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In Depth August 27, 2009, 5:00PM EST

The Most Powerful Banker You've Never Heard of

Lewis Kaden is the ultimate behind-the-scenes power player. Lobbying the White House for Citi may be his biggest role yet

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Jason Holley

By Mara Der Hovanesian

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Kaden (third from right), Wilpon (second from right), and New York Mayor Michael Bloomberg (center) at the groundbreaking for Citi Field Anthony Delmundo/New York Daily News

Editor's Note: This story is a corrected version of the story that ran in the magazine.

Lewis B. Kaden doesn't stand out among the high-powered executives on Citigroup's (C) organizational chart. He's one of three people who carry the title of vice-chairman, and he doesn't run a big revenue-generating business such as investment or retail banking. Kaden's official duties are largely administrative—human resources, government affairs, and philanthropy among them.

Behind the scenes, however, the 67-year-old Kaden has emerged as the most influential adviser to Citi CEO Vikram Pandit and a key conduit to the Obama Administration. "He's the most powerful man in financial services you've never heard of," says a former executive who worked with Kaden under Pandit and Citi's previous CEO, Charles O. Prince III. Kaden's clout "extends significantly throughout the organization. Some say he's the CEO with a lowercase c-e-o."

Kaden's fingerprints have been all over the bank's maneuverings during the financial crisis. When Prince left the bank in 2007, Kaden advised the team that picked Pandit for the top job. He co-chairs the group that oversees how the bank uses $45 billion in federal bailout money and negotiates with regulators on hot-button issues such as compensation. He's also trying to spiff up Citi's image, seeking out a high-powered consulting firm to develop a new public-relations strategy for the bank. Most important, he's a sounding board for Pandit at a time when sage advice has never been more crucial.

But Kaden, a corporate attorney for decades before joining Citi in 2005, hasn't always shown himself to be a brilliant banker. Serving on three of the firm's most important strategic committees—management, business heads, and business practices—Kaden stood by during the credit boom as Citi placed ever-bigger bets on subprime assets. "I thought bringing him in was a good idea," says a former member of Citi's executive management committee. "But he was in the same meetings I was [when] decisions were made to take on more risk and load up the balance sheet. If nothing else, he didn't step up and say: 'This is all insane. Why are we doing this stuff?' " Kaden also brokered the $800 million acquisition of the hedge fund that brought Pandit to Citi but was shuttered soon after for poor performance. And he paved the way for the pricey deal to name the New York Mets' new stadium Citi Field, drawing sharp criticism from many quarters.

That Kaden has been able to survive Citi's tumult—and his own apparent missteps—speaks to the peculiar niche he has come to occupy in the New York business and political Establishment. Part Karl Rove, part Zelig, Kaden has quietly shaped the decisions of a broad array of powerful leaders in business and government—but without bearing ultimate responsibility for those decisions. Says Zöe Baird, president of the Markle Foundation, a health-care and national security think tank where Kaden is chairman: "He's not the kind of person who tries to impose his views, but [rather] helps think through problems."

Over the years, Kaden has advised corporate chieftains, including Ford Motor's Bill Ford and General Electric's (GE) Jack Welch (now a BusinessWeek columnist). He has also counseled politicians such as ex-governors Mario Cuomo of New York and Brendan Byrne of New Jersey. His political travels have brought abiding friendships with key Obama Administration officials, including chief economic adviser Lawrence H. Summers. For all his lofty credentials, Kaden's personal connections may turn out to be his most valuable asset as he helps dislodge Citi from the teeth of the financial crisis.

HUMBLE ORIGINS

Lewis Kaden is an unlikely Wall Street power broker. The son of a trucker in Perth Amboy, N.J., he excelled at the local public high school, earning a scholarship to Harvard. After graduating magna cum laude in 1963 with degrees in history and mathematics, he attended Harvard Law School, studying constitutional and labor law and winning a coveted position as an editor of the Harvard Law Review. Even in his 20s the soft-spoken Kaden projected power. He had "a presence, a maturity, and a confidence in himself that was modest and not arrogant," says Richard B. Stone, a classmate at Harvard who teaches at Columbia University School of Law.

With law degree in hand, Kaden spent the next few years weaving in and out of politics. He clerked for the Second Circuit Court of Appeals in between stints working for New York Senator Robert F. Kennedy, first as a legislative aide and then on Kennedy's Presidential campaign. After Kennedy's assassination in June 1968, Kaden took a job as an associate at the law firm of Battle, Fowler, Stokes & Kheel.

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