They push and shove markets at will. They spend with abandon. They hire thousands in a day, occasionally instill widespread panic and, in pretty much every way you can think of, make the rules. They are, of course, the Power 30. Each year at this time, the reporters and editors of SmartMoney set out to answer a question that might seem, on its face, straightforward: Who are the individuals (or groups of people) who will figure prominently in the financial pages in the coming year -- the folks who will, in a sense, shape the economy around the world and here at home? This year, as always, the list surprised.
One man (you probably don't know his name) oversees nearly $4 trillion in assets and insists that after all the recent turmoil in the markets, he remains "steadfastly bullish" on stocks. Another relatively unknown executive just climbed into the hot seat at America's most celebrated (and, at times, most valuable) company. Finally, one name is so enormous that it describes some 80 million of us: We're talking about the generation of baby boomers, naturally. The first wave of these high-voltage spenders and investors turned 65 this year -- but thanks to the stock market's ruptures and rumbles, many now worry that their retirement plans may get another unwelcome jolt. So what's in the cards for the coming months? The answers may depend, in part, on the decision makers in the pages that follow.
In this story:
- Baby Boomers
- Jobs & the Economy
- Industry & Innovation
- World Affairs
While nagging questions surround the fate of stocks, bonds, commodities and much else in the coming months, this set of heavy hitters could well have a say in how the answers play out -- and, perhaps, even affect your portfolio in the process.
Director of investment management, Securities and Exchange Commission
Who better to protect investors' interests than someone versed in protecting their assets? Such is the thinking that led SEC Chairman Mary Schapiro to tap this former Goldman Sachs portfolio manager for a key agency role earlier this year. Rominger, 57, has veritably switched sides, bringing a resume full of finance chops to a post once held mostly by lawyers. The tasks ahead for the rookie regulator -- from overseeing investment companies to steering the course for new fiduciary-duty rules the SEC is considering -- are hardly minor. But supporters say Rominger's asset-management experience should be a plus in that regard. Others, however, worry her appointment is tantamount to planting a financial-industry insider to whisper in lawmakers' ears.
CEO, JPMorgan Chase
The captain of the country's second-largest bank (by assets) has steered his firm through the financial crisis, helping it emerge on the other side larger -- thanks to what many in the financial community describe as the bargain-basement acquisitions of Bear Stearns and Washington Mutual -- and, by many accounts, more powerful than before. Some say the blunt-spoken Dimon, 55, is poised to use some of that heft in Washington to fend off certain financial reforms, which he says will cripple the financial industry; others counter, however, that if oversight is weakened, investors could get hung out to dry -- again. A spokesperson for Dimon says the executive "supports 80 percent of financial regulation and that stronger regulation is critical to the safety of the industry."
With nearly $1.7 trillion in assets under his watch, McNabb, 54, is now king in a mutual fund business that tends to prize size above all.Vanguard's CEO has weathered the pressure with a preternatural calm,say analysts -- an achievement all the more remarkable considering he took the reins of the giant investment company a mere two weeks before Lehman Brothers collapsed in 2008. McNabb has been working hard to lure ordinary-joe investors into the fold, dramatically lowering the minimum investment in the firm's lowest-cost share class (Admiral) and launching a boatload of new ETFs. Some analysts worry the firm could start pushing gimmicky ETF products. That, says Morningstar's Dan Culloton, would be a "disconcerting" sign of "growth for growth's sake." But a spokesperson for the fund giant laughs off the criticism: "If there is a company in the fund industry with a soul," he says, "it is Vanguard."
If you're running away from stocks, Fink says, you're making a mistake. Why should you care what this 58-year-old onetime shoe salesman thinks? Well, one reason is that he runs BlackRock, the world's largest money manager, overseeing $3.6 trillion worth of assets. However,Fink says, too many of his customers aren't getting the message and are instead "de-risking" -- shying away from stocks -- in the face of what looks to many like a slowing global economy. Fink, for his part, is having none of it: "The private sector is doing a very good job," he says. "I remain steadfastly bullish."
Director, Alabama Securities Commission
With a 98 percent conviction rate when it comes to securities crimes, it's fair to say that Borg, 59, is one of the toughest "stock cops" in America. "We send the message, this is not the place you want to commit fraud," he says. And experts say state regulators like Borg are going to be all the busier -- and more important -- come January, when the U.S. Securities and Exchange Commission hands over the burden of overseeing a wide swath of investment advisers (those managing up to $100 million).
