Sometimes, I have to remind myself that the Volcker Rule has nothing to do with Warren Buffet’s secretary’s salary. It’s harder to remember that it isn’t actually a rule until it has been written. Calling it a rule at this point is a bit confusing, since it is still in draft form, and still the object of intense lobbying by the Wall Street Banks that don’t want to give up their place at the Craps Table.
Meanwhile, the president has thrown things into confusion by nominating the relatively unknown Timothy Massad to head the Commodity Futures Trading Commission (CFTC). If confirmed, he would replace former Goldman Sachs executive Gary Gensler, who has ironically been one of the tougher regulating voices in Volcker Rule drafting process.
As the president’s pick to head the CFTC, Massad would be handed a massively expanded portfolio. The small agency – complete with a small budget – is tasked with overseeing a complex derivatives marketplace that runs in the hundreds of trillions of dollars.
He has earned plaudits for his work at the Treasury Department, where he steered the reviled Troubled Asset Relief Program towards a government profit. Massad’s backers point to his earlier work as a corporate finance attorney as proof he has the experience to police derivatives.
Since the big players don’t know where Mr. Massad stands on regulation, they don’t whether or how to oppose his nomination. That’s a shrewd move by the president. It’s also a reminder that all the bitching about the Troubled Assets Relief Program was overblown. It was a morally dubious program, but it wasn’t the financial sinkhole people predicted.
The Treasury Department is hoping to announce the Volcker Rule before the end of the year. We’ll see if it emerges with any of its original teeth.
