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WASHINGTON (Reuters) - President Barack Obama on Thursday named JPMorgan Chase executive William Daley as his chief of staff, bringing a politically seasoned businessman into the White House to help trigger job growth as he grapples with resurgent Republicans.
Obama said he hoped Daley would help energize the economy. Reducing America's 9.8 percent jobless rate is Obama's biggest challenge ahead of his 2012 re-election bid.
"He possesses a deep understanding of how jobs are created and how to grow our economy," Obama said at the White House.
Daley, 62, whose appointment was welcomed by the business community, was President Bill Clinton's commerce secretary and campaign manager for then-Vice President Al Gore in his 2000 presidential campaign.
By picking Daley to lead White House efforts to carry out his agenda, Obama brings in a manager who was not part of his original inner circle and has deep experience in both business and government. "This team will not let you down, or the nation," Daley said.
After leaving the Clinton administration, Daley was president of SBC Communications and more recently he had has been responsible for operations in the Midwest for JPMorgan Chase.
Obama had been urged by some Democratic officials to bring in fresh thinking in response to the Republican rout of Democrats in the November 3 congressional elections.
Obama joked that Daley has a "smidgen of awareness" of how the political system works.
Current chief of staff Pete Rouse, a long-time Obama adviser who relishes a behind-the-scenes role, is being moved to the senior advisory position of counselor to the president.
William Galston, an economist who was a domestic policy adviser to Clinton, said Daley should help Obama repair frayed relations with the business community, which has complained that Obama's policies hurt job creation.
"He has excellent connections with the business community and I think will be a very credible and reassuring bridge to them as the Obama administration tries to reset relations with them," Galston said.
"This is a strong appointment," said Thomas Donohue, president of the Chamber of Commerce, a lobby group that says it represents more than 3 million businesses. "Bill Daley is a man of stature and extraordinary experience in government, business, trade negotiations, and global affairs."
The choice draws on Obama's Chicago background. Daley is the brother of Chicago Mayor Richard M. Daley and son of Richard J. Daley, the city's mayor from 1955 through 1976.
Daley's selection, along with the expected naming of Treasury official Gene Sperling as a senior economic adviser, would mean a return to the White House of experienced hands from their days working for Clinton, who presided over a growing economy in the 1990s.
Obama is reshaping his White House staff to prepare for the next two years of divided government -- with Republicans now in control of the U.S. House of Representatives -- and lay the groundwork for his re-election campaign.
Daley was involved in Clinton's tough negotiations over the 1994 North American Free Trade Agreement, which was opposed by organized labor and many Democrats, and China's effort to gain most-favored-nation trading status.
AFL-CIO President Richard Trumka said Obama is entitled to choose a chief of staff in whom he has complete confidence but will "ultimately be judged by results -- whether the economy recovers robustly and begins to generate good jobs on the scale needed to improve the lives of working people."
Marshall Front, founder and chairman of Chicago-based investment firm Front Barnett Associates LLC, which owns bank stocks, said he hoped Daley's appointment could ease frictions with the corporate world.
Rouse became interim chief of staff when Rahm Emanuel resigned last year to run for Chicago mayor. White House spokesman Robert Gibbs said it Rouse who had suggested Daley to be chief of staff.
Obama is expected to announce on Friday the members of his new economic team, including the expected naming of Sperling as chief of the National Economic Council.
Additional reporting by Andrew Stern in Chicago, Maria Aspan in New York and Matt Spetalnick, Jeff Mason, Alister Bull, Patricia Zengerle and Caren Bohan in Washington; Editing by Bill Trott