Charles A. Moran
Chair, Certified Financial Planner Board of Standards
Call him the standard setter. As chair of the organization that oversees the country's more than 60,000 CFPs, Moran, 68, is responsible for preserving what he calls the integrity of that adviser certification and for promoting its value to investors and Wall Street alike. Not everybody who hangs out a shingle as an adviser, he says, is either trained or qualified to provide people with sound financial advice. Moran, for his part, says he's determined to make sure that at least every certified financial planner is.
Rogers says there's no reason to say "I told you so," even though the 68-year-old commodities guru may have earned the right to. For years, he has been a vocal commodities bull.And lately,with prices for everything from gold to cotton hitting (nominal) record highs -- his eponymous Rogers International Commodity index is up 291 percentsince its inception in 1998 (compared with 4 percent for the S&P 500) -- Rogers says he's content just knowing he was right. Most of his current optimism lies in things like sugar and cotton. So will prices ever get too high? Sure, says Rogers: "All commodities will end up in a bubble. But that's still several years off."
Ever since the Egyptians first smelted the metal in 3600 B.C., gold has been at the center of the global power grab: Wars have been fought over it, weddings sanctified by it, fortunes built upon it. The metal's price is up a stunning 619 percent since its low in 1999 (while the S&P 500 is down 16 percent). But can its hypnotic power increase even now? Jon Nadler, senior analyst at Kitco Metals, warns that gold's current price does not conform to any rules of supply and demand. "This house of cards," he says, "is built on fear and greed."
Justice, U.S. Supreme Court
Though few legal scholars would name him as the most influential person on the high court, Thomas, 63, has been carving a niche for himself lately as the go-to justice for investment cases, says William Birdthistle, an associate professor at Chicago-Kent College of Law. And perhaps no case is as emblematic of Thomas's impact in this area as one decided in a 5-4 ruling in June. The court, in a majority opinion written by Thomas, found that mutual fund investment advisers cannot be held liable under federal securities law for false statements made by the funds they advise (because they are "separate legal entities"). Experts say the decision could have widespread implications for consumers and investors alike if companies discover they can limit liability simply by changing their corporate structures to be more like fund companies'.
Main Street's appetite for trading currencies keeps growing, despite government warnings about excessive risk. Individual investors make up about 8 percent of the Forex market worldwide and execute $315 billion in trades daily, up from 2 percent and $38 billion in 2004, according to Aite Group. But -- ahem -- only about 30 percent of do-it-yourselfers make money in their accounts, according to data from brokerage firms. This summer the SEC warned that currency trading wasn't appropriate for all investors, and U.S. regulators have drafted new rules to curtail trading risk. But Aite analyst Javier Paz says that any new guidelines are not likely to slow the stampede: He expects more growth over the next few years, as additional U.S. banks and securities firms begin catering to individual foreign-exchange traders.
Chairman, Federal Reserve Board
As the nation's politicians bicker over how to get the economy to move faster, more of the spotlight has fallen on Bernanke, 57. He authorized pumping more than $2 trillion into the U.S. economy to spur lending, to so-so effect, and hasn't ruled out another round of stimulus. But some analysts sayBernanke is better off persuading politicians, not the Fed, to boost the economy."There's only so much monetary policy can do," says Herbert M. Kaufman, professor emeritus of finance at the W.P. Carey School of Business at Arizona State University.
The stock market has its short sellers. In the $96 trillion global bond market, such shadowy naysayers are known by the term vigilantes, coined by economist Ed Yardeni back in 1983. Veteran traders say the vigilantes aren't so much a set posse but rather a changing mix of activist investors who can suddenly throw a chill on a particular country's bond issues, often by dumping them all at once. Vigilantes shut down Greece's bond market, for example. And many expected them to strike here after the debt-ceiling debate and credit downgrade, says Chris Shayne, senior market strategist for BondDesk Group. But they didn't. Asks Shayne, "Where are they?"
