By Douwe Miedema

WASHINGTON, Nov 7 (Reuters) - Timothy Massad, the Treasury official who leads the U.S. bank bailout program, is about to be selected as the new chair of the country's derivatives regulator, a source familiar with the matter said.

In nominating Massad as chairman of the Commodity Futures Trading Commission, President Barack Obama would pick someone who has earned his spurs during the 2007-09 financial crisis as head of the $700 billion Troubled Asset Relief Program.

The nomination would be a last-minute solution to avoid a leadership vacuum at the CFTC, which saw its powers vastly expanded after the crisis, when it was put in charge of the $630 trillion swaps market.

The Treasury declined comment. The White House did not immediately return a request for comment. If nominated, Massad would still need to be confirmed by Congress.

Chairman Gary Gensler's term at the agency finishes on Jan. 3 of next year, but the agency still faces a big task in finishing many of the rules under the 2010 Dodd-Frank act to reform Wall Street's investment banks.

An earlier contender for the job, Amanda Renteria, a former chief of staff for Senator Debbie Stabenow, the head of the Senate Agriculture Committee, withdrew her name in July, saying she was returning to California.

The last-minute search risked leaving the CFTC rudderless just as it starts overseeing vast new markets and is rushing to write crucial new regulations such as the Volcker rule, which bars banks from gambling with their own money.

The Treasury said last month that Massad would leave his post later this fall, although without elaborating. Because he is already in a senior government position, lobbyists said at the time that any vetting process could move quickly.

Massad was a partner at New York-based law firm Cravath, Swaine & Moore LLP for 17 years. While on leave from the firm in late 2008 and early 2009, he was also a special legal adviser to a congressional panel on economic stability.

He joined the Treasury in May 2009 as the chief counsel for the Office of Financial Stability.

Massad took over the TARP program three years ago, and has been working most recently to unwind investments the Treasury made during the financial crisis.

TARP, enacted in October 2008, was used to prevent a collapse of the U.S. financial system. It injected capital into hundreds of banks, including Goldman Sachs Group Inc, Citigroup Inc and Bank of America Corp and was used to bailout insurer American International Group Inc .

Obama was also expected to soon fill another top role at the agency, lobbyists and other agency watchers said this week, after Democratic Commissioner Bart Chilton unexpectedly announced his departure at a meeting this week.