Hillary snags a watchdog, with Wall Street pedigree

Hillary Clinton’s decision to hire one of Wall Street’s fiercest regulators could assuage concerns she is too close to the sector, while at the same time handing her an expert financial mind to oversee the massive election effort.

Bloomberg reported Thursday evening that Clinton’s campaign had tapped Gary Gensler, the former head of the Commodity Futures Trading Commission, as its chief financial officer. The campaign has not officially confirmed the move, and Gensler could not be reached for comment.

But if the hire comes through, Gensler could bring significant credibility to Clinton’s campaign when it comes to taking a tough stance on Wall Street. While creating first-ever rules for complex financial derivatives, Gensler carved out a reputation as one of the toughest regulators within the Obama administration, and regularly pushed for the strictest versions of Dodd-Frank rules.

At the same time, Gensler brings vast experience navigating multibillion-dollar deals, and deep knowledge of the financial sector. For a campaign that is likely to raise and spend over a billion dollars between now and November 2016, that’s not insignificant.

“I thought it was brilliant,” said one financial lobbyist. “The fact that it was Gary Gensler sends a real message to everybody that she’s looking for somebody that has real credibility with the industry and with the left.”

With the campaign not yet a week old, those pushing tougher rules on Wall Street see reason for optimism in Gensler’s selection, but aren’t popping the champagne just yet.

“Who actually is at the power table? Who has not just input but influence with Hillary Clinton?” asked Dennis Kelleher, president and CEO of Better Markets. “Is Gary one of those people or not?

“It would move the dial if he had a substantive role.”

At the same time, Gensler brings decades of experience as a partner at Goldman Sachs, where he helped negotiate massive deals like television rights for the National Football League.

And with the race on for deep-pocketed donors across the political spectrum, that experience gives Gensler credibility with the financial sector that other Wall Street scolds do not.

“Gary was tough on us, absolutely,” said the lobbyist. “But Gary was also somebody who understood the market…he understood what he was doing when he did it.”

If Gensler does join Clinton’s team, the move would make perfect sense in some ways. Before leading the CFTC under President Obama, Gensler held high-ranking positions in the Treasury Department under President Bill Clinton, and has vast experience in finance from both the private and public sectors.

But both sides of the financial reform debate say the pick also is an acknowledgment by Clinton that the public still has deep doubts about the financial sector, and she will need to address those concerns if she wants to get elected.

Much has been made about the liberal push to draft Sen. Elizabeth Warren (D-Mass.) to run against Clinton. Warren, who built her reputation on blasting Wall Street, has repeatedly dismissed those calls, but that agitation is now underlying every move Clinton makes.

Since launching her campaign, Clinton has slammed CEO pay, criticized hedge fund managers for ferreting out tax breaks, and penned plaudits for Warren in Time Magazine.

“It’s a major issue on the minds of the American people,” said Kelleher. “She’s reading the polls like everybody else.”

Gensler played a key role in crafting the 2010 Dodd-Frank financial reform law. And under Gensler, the CFTC was given the massive job of implementing a new swath of rules for the first time on the multitrillion-dollar derivatives marketplace, and doing it on a budget that was a fraction of fellow regulators.

But at the time Gensler left the agency at the beginning of 2014, the CFTC had nearly wrapped up work implementing the financial overhaul, outpacing all other regulators.

By the end of 2013, the CFTC had finalized 83 percent of the rulemakings required of it by Dodd-Frank. Overall, financial regulators had finished just 53 percent of the rules, and missed statutory deadlines for another 47 percent. By comparison, the CFTC missed deadlines on just 17 percent of rulemakings under Gensler’s watch, according to the law firm Davis Polk.

And in addition to speedy work, Gensler developed a reputation as being one of the most hard-charging regulations on President Obama’s team, sometimes going so far as to bother his fellow regulators in the process.

“Gary will go down in history as the person who tried to implement the financial reform law to the fullest,” said Kelleher.

But prior to joining Obama’s team, his reputation was decidedly mixed, particularly among those skeptical of Wall Street. Gensler’s Goldman Sachs pedigree was not a perk to some Democrats leery of the financial sector, nor was his time at Bill Clinton’s Treasury Department.

Gensler’s nomination to head the CFTC was briefly held up by Sen. Bernie Sanders (I-Vt.) who objected to placing a man who supported bills exempting derivatives from regulation and allowing banks to get into investment banking while at Treasury.

Gensler was eventually easily cleared by the Senate, and Sanders is now strongly considering running for president as a liberal counterweight to Clinton. Sanders has hammered Wall Street in his remarks of late, and questioned what Clinton’s campaign platform will actually be.

Sanders’s office did not respond to a comment on Gensler’s move to Clinton’s campaign.