President Barack Obama plans to name Timothy Massad as the next head of the U.S. swaps regulator, a White House official said, picking a lawyer who earned his spurs at the nation's bank bailout program.
At the Commodity Futures Trading Commission, Massad would head an agency that was given vast new powers after the 2007-09 crisis to rein in uncontrolled trading of complex derivatives - a $630 trillion market - on Wall Street.
His nomination, which Obama will officially announce later on Tuesday, is a last-minute solution to avoid a leadership vacuum at the powerful regulator, since current Chairman Gary Gensler's term expires on January 3, 2014.
"(The CFTC is) responsible for putting new rules in place to prevent some of the reckless and irresponsible practices that caused the financial crisis," the White House official said. Massad, 57, was born in New Orleans.
The CFTC, long an unexciting agency overseeing agriculture futures, has only just started overseeing the lucrative swaps market, and some of its planned rules have yet to be written.
Gensler has rushed through thousands of pages of new regulation in the past years, and the world's largest investment banks such as JP Morgan and Bank of America are now registered with the agency.
Many of the rules are a threat to the wide profit margins made in derivatives trading, as they force banks to open up their platforms to more market participants, and require more and costly safety buffers.
Massad spent most of his career as a lawyer at Cravath, Swaine & Moore LLP in New York and Hong Kong, working on a wide variety of corporate transactions. He joined the firm in 1984, and was made a partner in 1991.
He has an ability to get people to agree, a former colleague at the firm said, something that could set him apart from Gensler, who riled some on Wall Street because of the fast pace with which he adopted new rules.
"He's someone I would expect to be a consensus builder and to be thoughtful about other people's views. He doesn't always agree, but he engages with people," the former colleague said, asking not to be named.
Still, Massad - who has described how his Lebanese grandparents came to America as teenagers, barely able to speak English - has shown himself to be a loyal defender of the Dodd-Frank reforms before Congress and in media.
Massad also had direct experience in the highly technical world of derivatives trading, the person said, as the two had drawn up legal documents to regulate trading when the swaps market kicked off in the late 1980s.
But he is likely less of an expert than Gensler, a former Goldman Sachs banker who helped write large parts of the Dodd-Frank law that the CFTC was then told to implement.
The White House praised Massad for turning in a profit at the Troubled Asset Relief Program, the taxpayer-funded rescue mission for banks and other troubled companies.
Massad joined the Treasury in May 2009 after a brief spell at the Congressional Oversight Panel, the political body that oversaw TARP. He was closely involved and then headed the program from June 2011, when the Senate confirmed him as Assistant Secretary for Financial Stability.