street bankers are keeping their eye on the agency's newest top cop. A former federal prosecutor who battled white-collar crime in New York, Khuzami took the helm of the SEC's enforcement division last year and has overseen its largest reorganization since it was created in 1972. (The division's budget is up 18 percent, to about $380 million, since his arrival.)
The point man on the government's civil case against Goldman Sachs, Khuzami, 54, tells SmartMoney that the case, which Goldman settled without admitting wrongdoing, shows how the SEC is pursuing firms and individuals it thinks misled investors during the housing boom. All investors, he says, are entitled to know the risks of what they're buying, "no matter how sophisticated they allegedly are." The next goal, he says, is to staff up a whistle-blower office "to discover wrongdoing as early as possible."
Assistant Secretary for Financial Markets, Department of the Treasury
Everyone knows the U.S. spends far more money than it takes in. It's Miller's job to make up the difference. As assistant treasury secretary for financial markets, Miller, 55, manages the Treasury bond sales that finance the country's $1 trillion-plus deficit. "That's got to be one of the most difficult jobs in government," says Phillip Swagel, visiting professor at Georgetown University's McDonough School of Business and a former assistant Treasury secretary for economic policy.
While it's not Miller's job to rein in the deficit, she faces plenty of challenges. For one, she must choose whether to issue short-term notes or long-term bonds, a calculus that will become more complicated when interest rates begin to rise off their historic lows. It's like a homeowner choosing between a 30-year fixed-rate mortgage or a one-year adjustable-rate mortgage, Swagel says, but with a lot more at stake. Miller joined the Treasury in February from investment firm T. Rowe Price. As director of fixed income, she led her team through the trauma of the financial crisis, says Brian Rogers, T. Rowe's chairman. These days, adds Rogers, "you want a pro in charge of raising money for the government."
Assistant to the President
Now that she's attracted fans (and critics) as head of the panel overseeing the government's bailouts, Warren, 61, is President Obama's choice to oversee the creation of the Consumer Financial Protection Bureau -- an idea she has been pushing since 2007. Part of her appeal, says Travis Plunkett, legislative director of the Consumer Federation of America, is an ability to make consumer-finance jargon understandable, whether she's appearing on The Daily Show or before Congress.
Chairman, Commodity Futures Trading Commission
He asked for it. Gensler, 52, lobbied Congress for increased influence for his agency, as legislators hammered out the financial reform bill. Under the new law, the commission will assume oversight of an additional $250 trillion-plus in derivatives contracts as part of an effort to prevent these complex financial products from sparking another crisis. Now banks and others are watching anxiously as the commission fills in the many details the legislation left open to interpretation. "The next year is about writing rules," the former Goldman Sachs partner tells SmartMoney. It won't be easy. For example, the Commodity Futures Trading Commission will share oversight of credit-default swaps -- the type of derivative that did in insurance giant AIG -- with the SEC. And experts say that will require close collaboration between the rival regulatory agencies. Gensler "may be the best chance we have for a unifying force in this process," says Don Chance, professor of finance at Louisiana State University.
Director, Office of Management and Budget
If his appointment is approved by the Senate, it will be Round 2 for Lew, but this one will be more difficult. Lew, 55, ran the Office of Management and Budget during the budget-surplus years of the Clinton administration. With the budget deficit now topping $1 trillion, the D.C. veteran will play a pivotal role in trying to get it under control. Barbara Chow, a former OMB colleague, says Lew's experience negotiating with Democrats and Republicans should be a plus: "He is a known quantity."
Chairman, Securities and Exchange Commission
The head of an agency that's been accused of letting Wall Street off easy over the past decade, Schapiro, 55, tells SmartMoney the SEC's job is to focus on "the nuts and bolts of investor protection." Now that she's made a splash by charging Goldman Sachs with fraud in a civil case (the firm is paying a $550 million fine without admitting wrongdoing), she's on to the next things. Among them: deciding once and for all whether brokers should, by law, put their clients' interests ahead of their own.
Chairman, Federal Reserve
The recession might be over, but the economy isn't exactly booming -- and that's a problem for Bernanke. Interest rates can't go much lower, and Bernanke, 56, has tried to use the Fed's $2.3 trillion balance sheet to buy government debt and stimulate the economy. "How much more can he do if the recovery falters?" asks Mark Gertler, a New York University professor and a friend of the chairman.
