President Barack Obama is expected to tap Fannie Mae Chief Executive Herb Allison to head the U.S. government's $700 billion financial rescue program, The Wall Street Journal reported, citing people familiar with the matter.

Obama could announce his intention to nominate Allison as assistant secretary for the office of financial stability as early as this week, the Journal reported on its website on Monday.

Allison's name has been on the shortlist from the beginning as the government looked for someone to run the Troubled Asset Relief Program, the Journal said.

Several factors complicated his selection, including the need to replace him at Fannie, the paper reported, citing sources.

Allison, a veteran banker and former president of Merrill Lynch, led the TIAA-Cref pension fund before being appointed Fannie Mae CEO in September.

Fannie Mae spokespersons were not immediately available for comment.

(Reporting by Anupreeta Das; Editing by Richard Chang)