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 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 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.
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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 base.
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)
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