President, European Central Bank
Think Bernanke's had it rough? Trichet, his European counterpart, has to steer his 16 member countries through the worst economic slump in decades. That means reconciling such dueling constituents as profligate Greece and penny-pinching Germany. While the Greek debt crisis seems to have abated, Europe's "fundamental uncertainties have not been resolved," says Domenico Lombardi, senior fellow at the Brookings Institution.
Administrator, Gulf Coast Claims Facility
This former head of the September 11th Victim Compensation Fund is disbursing the $20 billion from BP to compensate oil-spill victims. "People in the Gulf are very nervous, angry and frustrated," he says. "We'll wade through it."
Secretary, Department of Transportation
His department received $48 billion in stimulus funds, and he's checking up on projects from rail extensions to bike paths: "Everywhere I go, I see orange cones, roads being built, bridges resurfaced."
EXTERNAL OBJECT PLACEHOLDER: src=http://online.wsj.com/media/swf/VideoPlayerMain.swf height=272 width=384Stephen Kaufer
For many of today's vacationers, the first step in planning a trip is logging on to TripAdvisor. The traveler-review Web site started by Kaufer a decade ago has become the 800-pound gorilla of the industry, says Douglas Quinby, senior director at research firm PhoCusWright, with the power to make or break hotels and other travel providers. While critics have questioned some of the reviews, the site's influence has paid off for parent company Expedia; TripAdvisor's revenue was up 36 percent in the first half of the year.
The revolution quietly taking place in China's factories grabbed the world's attention when Chinese workers launched dozens of strikes over the spring and summer. But instead of enduring a crackdown, many got much of what they wanted: higher pay and better working conditions. Empowered by an emerging worker shortage and some labor-friendly government policies, young Chinese "no longer see themselves as cogs in a machine," says Kenneth Lieberthal, senior fellow in foreign policy at the Brookings Institution.
Analysts say that simple fact could mean higher prices for a wide range of products made in China for consumers in the U.S. and Europe. But it's not all bad: The higher wages are expected to spur more domestic spending in China, boosting sales of products from other nations. And while some companies facing higher labor costs are likely to seek the services of lower-paid workers in countries like Vietnam and Cambodia, that frees China and its workers to focus on turning out products that rely on higher skills. Chinese officials, says Lieberthal, want to "move up the value chain."
It might be a few years before the world moves to a cashless society, but it won't be soon enough for Ajay Banga. The son of an Indian military officer, Banga, 50, took over as CEO of MasterCard in July. The job puts him at the helm of a company that processed more than 22 billion transactions last year on $2.5 trillion in customer sales. Yet MasterCard says that in the U.S. over half of personal purchases are still made with cash or checks. And while expanding abroad is high on his agenda, so is getting Americans to swipe their cards more frequently. "It's a fight against cash," he says.
A former executive with Nestl and Citigroup, Banga studied economics at Delhi University and was hired by MasterCard after running Citi's global consumer and regional business in Asia. Those banking connections should be a key asset as MasterCard tries to catch Visa in the fast-growing debit card arena, says analyst Andrew Jeffrey, of SunTrust Robinson Humphrey. MasterCard is also facing potentially lower profits in the U.S., due to new rules limiting "swipe fees" for debit transactions, and card companies are under pressure from regulators in Europe. "The market is evolving," acknowledges Banga. "My job is to find the opportunities and make money out of them."
CEO, General Motors
A Detroit outsider and the automaker's fourth chief executive officer in 18 months, Akerson, 61, took the top job at the humbled Detroit giant in September. A former naval officer, Akerson ran several telecom companies and worked for a private-equity firm before joining GM's board at the request of the U.S. government. Known for his no-nonsense management style, his first task will be to keep GM's profits flowing and to start boosting market share with new models like the electric Chevy Volt, due out in November with an expected starting price of $41,000 (before tax breaks).
He has revitalized the once-stagnant tablet market with the iPad, posted record revenue and profits, and powered Apple past Microsoft and Google as the biggest tech company by stock market value. But the latest iPhone unveiling was marred by the snafu over its antenna, and analysts say far greater challenges are ahead. Jobs, 55, needs to persuade consumers to pay a premium for Apple's products even as competitors roll out new and improved -- and often cheaper -- alternatives.
Few executives occupy a hotter seat these days than Dudley, now head of one of the world's most vilified corporations. Before assuming the top spot, he was on the ground managing the environmental and legal fallout of the Gulf Coast oil spill. Raised in Mississippi, Dudley, 55, has earned high marks so far, but "it's going to be a long, hard slog," says Pavel Molchanov, an analyst with Raymond James.
