The swaps cops are back on the beat in full force.
After a six-month wait, the U.S. Senate yesterday confirmed Timothy Massad to serve as chairman of the Commodity Futures Trading Commission as lawmakers moved to bring the derivatives regulator to a full roster by signing off on two additional nominees.
The Senate approved Massad and J. Christopher Giancarlo, an executive at inter-dealer broker GFI Group Inc. (GFIG), in a series of voice votes. Sharon Y. Bowen, a lawyer at Latham & Watkins LLP, was confirmed as a commissioner in a 48-46 vote amid opposition from Republicans and a handful of Democrats.
The three new members will join a panel working to finish a job, now in its sixth year, of bringing oversight to swaps blamed for igniting the 2008 financial crisis. Started as an overseer of agricultural and commodity trading, the CFTC was empowered by the 2010 Dodd-Frank Act to bring a broad new set of rules to swaps that were previously largely unregulated.
“The Dodd-Frank Act greatly expanded the scope of the CFTC’s authority, and there are still many important issues that need to be addressed in the implementation of that law,” Walt Lukken, president and chief executive of FIA, previously known as the Futures Industry Association, said in a statement. “So it is all the more important that the CFTC have a full complement of commissioners at this critical moment in its history.”
The law, and regulations put in place under previous chairman Gary Gensler, gave the CFTC new authority over trading by Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Deutsche Bank AG and other firms.
The new members will join current commissioners Mark P. Wetjen, who has been serving as acting chairman since January, and Scott O’Malia, a Republican who has been at the agency since October 2009.
“I look forward to working with these three new commissioners. I’m sure they are eager to get to work on the pressing issues before the commission,” O’Malia said yesterday.
The commissioners will take office as Wall Street is pressing for rollbacks of rules approved under Gensler, saying some are unworkable. Budget constraints threaten the CFTC’s ability to oversee markets and have led to a restive staff taking steps to join a labor union.
“The CFTC is essential to maintaining the integrity of the markets and having a full commission ensures that this mission can be effectively carried out,” Ken Bentsen, president and chief executive of the Securities Industry and Financial Markets Association, said in a statement today.
Massad, 57, attended Harvard Law School and spent 25 years at the Cravath, Swaine & Moore LLP law firm, where he focused on corporate finance including securities, banking and derivatives. He was tapped by the Treasury Department in 2010 to administer the Troubled Asset Relief Program that rescued Wall Street banks during the financial crisis.
Giancarlo joined GFI Group in 2001 and has been involved in the broker’s strategic investments and relationships, including with investors, analysts and the government. He is also a past chairman of the Wholesale Markets Brokers’ Association, Americas, a lobbying group that met with the CFTC and testified before Congress on Dodd-Frank. The organization has five members, including ICAP Plc (IAP) and Cie. Financiere Tradition SA. (CFT)
Bowen’s confirmation was opposed by 42 Republicans and four senators who caucus with the Democrats, including Vermont Independent Bernie Sanders.
“We need regulators who will have the courage to stop the largest Wall Street banks in this country from driving up oil prices in the energy futures market,” Sanders said in a statement after the vote. “After reviewing her record and those of two other nominees, I am afraid that none of them will make sure that the price of gasoline and heating oil is based on supply and demand and not Wall Street greed.”
Some senators, including Louisiana Republican David Vitter, opposed Bowen’s confirmation because of her role overseeing the Securities Investor Protection Corp., an industry-funded panel that ruled against compensating victims of the R. Allen Stanford Ponzi scheme.
“After Stanford victims were ripped off through that fraudulent Ponzi scheme, Sharon Bowen ripped them off again by refusing to take action at SIPC,” Vitter said in a statement after Bowen’s confirmation. “And today she was rewarded for that with a promotion.”
To contact the editors responsible for this story: Maura Reynolds at email@example.com Anthony Gnoffo, Gregory Mott