Mike & Ryan Alfred
At an age in life when most Americans barely contribute to their 401(k)s, brothers Mike, 30, and Ryan, 28, have written the book on them -- or, to be more precise, on some 50,000 of these company retirement plans. In 2008 the former money managers teamed up with veteran HP engineer Dan Weeks to create BrightScope, an online site that brashly aims to rate every 401(k) offering in the nation, based on data provided in securities filings and other records. (Anyone can check out their own -- or any company's -- plan for free; more in-depth analytics are available for hefty subscription fees.) And already, say experts (and human resources managers),the site is having an outsize effect, as companies feel the pressure to raise their plans' scores(which take into account dozens of factors, from fees and matching contributions to the menu of investing options). Now the brothers Alfred are cranking that pressure up even more, as they spotlight other players in the retirement-planning universe: financial advisers. As of press time, BrightScope had free profiles available for some 50,000 firms and for more than 400,000 individual advisers.
With $14 trillion in assets and a proven willingness to spend, this group has been driving the economy. As the first wave turns 65 this year, many hope those wallets will keep opening.
Jane & Joe Boomer
They grew up watching The Andy Griffith Show, came of age during the tumultuous '60s and bad-hair '70s, raised their kids, and now...10,000 of them are hitting retirement age every single day, on average. But don't think the 80 million-strong baby boom generation is going to go quietly to the land of canasta and early-bird specials. With a median age of 55, most boomers are not only still working, earning and saving; they're also spending like crazy -- buying some $2.6 trillion worth of stuff in 2009 alone. Indeed, the current crop of 45- to 64-year-olds spends 70 percent more than the same age group spent a decade earlier. But while money is power, as the saying goes, that isn't the only mark of their might: In the 2008 election, 65 percent of this generation reported casting a vote (a much greater proportion than that of most other age groups). And in 2012, experts say, it will be boomers, again, who decide who makes the rules.
Big names, yes. But impact? Not so much. Here, five for the woodwork.
U2's front man deserves global hosannas for getting investors to forgive African sovereign debt. But forgiveness has its limits, it seems. Just ask critics or audiences what they think of the $70 million Spider-Man musical he helped create on Broadway.
A year ago the high-profile banking analyst predicted Muni-geddon, claiming that dozens of major municipal-bond defaults were on the way. So far? Gloom, maybe but no doom. (Whitney says she stands by her work.)
In the midst of the European debt crisis, the French president made a show of leaving his summer vacation to rush home with emergency save-the-day measures. But banks and governments panned the proposals as all bluster, no punch.
The high-profile hedge-funder might have played the subprime mortgage crisis to a tee, but he was apparently a few steps behind during the market's recent seesaw. His funds, according to media reports, have shed more than $3 billion in assets since March. (Paulson declined to comment.)
The once-touted reform package has been pilloried on all sides. Many firms say the red tape will do little but strangle them, even as onetime boosters
insist it has been weakened to the point of "Why bother?"
Why does a soon-to-retire 76-year-old senator from Wisconsin rank among our Power 30? As chairman of the Senate Special Committee on Aging, the four-term Democrat is considered by many a linchpin in any near-term plan to address the solvency of Social Security and Medicare. Republican public-policy consultant Scott Becher saysthe senator's effective problem solving overshadows his political affiliation and has earned him fans across the aisle.Oh, and then there's Kohl's side job. No, not his ownership of the Milwaukee Bucks, the other thing: As the man leading the antitrust hearings on Google, he's one of the few people around who can make CEO Larry Page sweat (see sidebar).
The closest thing the 80 million baby boomers have to a tactical leader, Rand, 66, is working to make the already formidable AARP even more powerful. Not yet three years into his tenure, he has increased AARP's revenue modestly, to $1.3 billion; spent an estimated $43 million on lobbying; and inked a deal with Charles Schwab to dish out financial advice to many of its 37 million members. Earlier this year, the organization made waves by acknowledging its willingness to consider cuts to Social Security benefits (a stance the group later backed away from); now, with the program and Medicare on the table in Washington and boomers beginning to stream into retirement, Rand's ability to influence the pols, say experts, may be more important than ever.
J. Mark Iwry
Senior Adviser to Treasury Secretary
When we think about the power elite, the phrase "easy to get along with" doesn't usually pop to mind. But that, in part, is why this 61-year-old policy wonk carries so much weight on Capitol Hill -- and why he's likely to be an influential player in any future debates on legislation affecting retirement savers. In his first stint at the Treasury Department, during the Clinton administration, Iwry worked with Republican Sen. Bob Dole's office to make it simpler for small employers to offer 401(k)s. As a researcher at the liberal Brookings Institution, he teamed up with David John from the conservative Heritage Foundation to develop a plan to let small businesses direct a portion of workers' pay to IRAs. (That goal remains in the works.) Iwry says that despite political differences, both sides of the aisle can find common ground on key issues related to retirement and health policy. Who says nice guys finish last?
