UPDATE 1-Obama eyeing Fed's Raskin for No. 2 post at Treasury -source
* Current Treasury deputy Wolin to depart at end of August
* Raskin would bring bank regulatory background to Treasury
* Departure from Fed would create second vacancy on board
WASHINGTON, July 23 (Reuters) - President Barack Obama is considering nominating Federal Reserve Governor Sarah Bloom Raskin to replace the U.S. Treasury Department's No. 2 official, Neal Wolin, a source familiar with the matter said on Tuesday.
Raskin, a former state banking regulator, has served on the U.S. central bank's board since October 2010. She would bring bank regulatory experience to the job to complement the budgetary expertise of Treasury Secretary Jack Lew.
The source said Raskin, 52, appeared to be a leading candidate to replace Wolin, one of the Obama administration's point people on financial regulatory reform. The White House said it had no personnel announcements to make and the Fed declined to comment. Bloomberg reported on Monday that the White House was considering Raskin.
The Treasury on Tuesday announced that Wolin would step down from his post at the end of next month after more than four years in the job.
Wolin, 51, has been a key behind-the-curtains figure during his tenure, best known for helping lead the push for the Dodd-Frank financial reform law and for overseeing implementation of the new rules it put in place. He has yet to announce his future plans.
"Neal has played a key role on my economic team," President Barack Obama said in a statement. "His deep knowledge and excellent judgment helped us prevent a second Great Depression, pass tough new Wall Street reform, strengthen our financial system, foster growth here at home, and promote economic development around the world."
Raskin's prior Senate confirmation to the Fed and her earlier work as an aide to the Senate Banking Committee could help smooth her confirmation if Obama nominates her.
If Raskin moves to the Treasury Department, it would open a second vacancy on the seven-person Fed board. Fed Governor Elizabeth Duke, another banking expert, said earlier this month that she was stepping down on Aug. 31.
Two vacancies would allow Obama to potentially package a slate of nominees in way that would be politically palatable to the closely divided Senate, which would need to confirm them.
To fill the previous two vacancies, Obama selected one Republican and one Democrat.
Fed Chairman Ben Bernanke also is widely expected to step down when his four-year term expires on Jan. 31, which would give Obama additional latitude to shape the U.S. central bank.
Raskin has been outspoken at the Fed about the need for mortgage servicers to move quickly to fix problems in their businesses, including illegal foreclosure practices, such as the so-called robo-signing of loan documents. Mortgage servicers, many of which are large banks, collect home loan payments and manage foreclosures.
She expressed an openness to requiring these banks to write down loan principal for some borrowers as part of any regulatory enforcement action to remedy the industry's abuses.
Raskin voted against the proposed implementation of the Volcker Rule, which bans proprietary trading but allows exceptions for hedging and market-making, arguing it was not tough enough.
"I was concerned that the guard rails as crafted could be subject to significant abuse - abuse that would be very hard for even the best supervisors to catch," she said in a speech in July 2012.
Raskin has consistently supported the central bank's policy of low interest rates and large-scale bond-buying, both of which are meant to spur investment, hiring and broader economic growth in the wake of the 2007-2009 recession.
Prior to serving on the Fed board, Raskin was a managing director at the Promontory Financial Group. She also served as the banking counsel for the U.S. Senate Banking Committee. Earlier in her career, she worked at the Federal Reserve Bank of New York and the Joint Economic Committee of the Congress.