WASHINGTON Three nominees to head the U.S. derivatives regulator met little pushback in the Senate on Thursday as the agency heads into quieter waters after the departure of Gary Gensler, the former chief who was deemed overly aggressive by big banks and other critics.
Timothy Massad, a corporate lawyer who also headed the $700 billion U.S. bank bailout program, has been nominated by President Barack Obama to take the helm of the Commodity Futures Trading Commission.
Massad and two other nominees must be confirmed by the Senate if they are to join the five-member Commission.
Once a little-known agency that regulated agriculture futures, the CFTC was given authority over the $630 trillion global swaps market in 2010, a task Gensler took at hand vigorously, angering banks in the process.
Most of the rule-writing is done, and Massad promised a more modest agenda of enforcing the new rules, fine-tuning them if needed, and cooperating to a greater extent with foreign regulators, with whom the CFTC has argued in the past.
"We must aggressively pursue wrongdoers whatever their position or size and we must deter and prevent unlawful practices," Massad said at a hearing of the Senate Agriculture Committee, which oversees the CFTC.
Sharon Bowen, a partner at law firm Latham & Watkins in New York, and Chris Giancarlo, an industry veteran at swaps broker GFI Group Inc, have also been nominated to the CFTC, and were also questioned during the hearing.
Appearing for a group of lawmakers heavily backed by agricultural interests, the nominees pledged to listen to concerns from farmers and ranchers, the original users of the futures markets the agency oversees.
Such groups have expressed concern that tight new rules written to tame Wall Street will make using the financial instruments prohibitively expensive.
Unusually, the Commission in its new set-up will no longer have a dedicated agriculture expert member. But lobby groups for the sector have said they can live with the three, as long as they are granted some form of access.
Massad also said he would work closely with authorities abroad, alluding to last year's public dispute with foreign regulators. At issue was the degree to which the CFTC wants non-U.S. banks to abide by its rules.
Giancarlo, a derivatives industry veteran from GFI and a nominee to a Republican spot on the Commission, warned of an overly hasty rule-writing process, a frequent complaint against the CFTC by banks.
Bowen, a second Democratic nominee to the Commission, may still face questions later in the process over the $7 billion Allen Stanford Ponzi scheme, because of her role in a decision that left investors out of pocket. Stanford is serving a 110-year prison sentence.
Bowen heads the Securities Investor Protection Corporation, which is embroiled in a legal battle with the Securities and Exchange Commission over SIPC's decision not to pay out to people who had lost money in the scandal.
U.S. Senator Thad Cochran, the highest ranking Republican on the Agriculture Committee, has publicly supported the SEC in its fight against SIPC. While he mentioned the scandal during his question, he did not pursue the issue.