"He is a low-key guy who prefers to surround himself with policy experts rather than television cameras," Obama said.

Obama announced his nomination in the ornate White House East Room, flanked by Lew and outgoing Treasury Secretary Timothy Geithner. The two men and their backgrounds illustrate the nation's changing economic landscape. Geithner is a longtime banking specialist with the Treasury and the Federal Reserve who took office in 2009 at the height of the nation's financial crisis. Lew has been a budget expert as the government struggled with its debt and deficit challenges.

Obama heaped praise on Geithner for addressing the Wall Street meltdown and shepherding an overhaul of financial regulations through Congress.

"When the history books are written, Tim Geithner is going to go down as one of our finest secretaries of the treasury."

Obama highlighted Lew's past work on economic policy, from his days in the 1980s as an aide to then-House Speaker Tip O'Neill to his work on the budget with President Bill Clinton.

Obama delighted in singling out Lew's loopy signature, a distended Slinky-like scrawl that captured media attention Wednesday, joking that when he became aware of it he considered "rescinding my offer to appoint him." If confirmed as treasury secretary, Lew's signature will appear on U.S. currency.

A year ago, almost to the day, Obama selected Lew as his chief of staff, taking him from his job as director of the Office of Management and Budget into the White House's tight inner circle.

In selecting Lew to replace Geithner, Obama not only picks an insider steeped in budget matters but also a tough bargainer. Some Republicans complain that Lew has been unyielding in past fiscal negotiations, particularly the failed talks for a large deficit reduction deal in the summer of 2011. Some have bristled at what they say is a greater desire by Lew to persuade them rather than negotiate.

If confirmed, Lew would assume the post in time for the administration to tangle anew with Republicans over a confluence of three looming fiscal deadlines -- raising the $16.4 trillion federal borrowing limit, averting automatic spending cuts to defense and domestic programs, and the expiration of a congressional resolution that has been keeping the government operating. Those three events, if unresolved, would have a far greater negative effect on the economy than the "fiscal cliff" that Obama and Congress avoided a week ago.

Lew, 57, has often been described as a "pragmatic liberal" who understands what it takes to make a deal even as he stands by his ideological views.

"He's a political guy. He didn't get where he is today by being a shrinking violet," said Paul Light, a public policy professor at New York University and an acquaintance of Lew's. "But he's really a doer. He's the kind of guy you want at the table if you want to get something done."

One senior Republican senator, Alabama's Jeff Sessions, voiced opposition to Lew. But while Lew may face a tough confirmation in the Senate, he's not likely to encounter the type of stiff opposition that is already mounting against former Sen. Chuck Hagel, a Nebraska Republican whom Obama has tapped to be his defense secretary.

"We need a secretary of treasury that the American people, the Congress and the world will know is up to the task of getting America on the path to prosperity ... not the path to decline," said Sessions, the top Republican on the Senate Budget Committee. "Jack Lew is not that man."

Initial reactions from the business and financial sectors, however, were far more positive.

"One of the realities of Mr. Lew's appointment is the challenges we face in the country right now -- the cliffs we have in front of us," said Thomas Donohue, the president and CEO of the U.S. Chamber of Commerce. "I think Jack is a very experienced fellow on the issues of debt, deficits and budgets."

Donohue called Lew a "skilled operative," a "vigorous and strong person," and a "tough dude."

Rob Nichols, the president and CEO of the Financial Services Forum, a major banking industry group, said: "Given his experience in the government and private sector, Mr. Lew is well-suited for the job especially at a time when Washington must come together to address our debt situation and put our nation on a long-term fiscally sustainable path."

Lew's nomination is the fourth major personnel change in the administration since Obama's re-election. Obama tapped Sen. John Kerry, D-Mass., for the State Department, Hagel to lead the Pentagon and White House counterterrorism adviser John Brennan for the CIA's top job.

Lew was a top aide in the 1980s to O'Neill, a Massachusetts Democrat, playing a role in the Social Security deal between the speaker and President Ronald Reagan in 1983.

Before becoming Obama's chief of staff, Lew was director of the Office of Management and Budget, a post he also held in the Clinton administration, serving from 1998 to early 2001. While running OMB during the Clinton administration, Lew helped negotiate a balanced budget agreement with Congress, something that has eluded Washington ever since.

But while the bulk of his experience is in Washington, Lew also worked on Wall Street as managing director and chief operating officer of Citi Global Wealth Management and then Citi Alternative Investments. At the start of the Obama administration, he oversaw international economic issues at the State Department.

Despite his stint on Wall Street, Lew doesn't have the type of experience that Geithner brought to the job at the height of the financial crisis in 2009. Indeed, there's not as much of a premium on those skills now as the nation's attention has turned from bank bailouts to fiscal confrontations and brinkmanship.

"The basic financial position and economic position of the country is much stronger today that it was four years ago," said Michael Barr, who was assistant treasury secretary for financial institutions in 2009 and 2010. "That's a significant advantage for a treasury secretary coming in."

Associated Press writers Julie Pace and Martin Crutsinger contributed to this report.