WASHINGTON – The Senate on Tuesday confirmed President Barack Obama’s choice to head an agency overseeing potentially risky financial market activities.
Timothy Massad, who has promised to act aggressively against misconduct to ensure investors’ confidence, was approved as chairman of the Commodity Futures Trading Commission.
The CFTC, which regulates futures and options markets as well as derivatives trading, oversees some of the riskiest corners of the financial world. Derivatives were blamed for fueling the financial crisis.
Massad, a Treasury Department official, will succeed Gary Gensler, a Wall Street veteran who surprised many by becoming a tough regulator who pushed for strict rules that were opposed by large banks.
Also confirmed were two nominees to fill vacancies on the CFTC panel: securities lawyer Sharon Bowen and brokerage firm executive J. Christopher Giancarlo.
Bowen will fill a Democratic seat on the five-member commission, Giancarlo a Republican one.
Massad has said he would pursue final action on a revised rule aimed at clamping down on speculative trades that can drive up food and gas prices. The CFTC’s original rule was struck down in 2012 by a federal court.
Commissioner Mark Wetjen has been acting chairman of the agency since Gensler left in December.
Massad, Bowen and Giancarlo had their confirmation hearing before the Senate Agriculture Committee in March. But Senate approval was delayed by objections to Bowen from several Republican senators. Sen. Saxby Chambliss, R-Ga., had voted against her in the Agriculture Committee, saying she wasn’t qualified. Other Republicans cited Bowen’s role as the acting head of the Securities Investor Protection Corp., which insures brokerage firms, in its decision not to compensate victims of the $7 billion Ponzi scheme run by convicted former Texas tycoon R. Allen Stanford.
Bowen received a close vote in the Senate Tuesday, 48-46. Massad and Giancarlo were approved by voice vote.
For three years, Massad oversaw the Treasury’s Troubled Asset Relief Program, the bank bailout program that was launched in response to the financial crisis that struck in 2008. Under TARP, the government lent about $424 billion to bail out financial companies and automakers. The companies have repaid $373 billion.
Massad will oversee the implementation and enforcement of CFTC rules that were enacted to meet the agency’s mandate under the 2010 financial overhaul law.
Before joining the government, Massad was a corporate attorney for 24 years at a leading white-shoe law firm, Cravath, Swaine & Moore.
After the crisis, the CFTC brought the secretive $600 trillion market for derivatives under regulation for the first time. The goal was to prevent another crisis and resulting taxpayer bailout.
The value of derivatives is based on a commodity or security, such as oil or currencies. They are often used to protect businesses that produce or use the commodities, such as farmers or airlines, against price fluctuations. But they also are used by financial firms to make speculative bets.