Veteran regulator Mary Schapiro is to get the tricky job of restoring confidence in key US watchdog the Securities and Exchange Commission under the new Barack Obama administration.

She will also have to handle the fallout from the SEC's failure to uncover the $50 billion (£32 billion) Bernard Madoff alleged fraud that is shaping up to be the biggest swindle in US history. The president-elect is expected to announce her appointment in Chicago today.

Even before the Madoff bombshell, the SEC was under intense scrutiny for failures to protect investors amid Wall Street turmoil.

In September, its inspector general faulted the agency for failing to supervise big investment bank Bear Stearns adequately before it collapsed.

The latest blow to the SEC's name came when its chairman, Republican Christopher Cox, launched an inquiry into why his agency did nothing to investigate claims of wrongdoing by Madoff, accused of operating a pyramid scheme.

New Yorker Schapiro, 53, is chief executive of the Financial Industry Regulatory Authority, a self-regulatory body for the securities industry. Before that she was with the Commodity Futures Trading Commission. She has also served as an SEC commissioner for six years. A lawyer, she is also on the board of Duke Energy and Kraft Foods.

If confirmed, Schapiro will take over at an agency in crisis with demands for dramatic reform. For many, the Madoff scandal was the final straw in a string of failures.

In an embarrassing admission, Cox said yesterday he was concerned about the agency's failure to examine Madoff's operations, seen as something of an insider to many at the SEC as he had served as an adviser on regulatory issues.

Madoff's activities were flagged at least as early as 1999 and repeatedly brought to the attention of SEC staff, but they never recommended that commissioners take action.