The Most Powerful Banker You've Never Heard of

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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

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Talent management is another of Kaden's main focuses—and sources of frustration. As head of human resources, he has been instrumental in overhauling Citi's management over the past 18 months. But some of Kaden's recommendations have sparked controversy. In February 2008, Citi hired Edward J. Kelly III, formerly of JPMorgan and Davis Polk, to run Citi's Alternative Investments unit. Later, Kelly also moved into the top spots in the global banking and private banking groups. When Chief Financial Officer Gary L. Crittenden stepped down in March 2009, Kelly jumped into the role. But Kelly appears to have butted heads with Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. Kelly reportedly referred to the FDIC as a "tertiary regulator," while Bair questioned his qualifications. In the aftermath of the scuffle, Kelly left the CFO spot and was named Vice Chairman. An FDIC staffer says the regulator didn't dictate Kelly's job change but adds that the move didn't go far enough in fixing Citi's weak management team.

Kaden's most important assignment may be his front-line role in discussions with the government, Citi's biggest shareholder. He is part of a group of top executives who regularly meet with U.S. officials and regulators on everything from compensation to management.

The discussions about pay have been among the most heated. After the Obama Administration imposed a salary cap for banks that received bailout money, Kaden and other executives negotiated with Treasury officials to work out a different arrangement. The group, fearing that valued employees would bolt if their pay were cut, suggested that only the executive suite take the hit, leaving the bank's other top earners unscathed. Citi's response "paralyzed" regulators hoping to make examples of Wall Street fat cats, says one top executive at Citi. The pay discussions are ongoing. In June, the bank raised base salaries by as much as 50% for some top staffers.

Kaden is also a point man in discussions over the controversial pay package of top energy trader Andrew J. Hall, who is owed tens of millions based on a contract signed last year. The bank isn't caving to government pressure to rework the contract. Says a Citi spokeswoman: "We're confident in the value these types of profit-sharing arrangements bring to the company and its shareholders, as they directly align compensation with performance and include appropriate clawback and risk-sharing provisions."

If ever there were a time for Kaden to call on his Washington connections, it would be now. Kaden sits on the board of Human Rights First, a nonprofit advocacy group, alongside the new White House pay czar, Kenneth Feinberg. While working at Davis Polk, Kaden also met Citi's primary regulator, John C. Dugan, the U.S. Comptroller of the Currency, a former partner at Covington & Burling and Treasury official. And he has known Larry Summers for more than 20 years.

With Citi at the mercy of regulators, "knowing your way around Washington has become more important than ever," says Brad Hildebrandt, chairman and founder of the legal consulting firm Hildebrandt International. "Having friends in high places is especially helpful."

Der Hovanesian is Banking editor for BusinessWeek in New York.

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