President Obama will nominate Treasury Department veteran Timothy Massad to be the nation's top regulator of financial derivatives on Tuesday afternoon, according to a White House official.
Massad, who has served as the Treasury's assistant secretary for financial stability since 2011, would take over the Commodity Futures Trading Commission if confirmed, an independent federal agency tasked with regulating derivatives such as futures and options.
Current Chairman Gary Gensler has served since the beginning of the Obama presidency, and his five-year term expires in March 2014.
The 57-year-old Massad would take over the CFTC as it begins taking on added responsibilities given to it by the Dodd-Frank financial reform law. As a response to the 2008 financial crisis, Dodd-Frank calls for the CFTC to regulate swaps, derivatives that previously had been negotiated between firms with little or no government oversight.
The exchanges created by the law as a centralized location for trading swaps went live in October, just as the CFTC, which is funded by Congress, was partially shut down with the rest of the federal government.
Gensler warned in September that the agency is “sorely underfunded," with a budget of less than $200 million. Unlike other regulatory agencies, the CFTC does not have alternative sources of funding. It is not able to raise money with fees levied on the firms it oversees. As a result, it has been exposed to cuts since Republicans took over the House of Representatives. The agency has been forced by the lack of funding to delay cases and inquiries into companies' misbehavior, according to the Wall Street Journal.
For the past three years, Massad has overseen TARP, the bank bailout passed at the height of the financial crisis. Before joining the Treasury in 2009, he worked on the Congressional Oversight Panel, a body created to monitor the implementation of TARP. Previously, he was a lawyer at the New York firm of Cravath, Swaine & Moore, and he has undergraduate and law degrees from Harvard.