President Obama will nominate Timothy G. Massad as the new chairman of the Commodity Futures Trading Commission on Tuesday, a White House aide said, choosing the senior Treasury Department official to run an agency that polices some of Wall Street’s riskiest activity.
If confirmed by the Senate, Mr. Massad will succeed Gary Gensler, a former Goldman Sachs banker who overhauled the agency in the wake of the financial crisis. Mr. Gensler, credited with turning one of Wall Street’s laxest regulators into one of its most aggressive, must leave office at the end of the year when his term officially expires.
Mr. Massad, an assistant secretary of the Treasury who oversaw the unwinding of the government’s bailout program stemming from the financial crisis, would join the agency as it undergoes a makeover.
Bart Chilton, the agency’s most liberal commissioner, announced last week that he would soon depart. David Meister, the enforcement director who led actions against some of the world’s biggest banks, departed the agency last month. And Jill E. Sommers, a Republican commissioner, left months ago.
The vacancies have raised the stakes for Mr. Massad’s nomination. If Mr. Chilton and Mr. Gensler depart before their successors are confirmed, the five-member commission will be down to just two members: one Republican, Scott D. O’Malia, and one Democrat, Mark Wetjen.
But it is unclear whether Mr. Massad - and President Obama’s choice to succeed Ms. Sommers, Christopher Giancarlo - will pass Congressional muster. While Mr. Massad should benefit from already having received Senate confirmation in 2011 for his Treasury job, the extremely partisan environment on Capitol Hill could derail even the most popular nominees.
Some consumer advocates also remain skeptical of Mr. Massad, a former corporate lawyer who spent more than two decades at Cravath, Swaine & Moore. They wonder whether he will strike as aggressive a tone as Mr. Gensler did.
Under Mr. Gensler, the agency has received plaudits for its crucial role in putting in place new rules on derivatives and futures trading as part of the government’s Dodd-Frank financial overhaul. In the face of Wall Street lobbying, the agency created dozens of new rules since Congress passed the overhaul in 2010.
The Dodd-Frank Act gave the agency new authority to regulate the exchanges and the derivatives and futures contracts traded on those exchanges, expanding the scope of the agency’s jurisdiction. Mr. Gensler was an unapologetic supporter of the law, pushing the agency to tighten rules that Wall Street sought to loosen.
Derivatives tied to mortgages were the main accelerator of the financial crisis, helping to pump up a real estate bubble that led to a bust and the worst financial crisis since the Depression.
Since then, the agency has also imposed record fines on financial institutions. Among its most notable actions was a wide-ranging crackdown on the manipulation of benchmark interest rates, which reeled in major banks including Barclays and UBS.
The agency secured its most recent victory last month, extracting a $100 million settlement and an admission of wrongdoing from JPMorgan Chase, the nation’s biggest bank, as a result of its investigation into a multibillion-dollar loss out of the bank’s London office.
It is not clear whether Mr. Massad will continue to aggressively pursue the line taken by his predecessor.
But supporters point to his role in unwinding the unpopular bailout program orchestrated amid the 2008 crisis. He has been credited with overseeing the return of almost every taxpayer dollar that went into the bailout. The government has also turned a profit of almost $30 billion on these investments.
During his work at the Treasury, Mr. Massad also oversaw the General Motors initial public offering and helped the Treasury to exit its investment in Citigroup and the American International Group.
And before joining the Treasury, Mr. Massad worked for the Congressional Oversight Panel, a watchdog group that kept a close eye on the government bailout of Wall Street, a role that could win him points with consumer advocates.
During his senate nomination hearing for the Treasury post on May 3, 2011, Mr. Massad, who attended Harvard for both undergraduate and law studies, said he was reminded of his parents’ stories of growing up during the Great Depression.
“This financial crisis has caused many American families to suffer on a scale not seen since that time. As a result of this crisis, millions of people have lost their jobs,†Mr. Massad said, recalling the widespread loss of homes, retirement savings, small businesses and opportunities.
“We must never forget that this human suffering is the true cost of this financial crisis,†he added.
