Mixed Reception To Obama’s Pick for CFTC Chief

President Obama’s nomination of Timothy Massad to head the Commodity Futures Trading Commission (CFTC) was welcomed by business groups, but some lawmakers and left-leaning groups questioned whether the president’s pick would be aggressive enough in enforcing banking regulations. Massad would replace Gary Gensler, who served in the role for nearly five years and was seen as tough on Wall Street. “The key test is whether the nominee will continue the reforms initiated by Chairman Gensler,” Sen. Sherrod Brown (D-Ohio), chair of the Senate Financial Institutions and Consumer Protection subcommittee, said in an e-mail response. “The CFTC cannot shirk from ending the risky practices in the derivatives market.”

“The CFTC does critical work, and Gary Gensler set a very high standard for the chairman position,” Sen. Elizabeth Warren (D-Mass.) said in a statement. “I look forward to hearing more from Tim Massad about what steps he thinks the CFTC can take to further reduce the risk of future crises and level the playing field for middle class families.”

The Securities Industry and Financial Markets Association said in a statement, “Should he be confirmed, [Massad’s] combination of legal expertise and industry knowledge will benefit the CFTC as it continues its important and challenging work to implement the new regulatory framework under Dodd-Frank.”

Massad “has performed exceptional public service, in varied roles at the Treasury Department, responding to challenges posed by the financial crisis,” Paul Schott Stevens, president and CEO of the Investment Company Institute, said. “That experience, coupled with his distinguished legal career in the area of corporate finance and international transactions, will serve him well in his new role and will benefit the futures markets and the participants that the CFTC oversees.”

But the group Public Citizen said, “We need a CFTC chairman who will stand up to the Wall Street interests that aim to block the agency from doing its job. In short, we need a chairman who will prioritize the needs of Main Street over Wall Street.” The group urged Senators during nomination hearings to have Massad commit to rein in excessive speculation in commodity markets, limit high-frequency trading, and fully implement the Dodd-Frank Act. Dan Alpert, managing partner of Westwood Capital and a fellow at progressive think-tank The Century Foundation, said on Twitter: “[H]e’s no reformer, [and] will coddle banks.”

Massad was a corporate finance attorney before joining the Treasury in 2009, and as an assistant secretary he oversaw the implementation of the Troubled Assets Relief Program and the program that brought critical financial aid to the auto industry.

Gensler’s replacement at the CFTC will  be faced with overseeing the $400 trillion swaps market with a relatively meager budget of $195 million. “One of the greatest threats to well-functioning, open, and competitive swaps and futures markets is that the agency tasked with overseeing them is not sized to the task at hand,” Gensler said in a speech at the Fifth Annual Financial Regulatory Reform Symposium Oct. 31. “We need a CFTC chairman who will stand up to the Wall Street interests that aim to block the agency from doing its job.”