Two top contenders for senior posts at the U.S. Treasury have withdrawn, people familiar with the moves said on Thursday, dealing a blow to Treasury Secretary Timothy Geithner's efforts to build his staff to fight the financial crisis.
Former Securities and Exchange Commissioner Annette Nazareth withdrew from consideration to become deputy Treasury secretary for personal reasons to remain in her private securities law practice, one of the sources said.
Caroline Atkinson, Geithner's choice for international affairs undersecretary, also has withdrawn. Atkinson, a senior official at the International Monetary Fund, has decided to remain at the institution, a person familiar with the decision said.
Both Nazareth and Atkinson had been vetted for the jobs but were not formally nominated for U.S. Senate confirmation.
The withdrawals come as Geithner is trying to boost market confidence in the Obama administration's ability to battle the worst financial crisis since the Great Depression.
He is working with a close circle of advisers and civil servants to craft new bailouts and flesh out details of an effort to purchase troubled assets from banks as financial stocks are back under attack.
Nazareth and Atkinson could not immediately be reached for comment. Treasury spokesman Isaac Baker declined to comment on specific nominations, but said the department was still ahead of recent previous administrations in filling jobs, with over 50 political appointees at work.
In just weeks since taking office and inheriting the worst economic crisis in generations, we have taken an unprecedented level of action to strengthen our economy -- from passing a recovery bill to crafting a framework for financial stability to implementing a plan to keep millions of Americans in their homes, Baker said in a statement. Any rumors of vetting problems or delays in the process are simply not true.
Geithner told the Senate Finance Committee on Wednesday that the Treasury was making some progress on nominations.
We hope to come before the committee soon with a full slate of very strong people. We're doing this carefully, as you would expect, to try to make sure we have the best talent in the country, he said .
The Obama administration's vetting process for nominations has tightened considerably since a number of candidates for key cabinet jobs were forced to withdraw over tax and other issues.
Geithner himself faced tough questioning over his own underpayment of self-employment taxes earlier this decade before winning Senate confirmation in late January.
One of the sources said the vetting process, while lengthy, was not a major consideration in Nazareth's decision.
She was honored to be considered for the position. She enjoys what she is doing now in terms of working with her clients, a second source said. She concluded that it was the right decision for her and her family to remain in private practice.
After a decade at the Securities and Exchange Commission, Nazareth joined the law firm of Davis, Polk and Wardwell in September 2008. She has worked for a number of Wall Street investment banks, including Lehman Brothers.
The Wall Street Journal cited concerns in Congress about Nazareth's previous role at the SEC in which she had responsibility for investment bank oversight.
Before becoming a commissioner in 2005, she helped create a new division charged with voluntary oversight of what were then the major Wall Street investment banks. But this was at a time when some of these institutions were piling up massive portfolios of risky assets that eventually brought them to their knees.
The division was shut down in 2008 after Lehman collapsed, Merrill Lynch was sold and Goldman Sachs and Morgan Stanley were transformed into bank holding companies supervised by the Federal Reserve.
(Additional reporting by Tim Ahmann and Lesley Wroughton; Writing by David Lawder; Editing by Gary Hill)