Timothy Massad Tapped as Chief Derivatives Regulator

Timothy Massad

Treasury Department photo

Timothy Massad, an assistant secretary at the Treasury Department who’s been running TARP oversight, is going be nominated to succeed Gary Gensler as chair of the Commodities Futures Trading Commission.

The CFTC is a bit of an obscure agency, but it’s role as a derivatives regulator is substantively important. But what really makes this a noteworthy move is that the CFTC’s previous chairman, Gary Gensler, was basically the toughest regulator in the Obama administration. That, in turn, was a bit of a surprise. Gensler is a case study in how difficult it is to predict ideology from biography. He’s a former Goldman Sachs executive and a veteran of the Clinton administration. That sounded like the makings of a relatively meek regulator. But instead it turned out to be the biography of a hard-charging ambitious guy who wasn’t interested in taking crap from Wall Street and who wanted to flex the CFTC’s muscles.

That in turn led to a bit of a deteriorating relationship with other administration figures. Gensler’s allies would characterize this as a question of Gensler being a dedicated public servant trapped in an administration full of Wall Street toadies. Gensler’s critics (naturally) characterize the issue somewhat differently, seeing the disputes as in large part inter-agency power struggles and Gensler as basically an egomanic and poor team player.

As for Massad, I wouldn’t say that we know very much about his views on derivatives or anything else. And that’s probably a big part of what’s appealing about him to the president. Massad has been in the vicinity of a lot of controversial decisions and intra-administration spats, and as far as I know he hasn’t been an important source to anyone as a leaker or provider of perspectives on any of it. In other words, he’s (probably) a team player who (probably) won’t get into Gensler-style quasi-public fights with other regulators. The question, obviously, is whether in practice that just means giving up on serious derivatives regulation.

But mostly I’m very hesitant to make strong predictions this at all. The CFTC has been full of surprises over the past four years, and Massad’s played his cards very close to his chest. Perhaps confirmation hearings will illuminate.