Foursquare, which allows people to earn deals from merchants by sharing their location via mobile phone, squashed takeover rumors with an infusion of $20 million in venture capital. While doubters note that the service has a modest 3 million users, Crowley, 34, tells SmartMoney that Foursquare is adding as many as 20,000 a day and aims to get as big as social-networking titans Facebook and Twitter: "We want to grow up to be one of the big three."
Finance and Wall Street
When El-Erian makes a phone call, the world's finance ministers answer. Pimco, a unit of financial-services giant Allianz, has $1.2 trillion in assets -- most of that in bonds. Along with Pimco founder Bill Gross, the 52-year-old El-Erian is seen as among the most powerful -- some say too powerful -- people in international finance. Pimco's sheer size, says Barry Ritholz, of The Big Picture blog, gives it "great influence over federal policy, which is a little iffy, because they are the ones that stand to benefit or suffer most from it." (Pimco declines to comment on its perceived influence.)
El-Erian and Gross have pushed the "new normal" view of the future, which sees the world's largest economies as plodding along at best. El-Erian, who gets credit for his early warnings about subprime mortgages and Greek bonds, tells SmartMoney that the European sovereign-debt crisis "has not yet run its course," and efforts to fix the problem amount to kicking the can down the road. He also warns that if the U.S. doesn't start seriously investing in technology, infrastructure and education, investors will need to prepare for low economic growth and persistently high unemployment.
CEO, Charles Schwab
Thank this guy for making some online trades a lot cheaper. Schwab, the giant discount brokerage, fired the first salvo in the recent broker price war by launching its own exchange-traded funds that investors can trade for free -- as long as they're using a Schwab account. Fidelity Investments and Vanguard promptly offered similar perks to their own customers. The gambit garnered headlines -- and $1.4 billion in assets for Schwab's new products. Now Bettinger hopes to get more customers to trade up to the firm's advisory services. The number of households opting for Schwab's fee-based brokerage accounts has already risen 25 percent, to 141,000, since the beginning of 2009, as the financial crisis convinced clients they needed more guidance.
Bettinger, 50, who founded a retirement-plan-services company that he later sold to Schwab, says the biggest challenge facing the industry now is keeping up with the rapidly changing communications landscape. As the amount of online information continues to explode, he says, some clients will want more Web tools while others will demand more hand-holding. He aims to give them both, allowing customers "to engage with us on their own terms."
CEO, Goldman Sachs
After agreeing to the SEC's record $550 million fine against Goldman for allegedly misleading subprime-mortgage investors (the firm didn't admit wrongdoing) and facing continued criticism over the firm's pay packages, the 56-year-old executive has to grapple with financial reform along with other Wall Street banks. But the biggest challenge, says Oppenheimer analyst Chris Kotowski, is repairing a tarnished image: As Goldman has become a focus of Main Street anger, Blankfein is "mainly guilty of presiding over one of the best-managed investment banks during a period of crisis."
CEO, Berkshire Hathaway
He's looking for successors, but he's not going anywhere yet.
Now 80, Buffett is putting more emphasis on Berkshire's roster of successful operating companies, including industrial giant Marmon Group, insurer Geico, and the latest jewel in the crown, railroad Burlington Northern Santa Fe. In his spare time, he's also doing his bit for philanthropy: In addition to giving away most of his billions, he's joining pal Bill Gates in urging other billionaires to help cash-starved charities by donating at least half their wealth.
Photo: Getty Images>
EXTERNAL OBJECT PLACEHOLDER: src=http://online.wsj.com/media/swf/VideoPlayerMain.swf height=272 width=384Robert Shiller
Professor of Economics, Yale University
The real estate sage, who warned of a housing bubble back in 2003, has been particularly vocal on the role consumer confidence plays in the economy; he recently argued that fear of a double-dip recession could cause one. The good news: Shiller, 64, who also serves as chief economist of financial-products developer MacroMarkets, says the home-price bubble was "so exceptional" that he doesn't expect another to emerge anytime soon.
CEO, National Association of Realtors
For years the National Association of Realtors pushed the notion that housing prices had nowhere to go but up. Now, with many markets still struggling to recover from the bursting of the bubble, the nation's largest trade association is still on the offensive. The group boosted its spending on lobbying by nearly 13 percent last year, to $19.5 million. Among other things, the Realtors urged lawmakers to extend the tax credit for first-time homebuyers -- not just once but twice. The incentive helped prop up the market, but the bigger challenge is finding ways to keep the momentum going.
