Schapiro is currently the head of the Financial Industry Regulatory Authority, the largest non-governmental regulator for securities firms doing business with the public. Before that, she served as chairman of the Commodities Futures Trading Commission and six years as a member of the SEC.
The SEC has been criticized in recent months for failing to detect signs that major Wall Street banks were in trouble. The financial losses suffered by lending institutions have played a significant role in the current economic crisis.
In addition, llinois Rep. Ray LaHood, a moderate Republican who often criticized President Bush and conservative party leaders, will be nominated by Obama for transportation secretary.
LaHood, elected in 1994, did not seek re-election in 2008. If confirmed, LaHood would be the second Republican to serve in Obama's Cabinet. President Bush's Defense Secretary Robert Gates has agreed to remain at the Pentagon at Obama's request.
Meanwhile, Michigan Gov. Jennifer Granholm originally sought the position of energy secretary to oversee the department's new investment in fuel-efficient vehicles but is now being eyed as the labor secretary. Granholm lost the energy post to Steven Chu, a Nobel Prize-winning physicist with vast scientific and technical skills -- but little management or political history.
Democrats are eyeing Obama's selection for labor secretary nominee as a key sign of his support for big labor and passage of the so-called Employee Free Choice Act, otherwise known as the card-check bill.
The card-check bill, which would do away with secret ballot elections for the purpose of union organizing, is big labor's top legislative priority in 2009, and massive advertising and lobbying campaigns are now being constructed by blue-collar and service employee unions to push the issue early in an Obama presidency. The Obama White House will have to decide how hard it wants to push for card check in the early days of the administration -- losing the bill to a virtually guaranteed Senate Republican filibuster could deal Obama an early and possibly embarrassing political setback.
Dean and Obama are not particularly close. Obama's campaign moved many DNC functions to Chicago for the general election and did not turn to Dean as a regular surrogate during the campaign. Dean made a bid for secretary of Health and Human Services, but lost out to former Senate Majority Leader Tom Daschle.
Mary Beth Maxwell, the founding executive of the pro-labor group American Rights at Work, is also under consideration. Democrats say former Rep. David Bonior, who managed John Edwards' failed presidential campaign, is pushing Maxwell as an aggressive union advocate.
Democrats say her appointment, however, would send a chilling signal to the business community which has to date not been alarmed by Obama's economic appointments.
Obama will apparently not select a Republican for the labor post.
When President Bush took office, he appointed California Democratic Rep. Norm Minetta as transportation secretary, a move meant to exhibit his bipartisan tendencies. By Obama selecting LaHood it may cement the position of transportation secretary as an outpost for bipartisanship, sources said.
FOX New's Major Garrett and the Associated Press contributed to this report.