“President Barack Obama’s nominee to head the Commodity Futures Trading Commission will pledge to aggressively enforce rules against misconduct and beef up oversight of derivatives markets in a Senate hearing Thursday.”
“Timothy Massad is expected to point to his time spent overseeing the Treasury Department’s bank-rescue program for the past three years, noting that derivatives played a key role in the financial crisis, according to prepared testimony reviewed by The Wall Street Journal.”
“‘Excessive risk related to derivatives, particularly at American International Group, was one of many factors that contributed to the crisis,’” Mr. Massad’s prepared testimony says. AIG collapsed in late 2008 due to billions in derivatives obligations it couldn’t meet, triggering a massive government bailout.”
“The Senate Agriculture Committee, which oversees the CFTC, will also hear testimony from Sharon Bowen, a securities lawyer at Latham & Watkins LLP, and brokerage executive J. Christopher Giancarlo to fill CFTC commissioner slots.”
“Mr. Massad’s appointment comes at a critical time for the CFTC, which continued to implement complex rules from the 2010 Dodd-Frank financial overhaul. He will step into the shoes of former agency chairman Gary Gensler, an outsize figure in Washington in recent years who helped expand the CFTC’s mandate by aggressively pursuing tough rules to oversee derivatives markets.”
Read full Wall Street Journal article here.