Timothy Massad, the Treasury Department official responsible for overseeing the U.S. rescue of banks and automakers after the credit crisis, will be nominated to head the country’s top derivatives regulator.
President Barack Obama chose Massad, 57, to succeed Gary Gensler as chairman of the Commodity Futures Trading Commission, an agency with expansive new authority under the 2010 Dodd-Frank Act. His nomination requires Senate confirmation.
Massad would take over an agency that has put into place more than 60 rules to regulate trading by banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. (JPM) to help reduce risk and increase transparency in the swaps market after largely unregulated trades helped fuel the crisis. The rules have yet to all take effect as the agency battles budget challenges as a result of Republican efforts in Congress to block Obama administration efforts to increase its funding.
“Gensler has been purposefully aggressive both in the implementation of the Dodd-Frank Act as well as his wish to expand the CFTC’s scope, and I simply don’t believe Massad will be anywhere near as laser-focused as Gensler has been,” Isaac Boltansky, policy analyst at Compass Point Research & Trading LLC, said in a telephone interview.
Obama said at the White House today that he is confident Massad will continue the work Gensler has done to put new rules into place. Obama said Massad doesn’t “seek the spotlight, but consistently delivers” and has a “deep commitment to a reform agenda.”
A former partner at Cravath, Swaine & Moore LLP in New York, Massad was a legal adviser to a congressional panel that oversaw the Troubled Asset Relief Program, which loaned billions of dollars to banks and auto companies to help stabilize the economy during the 2008 crisis.
The program, which he then was confirmed to manage at Treasury, spurred a political backlash that drove congressional supporters from office in the 2010 election and fed criticism of Wall Street.
“Nobody ever wants to see TARP repeated. But the fact is, TARP is a program that did its job,” Massad said Sept. 30 at the Brookings Institution. “It has worked faster, better, and cheaper than most people ever thought possible.” He did not comment about his nomination today.
As of Nov. 8, $421.54 billion had been disbursed under the TARP program, while $406.48 billion had been repaid, according to the latest numbers from the Treasury Department.
Senator Elizabeth Warren, a Massachusetts Democrat and formerly the head of the TARP oversight panel, said she wants to hear further from Massad about steps he would take to reduce the risk of future crises.
“The CFTC does critical work, and Gary Gensler set a very high standard for the chairman position,” Warren said in a statement.
The commission, which is designed to have five members, may instead have only one Democrat and one Republican early next year if Obama and the Senate cannot overcome political hurdles to confirm new commissioners.
Senate Banking Committee Chairman Tim Johnson called Massad “an excellent selection” to replace Gensler.
“He is exactly the type of leader the CFTC needs as the commission works to implement the new Wall Street reform rules, strengthen the agency’s ability to hold wrongdoers accountable, and collaborate with regulators both here and abroad to improve oversight of the global derivatives market,” Johnson, a Democrat from South Dakota, said in a statement.
Bart Chilton, a Democratic commissioner, said he will step down before next year, and Obama has yet to nominate his replacement. Jill E. Sommers, a Republican, stepped down from the CFTC in July and the Senate has failed to act on the nomination of J. Christopher Giancarlo as her successor.
The party-line split on the commission would probably delay votes on contentious Dodd-Frank regulations.
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