U.S. Commodity and Futures Trading Commission (CFTC) Chairman Timothy Massad on Tuesday tendered his resignation to President Obama, effective Jan. 20 — the same day that Donald Trump, who has indicated he will dismantle many of the regulations implemented during Massad’s tenure, is to be inaugurated.
“I came to the CFTC with a number of priorities, and I am proud we have made significant progress in every area,” Massad said. “We have largely finished implementing the regulatory framework for swaps, and have concentrated on the areas posing the greatest risk to the financial system. We have taken many actions to make sure commercial businesses can continue using the derivatives markets efficiently and effectively to hedge routine commercial risk and engage in price discovery.
“We have improved international coordination by harmonizing rules in many areas, strengthening relationships, and working with other regulators on oversight of markets, all of which has reduced inconsistency and the risk of regulatory arbitrage. We have engaged in robust enforcement efforts to hold bad actors accountable and protect users of these markets. And we have taken action to address the new challenges and opportunities in the derivatives markets, particularly cyber threats, clearinghouse resilience, and the increased use of automated trading.”
Massad will remain a commissioner at CFTC “for a few weeks in order to close out his office and handle administrative matters,” the agency said.
It is widely speculated that Commissioner J. Christopher Giancarlo could be moved into the Chairman’s seat by the Trump administration. Giancarlo, a Republican and frequent critic of CFTC decisions under Massad, was a brokerage firm executive before being appointed to CFTC.
Massad’s resignation will leave only two Commissioners at CFTC — Giancarlo and Sharon Bowen, a Democrat confirmed in 2014 — which could create a logjam, since there would not be enough Commissioners to constitute a quorum. There can be as many as five CFTC Commissioners, with no more than three from any political party serving simultaneously, so — assuming Giancarlo and Bowen stay on board — the next president could nominate as many as two more Republicans and one Democrat to fill the vacant seats, and designate one of the commissioners as chairman.
Massad was nominated to become CFTC chairman by President Obama in 2013, and was confirmed by the Senate in 2014 to replace Gary Gensler. Massad had been the Treasury Department’s assistant secretary for financial stability since June 2011, where he was heavily involved in the federal bank bailout program.
Massad 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 adviser to the COP for its first report on the TARP investments, before moving on to successive posts in the Treasury Department.
During Massad’s time at the helm, CFTC approved a final rule on exclusion of utility operations-related swaps with utility special entities from de minimis threshold for swaps with special entities, sought to apply the Commission’s margin requirements for uncleared swaps in the context of cross-border transactions, and last month reproposed regulations implementing limits on speculative futures and swaps positions as called for in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Much of CFTC’s work during Obama’s two terms, including rules implementing the sweeping Dodd-Frank legislation passed six years ago in the wake of the Great Recession, could be destined for the chopping block under the incoming Trump administration.
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