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What Wall Street should expect from the next AG

U.S. Department of Justice building in Washington
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U.S. Department of Justice building in Washington

Wall Street hates nothing more than uncertainty and that's exactly what it's facing as President Barack Obama considers possible replacements for outgoing Attorney General Eric Holder.

Holder was hardly the scourge of Wall Street. In fact, he came under heavy criticism from the White House political staff in 2012 for failing to sate populist hunger for prosecutions of big bank CEOs and banks themselves in the wake of the financial crisis. But he was an ardent advocate of civil suits against banks in ways that analysts often cite as among the bigger impediments to mortgage credit expansion.

So the next attorney general's approach to this type of litigation, as well as their general stance toward criminal prosecution in the financial sector, matters a great deal to the banking industry and bank investors as well as the broader economy.

The conventional wisdom is that Obama, whose leanings tend toward anti-bank populism, will select someone whose approach will not differ very much from Holder's.

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"Our view is that the odds favor the president picking someone who will pick up where Holder left off in pursuing the big banks as the president has never given an indication that he thought the Justice Department had gone too far," Guggenheim Securities analyst Jaret Seiberg wrote in a client note.

One Republican attorney suggested to this columnist that former prosecutor Mary Jo White, who now heads the Securities and Exchange Commission, would be a possibility because she would likely not face heavy GOP opposition.

But if Obama seeks to confirm a successor during the post-election lame duck session of Congress he won't need Republican support. And White appeared on few of the short lists in stories on Thursday about Holder's departure.

Our Politico colleague Glenn Thrush cited Massachusetts Gov. Deval Patrick, former head of the civil rights division under President Bill Clinton as a possibility. But Patrick reiterated yesterday that he is not interested in the job. Saying you don't want a big administration job does not always mean you don't end up taking it. But it seems more likely than not that Patrick will successfully fend off West Wing entreaties.

Thrush also cited Solicitor General Donald Verrilli Jr. as an Obama favorite who could have an inside track along with former White House counsel Kathryn Ruemmler. Another possible candidate: California Attorney General Kamala Harris. But Harris may prefer to stay in California and run for governor.

Another name on the list that might scare Wall Street: Manhattan U.S. Attorney Preet Bharara, who would fit Obama's desire for an aggressive approach to financial prosecutions. Bharara is a long shot, however, as he is not as deeply well known to a White House that generally prefers trusted insiders. Another dark horse: former Homeland Security Secretary Janet Napolitano. Napolitano is not known for a focus on financial crime so the banking industry might welcome her long-shot nomination.

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Wall Street won't have too long to wait as the White House will want to send its nominee to the Judiciary Committee in time for consideration in late November and then a full Senate confirmation vote in December. That would require only 50 of 55 Democrats to support the nominee, as the party changed the rules that formerly required 60-plus votes on presidential nominees (the so-called "nuclear option").

The short process limits the White House's ability to range very far afield in its search or vet candidates that don't already have well-known records. There simply isn't time to open a whole new file on someone. White House officials will want to draw on people already vetted for other jobs. White would fit that bill, as would Verrilli and Napolitano. Verrilli's big negative is progressive dissatisfaction with how he argued the Obamacare case before the Supreme Court. But that is probably not enough to knock him off the top of the list unless the drumbeat gets as loud as it did when Obama wanted to nominate Larry Summers as Federal Reserve chair.

The bottom line for Wall Street is that the choices it fears most, White and Bharara, seem likely fairly long shots. But it's not impossible that one of them gets the nod. But Obama's tendency towards bank-bashing populism is often more than tempered by his more cautious instincts and desire to get a nominee he already knows well confirmed very quickly.

—By Ben White. White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.