This article is more than 9 years old

This article is more than 9 years old

Barack Obama has begun a major overhaul of his inner circle, lending the White House a more business-friendly face with the appointment of an outsider banker, William Daley, as his chief of staff.

Daley continues the heavy Chicago bent of Obama's White House. He is the son of the late Richard Daley, who was mayor of Chicago for two decades, and brother of the even longer-serving outgoing current mayor of Chicago, also Richard.

But Daley marks a change of tack after Obama's first two years in office because of his considerable Wall Street experience.

He will form the crux of Obama's reformed operation, or Obama 2.0 as it has been dubbed, which now faces an angry and resurgent Republican party.

Announcing the appointment today , Obama described Daley as "an experienced public servant, a patriot, my friend and fellow Chicagoan". Daley repaid the compliment by promising the president that "this team will not let you down or the nation".

The new chief of staff has for the past seven years been a senior executive at JP Morgan Chase, and before that worked for a hedge fund and in telecoms. He straddles the business-politics divide, having been Bill Clinton's commerce secretary for three years from 1997 and managing Al Gore's failed bid for the presidency in 2000.

Daley's appointment was being seen as a signal of Obama's intention to change political direction following the drubbing he received in the mid-term elections last November. Daley comes from the moderate centre of the Democratic party and has criticised the leftward swing of the party for losing the confidence of many Americans.

"Either we plot a more moderate, centrist course, or risk electoral disaster," he wrote in the Washington Post a year ago.

Daley also indicates a new willingness on the president's part to step outside his comfort zone in terms of top advisers. There has been mounting criticism that Obama's team is too inward looking.

Earlier this week the former Democratic national committee chairman Howard Dean complained of a "mindset" among the administration's senior advisers that "they knew everything and we knew nothing".

Unlike many in the previous inner circle, Daley is not close to the president personally. "Obama was never a Daley person in Chicago, so this alliance is something new," said Sidney Blumenthal, who worked with Daley in the Clinton administration.

Former Clinton aides make up another important theme of Obama 2.0. In addition to Daley, Gene Sperling is expected to be announced as head of the National Economic Council tomorrow today, a job he did for Clinton between 1996 and 2000.

The choice of Clinton people may not be coincidental, as Obama is facing the same challenges that his Democratic predecessor in the White House did in working with a hostile Republican congress.

The chief of staff is the most high profile of a number of posts to be filled by Obama as he works his way through a post mid-term election round of musical chairs.

Pete Rouse, who has been standing in as acting chief of staff for the past few months following the departure of Rahm Emanuel, will become a senior adviser to Obama. Underlying the circularity of Obama's Washington, Emanuel quit the White House to run for Daley's brother's job as mayor of Chicago.

David Plouffe, who was a leading figure in Obama's 2008 presidential campaign, will join the White House on Monday to take over from David Axelrod, who is returning to Chicago to spearhead Obama's re-election bid in 2012.

The other sensitive post remaining to be filled is that of White House press secretary. Robert Gibbs this week announced he would leave the post next month.