President Obama nominated his bailout watchdog to take over the financial regulatory agency charged with monitoring the multitrillion-dollar derivatives market.
On Tuesday, the president officially nominated Timothy Massad, the Treasury Department’s assistant secretary for financial stability, to lead the Commodity Futures Trading Commission (CFTC).
{mosads}Obama painted Massad as an effective operator behind the scenes and as the right man to take the reins of the CFTC from its outgoing head, Gary Gensler.
“He’s not the guy to seek the spotlight, but consistently delivers,” Obama said. “I have every confidence that he’s the right man to lead an agency designed to prevent future crises, because I think it’s safe to say he never wants to manage something like TARP again.”
If confirmed, Massad would take over an agency with a workload that has vastly expanded in the wake of the financial crisis and the enactment of the Dodd-Frank financial reform law. Due to that new law, the CFTC is charged with regulating for the first time the marketplace for financial derivatives, the complex tool that contributed to the financial crisis of 2008.
Obama used Massad’s nomination to also push for increased funding for the CFTC. The White House has wanted for years to significantly boost the agency’s funding but has been stymied by congressional Republicans who want to trim it. The president’s budget calls for $315 million for the agency, which is currently operating with funding of $195 million.
“It’s foolish for us not to adequately resource it,” Obama said.
Before being tapped to lead the CFTC, Massad spent the last two and a half years overseeing and winding down the government’s federal bank bailout program, the Troubled Asset Relief Program (TARP).
The widely reviled bailout program has generally exceeded expectations, with the bank rescue portion of the program turning a multibillion-dollar profit for the federal government. However, some components, particularly those aimed at providing relief to struggling homeowners, have underperformed.
Massad joined the Treasury in 2009 as chief counsel on financial stability, after spending six weeks serving as a legal adviser to the Congressional Oversight Panel, the independent body created to oversee the bailout program.
Before joining Congress, Sen. Elizabeth Warren (D-Mass.) served as the first chairwoman of that panel. Warren now sits on the Senate Banking Committee.
The Senate Agriculture Committee will vet Massad’s nomination.
Before joining the government, Massad was a partner with the law firm Cravath, Swaine & Moore in New York, specializing in corporate finance and international transactions.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) hailed the pick, calling Massad “exactly the type of leader the CFTC needs.”
If confirmed, Massad would replace a man who emerged in the wake of the financial crisis as one of the government’s toughest regulators. Gensler, who was an executive at Goldman Sachs, faced some skepticism on the left when he was nominated to lead the agency. Sen. Bernie Sanders (I-Vt.), citing Gensler’s ties to Wall Street, originally held up the nomination.
In the years since his confirmation, Gensler has pushed for some of the toughest financial rules from Obama’s regulatory team. Gensler is scheduled to leave the CFTC at the end of the year.
Obama hailed Gensler’s work leading the “small but mighty” CFTC, saying he has done as much as anyone else to overhaul the financial system since the crisis.
With little known about how Massad would lead the CFTC, financial reform advocates are already warning that he has big shoes to fill, and they will be watching his confirmation hearing closely.
“Very little is known about … Mr. Massad. The inevitable spin, politics and PR surrounding his nomination must be disregarded,” said Dennis Kelleher, president and CEO of the reform advocacy group Better Markets. “It is the Senate’s duty in the confirmation process to determine whether Mr. Massad has the qualifications and guts for the job.”
The five-member CFTC is currently operating with four commissioners following the exit of Jillian Sommers, a Republican, earlier this year. The panel will drop to three later this year, as Democratic Commissioner Bart Chilton has also announced his plans to exit the regulator soon.
— This article has been corrected to reflect that the Senate Agriculture committee will handle Massad’s nomination.