Jobs & The Economy
When will the recovery, such as it is, turn into a bona fide job boom? That's the question top of mind for millions of workers these days (as well as employers and policy makers). Look to the four leaders here, experts say, for early clues to the outcome.
It's that classic mailroom-to-boardroom story, but with a fast-food twist: McDonald's big cheese actually began his career at the company 40 years ago as a restaurant-manager trainee in Carpentersville, Ill. In his seven years as CEO, the 67-year-old Skinner has turned the company around, says Larry Miller, an equity analyst at RBC Capital Markets. But lately, it has been his role as America's hirer-in-chief that's been getting notice.In April the company added 62,000 restaurant workers in a single day.(Among the perks: cool Happy Meal prizes for all your nieces and nephews.)
In today's uneasy job market, recruiters and employers recite a common mantra to job hunters: Get on LinkedIn.The professional-networking site now has more than 120 million members, up from 52 million two years ago,with roughly 1 million new members joining each week. Weiner, 41, a former Yahoo executive, brought the company public this year in a riotous debut -- shares more than doubled in their first day of trading. But analysts continue to raise their eyebrows at the company's rich valuation. How rich? Well, shares recently traded at more than 700 times expected earnings for 2011. Says a company rep: "We don't comment on our stock price."
Chairman and CEO, General Motors
nA former Naval officer with a reputation for focusing on the bottom line, Akerson, 62, has been CEO for just over a year. And while car sales are up, many are looking to see if that growth will continue down the road -- enough, that is, to create some shareholder returns...and maybe a few needed jobs as well. GM has faced the challenge, analysts say, of balancing supply shortages (after the earthquake in Japan) against demand for smaller, fuel-efficient cars, such as the Chevrolet Cruze, which became America's best-selling car earlier this year. (A GM spokesperson says that since July 2009, the company's investments have created or saved more than 13,000 jobs.)
Governor, New Jersey
In just two years in office, the budget-slashing, tax-capping Republican governor, 49, has made quite an entrance onto the national scene -- and showcased at least one strategy for getting a state's fiscal house in order. Christie rallied Democrats behind an aggressive pension-and-benefits reform package, then infuriated them when he used his line-item veto to slash $900 million from New Jersey's budget -- garnering nearly equal parts accolades and outrage from voters, says David Redlawsk, a political science professor at Rutgers University. And while he has said he won't challenge Obama in 2012, few would be surprised by a 2016 bid.
Industry & Innovation
One has been CEO for only weeks (and is still known as the "other guy"). Another is, well, a bit Gaga. But this set of monsters and shakers could usher in the next big thing.
Perhaps it should come as no surprise that "Poker Face" singer Lady Gaga, 25, has a taste for the high-stakes game of venture financing. The pop superstar is wagering more than penny ante with a 20 percent stake in start-up The Backplane, which aims to let celebrities harness their fan bases across multiple social-networking sites, such as Facebook and Twitter. (Could a cure for cancer be far behind?) The poised-to-launch site has already drawn $1 million in financing from the likes of Google Chairman Eric Schmidt and other notables. But that's hardly her only foray into tech. To debut her most recent album, Born This Way, Gaga teamed up with Web darling Zynga, maker of the popular online game FarmVille, to offer fans early access to tunes. What accounts for her golden business touch?Tech analysts say her record 13 million Twitter followers flock to any property she touches.The Gagapreneur, through a spokesperson, declined to comment.
Though he's been in the corner office only since August -- when the revered Steve Jobs resigned the post -- Apple's former chief operating officer has mostly been well received by jittery shareholders. But until Apple comes up with its next gravity-defying, trend-twisting product line, major investors like Jerry Jordan, portfolio manager of the Apple stock-owning Jordan Opportunity fund, say they won't know if Cook, 50, "is the guy." Then again, even if the company's new innovator-in-chief doesn't come up with, say, the new iPlane right away, there's always another way for him to make an impact: Apple has about $76 billion in potential spending money just sitting in the bank.
