WASHINGTON, June 13 (Reuters) - U.S. President Joe Biden

will nominate Christy Goldsmith Romero, a Democratic member of

the Commodity Futures Trading Commission (CFTC), to replace

Martin Gruenberg as chair of the Federal Deposit Insurance

Corporation, the White House said on Thursday.

Gruenberg, a Democrat, said in May he would step down once a

successor is confirmed by the Senate, succumbing to pressure

from lawmakers who said the bank regulator needed fresh

leadership after an investigation found widespread sexual

harassment and other misconduct at the agency.

Goldsmith Romero, 53, has a background in enforcement and

has led major actions against Wall Street banks and other

financial firms during her career. She joined the CFTC in March

2022 after a decade investigating financial crime and fraud as

the watchdog of a key 2009 financial crisis bailout program.

During her tenure as Special Inspector General for the

Troubled Asset Relief Program (SIGTARP) from 2012 to 2022,

Goldsmith Romero's office brought cases and cooperated in

federal enforcement actions against major corporations,

including Goldman Sachs ( GS ), Morgan Stanley ( MS ) and

General Motors ( GM ).

Goldsmith Romero also received awards from the U.S. Attorney

General and Department of Justice's Criminal Division after her

office uncovered a multibillion-dollar fraud, leading to jail

terms for former executives at the former mortgage lender

Taylor, Bean & Whitaker and the failed Colonial Bank.

In progressive circles, she is seen as a strong fit for the

FDIC role and as having the management experience and skill set

necessary to help fix the agency's "toxic" environment, as the

investigation described the FDIC, and address other challenges.

The FDIC is also grappling with the fallout of last year's

bank failures, which exposed supervisory weaknesses at the

regulator, and is trying to finalize a handful of contentious

new rules for Wall Street banks, including major capital hikes.

Goldsmith Romero's nomination, a process that usually takes

months, comes at a precarious time politically, just five months

ahead of the November general election.

A number of Senate Democrats are up for re-election in

narrow races, including Sherrod Brown who chairs the Banking

Committee that must advance the FDIC nominee, making a

potentially contentious confirmation process difficult to

navigate. Democrats control the Senate by a single vote.

"Getting a nominee through the Senate in the summer of a

presidential election year is always an uphill battle, but the

toxic politics and compressed timing make this forthcoming

nomination a sprint up Mount Everest," said Tyler Gellasch, CEO

of Healthy Markets Association in Washington, a non profit

focused on financial markets.

GUILTY ADMISSIONS

As a CFTC commissioner, Goldsmith Romero has advocated for

stronger policing of U.S. markets and stiffer penalties for

misconduct.

Most notably, she has pushed for the agency to secure more

admissions of wrongdoing from companies when settling

enforcement actions, particularly from repeat offenders.

"We've seen Wall Street banks get one enforcement action

after another ... so I'm looking for a greater deterrent

impact," she told Reuters in a 2022 interview.

That campaign was evidenced by a recent CFTC settlement

with JPMorgan Chase ( JPM ), in which the bank admitted it broke

the agency's rules.

She has also led the agency's efforts to better

understand the potential impact of artificial intelligence on

financial markets.

Prior to being appointed SIGTARP, Goldsmith Romero was

counsel to then U.S. Securities and Exchange Commission chairs

Mary Schapiro and Christopher Cox and had investigated

securities law violations.

She started her career as a law clerk at the U.S. Bankruptcy

Court in Nevada after graduating from Brigham Young University

Law School in 1995.

(Additional reporting by Pete Schroeder; editing by Michelle

Price and Rod Nickel)