Why Clinton Just Brought a Wall Street Scold on Board

WASHINGTON — Hillary Clinton said Friday she had tapped Gary Gensler, the former chairman of the Commodity Futures Trading Commission, as the chief financial officer of her 2016 presidential campaign, a move that will likely bolster her credibility as a hawk on Wall Street regulation.

Gensler's pick is the first major personnel announcement for the Clinton campaign since formally announcing her bid and his first time back in the public eye since he left the CFTC in early 2014. His presence suggests Clinton could take a more progressive stance on big-bank reform, closer to the views of Democrats like Sen. Elizabeth Warren, D-Mass.

"His selection will make progressives feel better about Hillary's campaign, and make reformers feel better about her campaign," said Sheila Bair, a former chairman of the Federal Deposit Insurance Corp.

Though Gensler is a former executive at Goldman Sachs and a top Treasury Department official in President Clinton's administration, he earned a reputation as a tough regulator during his time at the CFTC. In his five-year tenure, he pushed through scores of rules to clamp down on over-the-counter derivatives, or swaps -- transactions that were totally obscured from regulators before the 2008 financial crisis. Gensler also butted heads with fellow Democratic CFTC commissioners because they feared his rules were too harsh on big banks.

"He's a proven, fearless fighter for financial reform," said Dennis Kelleher, president of the public interest group Better Markets.

Gensler also reportedly caused angst within the Obama administration, which saw him as too aggressive. It was widely reported ahead of his departure that Gensler had sought the Treasury Secretary nomination, ultimately losing out to then-White House Chief of Staff Jack Lew. Gensler's prominent role in the Clinton campaign suggests he is poised to take a similarly prominent role in her administration should she win.

But Bair and others asked questions about what kind of policy role Gensler will play on the campaign itself. The CFO role for a presidential campaign is only vaguely defined, leaving it unclear if Gensler will have a hand in shaping Clinton's positions.

"Does this mean that people like Gary Gensler will have a meaningful voice in developing policy on financial regulation?" Bair said. "That's really the question."

Kelleher agreed.

"Gary's exactly the type of person Hillary Clinton needs to hear from and listen to," though "it remains to be seen whether or not Gary is really at the Hillary decision-making table," he said.

But some analysts said Gensler would not have joined the campaign to just worry about finances. Instead, he likely sees it as an opportunity to have a real voice in policy, they said.

"You don't have someone with that much substantive knowledge — especially in the early days when staff is the leanest -- and not have them used for understanding policy ramifications," said Edward Mills, a policy analyst at FBR Capital Markets. "Gensler's talents are going to be used in the campaign beyond the title given."

Mills said that Gensler may view this as a chance to complete some of the reform efforts he was unable to accomplish at the CFTC.

"He viewed his work as unfinished in D.C., so the best chance another Democrat has to get to the White House is the Clinton campaign," Mills said. "Time and again, those who are there through thick and thin and work on the campaign are best positioned to be rewarded. I think you get a promotion from CFTC chairman for Gensler if Clinton wins. Treasury Secretary Gensler? I don't think that's out of the realm of possibility."

Observers said Clinton, meanwhile, has almost all upside from choosing Gensler. Though he is popular with reform advocates, his Wall Street experience is also reassuring to some in the industry.

"He is the perfect reflection of exactly what the Clinton campaign is trying to do — walking that fine line in being progressive on financial issues to appeal to the Elizabeth Warren Democrats, but also sending a message to the establishment that they get it," Mills said. "He's someone with a Wall Street background who has also been a strong regulator — that is the perfect Clinton triangulation that we have always known and loved."

— Rob Blackwell contributed to this article.