President Obama on Tuesday not only put forward his pick to head a powerful financial regulatory panel, he also declared in no uncertain terms that the “army of lobbyists” who he says have teamed with Republicans to undermine Wall Street reform must not succeed.
At the White House, Mr. Obama appeared alongside Timothy Massad, who, if confirmed by Senate, will lead the Commodity Futures Trading Commission (CFTC). Mr. Massad formerly headed up the Treasury’s highly controversial Troubled Asset Relief Program started by former President George W. Bush in the immediate aftermath of the 2008 economic collapse.
Mr. Obama touted his administration’s successes in cracking down on derivatives and other “reckless” Wall Street behavior since that crisis, but made clear that more work must be done and that congressional Republicans are standing in the way.
Mr. Obama, flanked by Mr. Massad and outgoing CTFC Chairman Gary Gensler, took specific aim at budget cuts to the commission brought about by sequestration and cast by some Republicans as a good thing for the nation and the economy.
“We can’t let an army of lobbyists and their allies in Congress delay, defund, dismantle the rules that were designed to protect consumers and protect a crisis from happening again,” the president said. “We can’t go back to the days when bad behavior could nearly bring down the entire economy unless taxpayers stepped in to rescue it. And anybody who is working hard to dismantle any of these reforms will have to explain to the American people why they did that when and if a crisis ever does happen again.”
Republicans have argued that some of the CFTC’s work, including implementation and enforcement of the Dodd-Frank financial reform law, hampers the economy and slows job creation. Two years ago, Senate Minority Leader Mitch McConnell, Kentucky Republican, famously said “the less we fund those agencies, the better America will be,” echoing the sentiments of others in the GOP who believe further cuts to the commission could help remove unnecessary regulatory burdens.
As a result of sequestration, the CFTC had to trim its budget by about 5 percent, or $10 million, in the past fiscal year. As budget negotiations continue on Capitol Hill, Mr. Obama and many Democrats will continue to argue for major increases in commission funding.
The commission “makes our financial system work better, and it’s foolish for us not to adequately fund it,” Mr. Obama said.
As for Mr. Massad, the president said he has full faith in him to do the job and help prevent future financial crises.
But moving forward, Mr. Massad will face questions from both sides of the financial-reform debate. Republicans will want to be sure Mr. Massad doesn’t favor excessive government regulation of financial markets, while Democrats and others will want assurance he’ll be tough enough.
“We need a CFTC chairman who will stand up to the Wall Street interests that aim to block the agency from doing its job,” said Lisa Gilbert, director of the Congress Watch division at Public Citizen, a nonprofit consumer rights advocacy group. She laid out a number of commitments Mr. Massad should make before being confirmed, including: that he will “aggressively rein in” commodity market speculation, continue to implement Dodd-Frank and take other steps.
The commission is supposed to have five members, but currently has four. It will be down to three when Bart Chilton, a Democrat, soon steps down.