WASHINGTON — President Barack Obama tapped a senior Treasury Department official to take over as one of Wall Street's top regulators, leading the agency charged with overseeing complex financial derivatives.
Obama said Tuesday he would nominate Timothy Massad to succeed Gary Gensler as chairman of the Commodity Futures Trading Commission.
Massad has spent more than two years in charge of winding down the $700 billion financial crisis bailout fund, which has turned into a gain for taxpayers so far, though a small projected loss on paper.
Calling the CFTC a "small but mighty independent agency," Obama said it plays a crucial role in using new rules under the 2010 Wall Street reform law to try to prevent a repeat of the financial crisis.
One of the commission's responsibilities is "to guard against some of the most reckless and irresponsible practices at the heart of the financial crisis, and this includes making sure big banks can't make risky bets with their customers' deposits — something we call the Volcker Rule," Obama said during a White House ceremony with Massad and Gensler.
The rule would place strict limits on so-called proprietary trading by Wall Street firms. The CFTC is drafting the rule along with other financial regulators, and a final version is expected by the end of the year.
Massad has been assistant Treasury secretary for financial stability since 2011. The job put him in charge of the Troubled Asset Relief Program, which was created during the 2008 crisis to stabilize the financial system.
He has been credited with helping sharply reduce expected losses in the program. The latest estimate from the Congressional Budget Office is that TARP will end up costing $21 billion.
The Treasury Department has distributed $421 billion in bailout funds and has received $424 billion in repayments, dividends and sales of stock in American International Group Inc., General Motors Co. and other rescued firms, according to the department's latest figures.
"Tim's a guy who doesn't seek the spotlight, but he consistently delivers," Obama said. "I have every confidence that he is the right man to lead an agency designed to prevent future crises because I think it's safe to say that he never wants to have to manage something like TARP again."
Gensler led the commission through tumultuous times. Like other regulators, the CFTC was criticized for not moving faster to enact a slew of new regulations called for under the financial reform law.
But Gensler has drawn praise from consumer groups and liberals for pushing the agency to draft tough new rules to oversee derivatives. Obama said Gensler "transformed what was a secretive and shadowy derivatives market" and imposed nearly $1.8 billion in penalties against companies in rate-rigging cases.
Mary Jo White, chair of the Securities and Exchange Commission, called Gensler "a tremendous regulator" who leaves office with "quite a strong record." She also said Massad has done a "superb job" overseeing TARP.
But Massad has kept such a low profile at the Treasury Department that groups backing tough Wall Street regulation were unsure whether he would continue Gensler's aggressive efforts.
"Timothy Massad's views on most of the key issues before the CFTC are not known," said advocacy group Public Citizen. "We need a CFTC chairman who will stand up to the Wall Street interests that aim to block the agency from doing its job."
His nomination comes as the five-person agency finds itself strapped for voting members. It already has one vacancy, and Commissioner Bart Chilton recently said he would leave at the end of the year. It could take months for the Senate to confirm Massad and any new appointees.