Few real estate executives can boast that their firm played a role in one in every four home sales (involving a broker) in the country last year. But as head of the real estate conglomerate that counts Century 21, Coldwell Banker and Sotheby's International Realty among its brands, Smith, 58, can say precisely that. The company's brokerage operations accounted for $113 billion in residential sales volume last year -- more than three times what the second-largest brokerage pulled in.
Cofounder and CEO, Google
You can't "poke" anyone on Google Plus, the Internet-search giant's challenge to competitor Facebook. But that hasn't stopped more than 10 million people from signing up with the site so far, displaying the striking influence of Google and its 38-year-old CEO. It's up to Page, now, to guide Google through what increasingly looks like hand-to-hand combat in the search and social-media arenas -- and with the recent move to acquire Motorola's cell phone business, in the wireless-device industry, as well. One test of Page's grit will come when Google faces down a U.S. antitrust probe later this year. (Google says it respects the Federal Trade Commission's process and will be working with it.)
CEO, United Continental Holdings
With spiking fuel costs and a particularly turbulent economy, the year ahead is sure to be bumpy for airlines in general. Throw in the challenge of merging two very different companies -- as well as their labor unions -- into the world's largest carrier, and one begins to get a sense of the challenge facing this 57-year-old CEO. When he ran Continental, Smisek, a former corporate lawyer, gave up his salary until the company was profitable for a year. This time around, however, investors and industry analysts seem more ready to trust him: "Of all the executives," says Rick Seaney, CEO of airline ticket-comparison site FareCompare.com, "he's one who can bridge the gap."
On an ever-more-connected planet (the European debt contagion proved that), these players are almost sure to have an outsize effect on the global economy.
Germany's first female chancellor faces a near-impossible task: Merkel, 57, must balance public resentment among German voters over a second bailout of Greece while containing the European Union's deepening debt crisis. As the leader of Europe's biggest economy, she has the power to make or break E.U. summits. She has used that power to help green-light bailouts for Ireland and Portugal and to withhold support for the NATO-led military action in Libya. Europe's top power broker is up for reelection in 2013 -- and political analysts say a third term bodes well for U.S. investors and bondholders, who should benefit from having Germany remain a safe haven for American dollars.
Managing Director, International Monetary Fund
It probably wasn't quite the way she wanted to land the job: Lagarde, 55, became the IMF's new boss after her predecessor, Dominique Strauss-Kahn, was forced to resign after being charged with attempted rape in New York City. (Strauss-Kahn denied the allegations, and the charges were later dismissed.) But regardless of how Lagarde got there,she will need her considerable diplomatic and political eclat to avoid appearing Euro-centric, even as she helps shepherd the continent through its sovereign debt crisis,says Arturo Porzecanski, economics professor at American University. Her biggest task right now? Getting used to being investigated herself. In August, a French court ordered a probe into charges that Lagarde abused her authority years ago when she was France's finance minister. Lagarde has denied any wrongdoing.
Reconstruction minister, Japan
Japan's 57-year-old reconstruction minister has his work cut out for him. The March earthquake and tsunami not only left tens of thousands homeless and destroyed critical infrastructure, but also halted production for a number of high-tech companies that make small components for cell phones and cars. That, in turn, created headaches for industries here in the States. Hirano's job: to spend $300 billion rebuilding the hard-hit region -- and the supply chain as well. The outcome, says Gary Katzenstein, an associate professor at New York University's Stern School of Business, will affect giant companies like Sony and Toyota, as well as factory towns around the world.
With about $1.3 trillion worth of U.S. Treasury bonds lying around in its lockbox, our biggest foreign creditor belongs on any power list. After all, China can punch the sell button anytime it wants, right? Well, not quite, says Cornell economics professor Steven Kyle: The Chinese government has little option except to keep buying. Turns out, it's got to park the dollars from its massive trade surplus with the U.S. somewhere -- and where better than in the bonds of its biggest customer? Of course, this standoff is not likely to last forever. Many experts, in fact, say China is at least beginning to diversify its foreign reserves away from the greenback.
By Alyssa Abkowitz, Kristen Bellstrom, Quentin Fottrell, Sara Germano, Kelli B. Grant, Catey Hill, Linda Lacina, Jonnelle Marte, Elizabeth O'Brien, Charles Passy, Russell Pearlman, Anna Prior, J. Alex Tarquinio, Chad Terhune and Jen Wieczner