Democratic sources say that H. Rodgin Cohen, a partner in the New York law firm Sullivan & Cromwell LLP, and the leading candidate for Deputy Treasury Secretary, has withdrawn from consideration.
It's the third withdrawal of a top Treasury Department staff pick in less than a week. I reported last week that Cohen was likely to be officially nominated for the Deputy Treasury Secretary position.
Cohen has been a counsel to just about every major player on Wall Street, which perhaps complicated his nomination.
Now, the nomination is off.
Democratic sources said that an issue arose in the final stages of the vetting process.
As one source put it, "it's back to the drawing board."
Cohen had risen to the top after the withdrawal last week of expected deputy treasury secretary pick Annette Nazareth.
Nazareth was forced to withdraw from consideration for the deputy treasury slot because senators made it clear she would face tough questioning over her time at the Securities and Exchange Commission -- tenure that overlapped with the agency's failure to catch Bernie Madoff.
And the candidate for Undersecretary for International Affairs, Caroline Atkinson, was told she had to withdraw after a "tax problem" was revealed early in the vetting process, according to officials.
Last week an administration official conceded to me that "it's not easy to find qualified people who don't have conflicts" adding that "dozens of candidates" across the government have been forced to pull out because they couldn't meet President Barack Obama's ethics standards or overcome other vetting issues.
Obama administration officials have pushed back hard at critics who argue that failure to fill key Treasury Department positions is hampering their response to the economic crisis.
The administration has argued that they have more appointees in place than previous administrations and have done big things: housing, stimulus, and the beginning of their bank plans.
But with Treasury Secretary Tim Geithner struggling to contain a national economic crisis and helming a department with vital staff positions unfilled -- the latest withdrawal will give critics more ammunition.
Foreign Policy reported yesterday that Britain’s most senior civil servant, cabinet secretary Sir Gus O’Donnell, claimed it was hard to find anyone to speak to at the US Treasury Department.
He blamed the “absolute madness” of the US system where a new administration had to hire new officials from scratch, leaving a decision-making vacuum.
“There is nobody there. You cannot believe how difficult it is,” he told a conference of civil servants.
-- George Stephanopoulos
UPDATE: Sen. Lindsey Graham, R-S.C., ribbed Geithner today during his appearance before the Senate Budget Committee about the staffing issues at the Treasury Department. Here's the exchange, as reported by ABC's Matt Jaffe:
SEN. GRAHAM - If you're looking for a way to serve the country, join the Marines or go to Treasury. (Laughter.) I think they're both very difficult --
SEC. GEITHNER: I'm very glad you said that and I completely agree.
SEN. GRAHAM: -- very, very difficult assignments. But --
SEC. GEITHNER: No more important, no more noble opportunity.
SEN. GRAHAM: The few, the proud, the brave, the Treasury people. Yeah. (Laughter.) But where was I at? Oh, okay.
SEC. GEITHNER: Just don't want to say "the few."
SEN. GRAHAM: Yeah, yeah. That's right.
SEC. GEITHNER: Want to say "the many" and the proud and the brave.
SEN. GRAHAM: That's right.