(Adds comments from analysts)
By Jeff Mason and Roberta Rampton
WASHINGTON May 22 President Barack Obama will
shuffle his cabinet on Friday, nominating San Antonio Mayor
Julian Castro as secretary of housing and urban development and
naming outgoing HUD chief Shaun Donovan as his new budget
director, a White House official said on Thursday night.
The switch brings a high-profile Latino leader who is a
rising star in Democratic politics into the Obama administration
and moves a long-serving Cabinet member into the president's
inner circle at the Office of Management and Budget.
Obama was set to make the announcement at 3:35 p.m. ET (1935
GMT) at the White House, flanked by Castro and Donovan, the
White House official said.
"The President is thrilled that Secretary Donovan will take
on this next role and believes that Mayor Castro is the right
person to build on his critical work at HUD based on his work in
San Antonio," the White House official said in a statement.
Donovan will take over from Sylvia Mathews Burwell, who is
moving on to be secretary of health and human services. Burwell
is awaiting confirmation by the Senate, and both Donovan and
Castro must also be confirmed.
Donovan, 48, is highly regarded within the administration,
and is seen as a low key, competent and hard worker who does not
seek the limelight but has an eye for politics.
At OMB he is likely to be involved in talks with lawmakers
to achieve a new budget agreement to ease the impact of
automatic budget cuts known as the sequester.
"He's smart, quick, thoughtful, really knows what he's
talking about and is interested in making government programs
work better," said Robert Greenstein, head of the
Washington-based Center on Budget and Policy Priorities.
"People think he's a straight shooter," Greenstein said,
noting the trait would help Donovan in talks with Congress.
Donovan, who holds undergraduate and graduate degrees from
Harvard University, was a leader within the administration in
tackling the U.S. housing crisis, one of the triggers of the
worst economic downturn since the Great Depression.
He was a chief negotiator in the historic $25 billion
settlement reached with five of the nation's biggest banks and
49 state attorneys general to end a probe of abusive mortgage
practices stemming from the housing bust.
Shortly after his re-election, Obama appointed Donovan to
lead rebuilding efforts in areas that suffered damage by
Superstorm Sandy, which ravaged the East Coast.
"Shaun Donovan is a consummate professional, thoughtful and
analytical but also very politically aware," said Larry Summers,
a former economic adviser to Obama, through his spokeswoman. "I
expect he will make an excellent OMB director."
LAUNCHING PAD FOR CASTRO?
Castro, 39, would manage the $47 billion budget of the
housing department at a time when there is evidence of renewed
weakness in the U.S. housing market that is worrying
policymakers and private economists.
Castro, the leader of the seventh-largest city in the United
States, burst onto the national stage in 2012 when he delivered
the keynote address at the Democratic National Convention,
becoming the first Latino to do so.
The job will give Castro an opportunity to work on economic
issues that are important to lower- and middle-class Americans,
who make up a large part of the Democratic Party's political
Analysts believe the new position will raise the Texas
native's profile further and serve as a possible launching pad
for higher political office.
"This nomination will be good for Mayor Castro's political
career and national profile because it positions him for either
a future vice-presidential nomination or, in another Democratic
administration, a higher profile cabinet post," said Henry
Flores, a political science professor at St. Mary's University
in San Antonio and a friend of the Castro family.
"Either way it will give Julian the bona fides for a future
presidential run of his own," Flores said.
If confirmed, Castro would be a player in Washington's
deliberations on how to make mortgages broadly accessible while
minimizing risks to taxpayers. Officials also want to avoid
setting the course for another housing bubble.
Castro would add another Hispanic face to Obama's Cabinet
just as the party seeks to maintain its advantage with Latinos
despite a failure to pass broad reform of U.S. immigration laws
as Obama promised during his presidential campaigns.
The rapid rise of Castro and his twin brother Joaquin has
been a compelling story in Democratic politics. After growing up
in San Antonio, the two attended Stanford University and Harvard
Law School before returning to their native city. Joaquin Castro
is now a member of Congress.
(Reporting by Mark Felsenthal and Corrie MacLaggan; Editing by
Peter Cooney and Ken Wills)