Up next for Stinton: urging Congress to turn mortgage giants Fannie Mae and Freddie Mac into nonprofits, where incentives wouldn't be built around stock prices or shareholder sentiment. Despite the crash, Stinton, 60, now in his fifth year as CEO, also is working to change the idea that housing got completely out of hand. "A sustainable 65 or 66 percent home ownership rate isn't greedy or unusual," he says. "It's really what this country is about."
CEO, DoubleLine Capital
A math whiz who dropped out of a Ph.D. program at Yale, Gundlach, 51, was one of the few money managers to see cracks in the housing and financial markets back in 2005. By mid-2007 he had moved most of his clients' money into cash and government-guaranteed debt, largely avoiding the crash. Over the past decade he's produced results rivaling those of legendary bond guru Bill Gross, says Morningstar analyst Sonya Morris. That makes him a rock star in the bond world, and investors are throwing money ($4 billion and counting) at his firm DoubleLine Capital, which he launched late last year, after an acrimonious split with his former employer, TCW.
Gundlach remains pessimistic about the housing market, figuring prices could still fall as the foreclosure rate rises. While he says the easy money has been made in most types of bonds, he sees opportunity in some mortgage-backed bonds trading at deep discounts. He also sees Treasurys as insurance against another recession or downturn. "My method isn't to be contrarian," he says, "but it doesn't bother me one iota if everyone in the world disagrees with me."
What real estate slump? Online broker ZipRealty increased transactions by 35 percent last year to become the fifth-largest U.S. real estate brokerage. Founded in 1999, the company s simple model of matching buyers and sellers through the Internet has taken business away from traditional real estate brokers. With much of the new Web-based technology now focused on homebuyers, ZipRealty is trying to come up with more tools for sellers.
[Editor s note: Lanny Baker succeeded Pat Lashinsky as ZipRealty s CEO in October, after SmartMoney magazine went to press.]
Health and Medicine
Director, Office of Health Reform, Department of Health and Human Services
You d think 2,400 pages would be enough room to clarify things. But when Congress passed the massive health care bill last spring, it left much to be resolved: The words the secretary shall are written more than 1,000 times in the bill, indicating areas that must be clarified with regulations by Department of Health and Human Services Secretary Kathleen Sebelius. And it s Lambrew who will be doing much of the day-to-day work to get there, says Karen Davenport, director of Health Policy at the Center for American Progress.
Lambrew, a health-policy wonk, is tackling such thorny issues as what must be included in a health plan for employers to get credit for insuring people (dental coverage? specific types of maternity care?). Insurers also must begin spending 85 percent of the premiums they collect on medical expenses by 2014, but don t yet know whether related expenditures like investigating medical errors will count toward the total. The amount of discretion regulators have here is just incredible, says James Gelfand, director of health policy with the U.S. Chamber of Commerce, which opposed the bill.
Administrator, Centers for Medicare & Medicaid Services
Just running Medicare and Medicaid would be enough to give Berwick outsize influence. But the former Harvard professor is also taking the lead on initiatives to test the Obama administration s ideas to curb health care costs. Berwick is expected to begin a pilot program that pays doctors and hospitals one shared fee for procedures, instead of reimbursing each separately. He s also slated to cut spending on Medicare Advantage Plans, a private version of Medicare serving one in four seniors, by $136 billion over the next 10 years. Kathleen Stoll, director of health policy for the consumer advocacy group FamiliesUSA, says the job is a good fit for Berwick, who founded a health care nonprofit. He has real experience cutting costs, while also really improving the quality of care overall, she says.
When President Obama nominated Berwick, opponents cited quotes in which Berwick seemed to endorse health care rationing and praise Britain s national system criticism that the White House labeled as unfair. By appointing him during a congressional recess, Obama avoided confirmation hearings. But the controversy lingers. He fuels all the fears people already have about this legislation that it s a government-controlled boondoggle, says Grace-Marie Turner, president of the Galen Institute, a research group that opposed the health care bill.
He s not the most popular guy in town at least not with smokers and overweight workers who could take a hit to their wallet from his efforts. Burd gained attention for Safeway s program that charges higher premiums to workers whose lifestyle habits pose health risks. Under the new health bill, employers gain leeway
to pursue such programs and many expect Safeway s to be a model.
His company insures more than 36 million people, but the Aetna CEO is known for something else lately: spending a lot of time in Washington. In an effort to shape how health care changes play out, Williams has raised concerns that the new law could force small insurers out of business. He has also called the changes a blueprint that needs to be paired with real cost-cutting.