President Barack Obama will announce Tuesday that he's tapped Treasury official Timothy Massad to head the Commodity Futures Trading Commission, a little known but important financial regulator.
Obama is expected to make the announcement around 3:15 pm EST at the White House State Dining Room, where he'll be joined by Massad and the man he'd replace, Gary Gensler.
The CFTC regulates trading in futures, which are contracts for future delivery of products ranging from oil and natural gas to corn, wheat and coffee. Traditionally these markets have been for producers and buyers to hedge against the risk of price changes. But in recent years, Wall Street money has flooded these markets, treating these contracts as a third asset class along with stocks and bonds.
Since 2011, Massad has served as assistant Treasury secretary for financial stability, but he comes from a corporate finance background. During the financial crisis of summer 2008 and the subsequent turbulent period, Massad was part of the Congressional Oversight Panel that served as a watchdog on government rescue efforts.
Later he managed the Troubled Asset Relief Program, or TARP, at Treasury and was part of the team involved in rescuing the automobile industry in the restructuring of Chrysler and General Motors.
The departing Gary Gensler, a top Treasury official in the Clinton White House, oversaw the implementation of 2010 revamp of financial regulation. A former Goldman Sachs executive, Gensler initially received a cold reception from consumer advocacy groups but later won their respect for taking on Wall Street over issues such as imposing limits on much of any market a single trader or company could control.
The CFTC is less known to the public than its stock market-regulating cousin, the Securities and Exchange Commission. The SEC is funded through fees on traders. The CFTC is not, and must depend on congressional appropriations.
During the recent government shutdown this was quite noticeable, as the SEC was able to keep policing the trading of stocks in real-time, while the CFTC had but a handful of employees watching the massive futures market where oil and other commodities are traded.
In a statement, the White House said that during the announcement Obama is expected to call on Congress "to stop underfunding agencies like the CFTC that are responsible for putting new rules in place to prevent some of the reckless and irresponsible practices that caused the financial crisis."