President Obama Tuesday announced his decision to nominate Timothy Massad, a Treasury Department official heavily involved in the federal bank bailout program, as chairman of the Commodity Futures Trading Commission (CFTC), an agency that has gained prominence as it has reined in excessive or illegal speculation in the commodity derivatives and futures markets.
Massad, Treasury's assistant secretary for financial stability since June 2011, would succeed Gary Gensler, who has been CFTC chairman since May 2009. Gensler spearheaded the agency’s drive to put rules in place under the Dodd-Frank Wall Street Reform Act, passed by the Congress following the economic collapse of 2008. Gensler’s term ends in January.
“I have every confidence that he is the right man to lead the agency,” Obama said in announcing Massad’s nomination.
Massad also joined the administration following the 2008 crash, leaving his partnership in the New York law firm of Cravath, Swaine & Moore LLP to assist the newly formed Congressional Oversight Panel, one of the oversight agencies for the big bank bailout, the Troubled Asset Relief Program (TARP). He served as a special legal advisor to the COP for its first report on the TARP investments, before moving on to successive posts in the Treasury Department.
In the private sector Massad had a diverse corporate practice, with an emphasis on corporate finance, international transactions and representation of some of the law firm’s corporate clients. It included spending time in the firm’s Hong Kong and London offices. Massad received a B.A. from Harvard College and a J.D. from Harvard Law School.
Gensler had let it be known several weeks ago that he plans to leave the CFTC by the end of the year. CFTC Commissioner Bart Chilton recently announced that he will leave as well (see Daily GPI, Nov. 5a). Commissioner Jill Sommers departed in July.
"I want to congratulate Tim Massad on his nomination today and on the opportunity to lead this remarkable agency," Gensler said. "Subject to Senate confirmation, I look forward to working with Tim to ensure a smooth transition. It has been an honor for me to take part in the president's reform agenda, and I thank him for the privilege."
Gensler commended Obama for the confidence he placed in the CFTC staff to reform the $400 trillion swaps market. The CFTC "has brought transparency, competition and oversight to a once dark, closed market," and the "public and the economy now are benefitting from these reforms,” Gensler said.
With the planned departure of Chilton and exit of Gensler (both Democrats), the Commission would be down to two members: Scott O'Malia, a Republican, and Mark Wetjen, a Democrat. That would mean that the Senate would have to move quickly to approve Massad's nomination, or the agency -- which would not have a quorum -- would be unable to conduct business.
Going forward the CFTC chairman’s job mainly will involve fine tuning, carrying out and enforcing some 65 new rules and guidances issued by the current commission under the Dodd Frank law. One major rule, the revised position limits rule, remains to be put in place. The original rule was overturned by the courts and the Commission voted out a substitute just last week (see Daily GPI, Nov. 5b).