Elizabeth Warren has torpedoed a second economic nominee by the Obama administration for being too close to Wall Street, forcing Lazard banker Antonio Weiss to pull out of the running to become undersecretary of the Treasury.

Warren, a Democratic senator from Massachusetts, led opposition to Weiss – whom Barack Obama had nominated to fill the department’s third most important post – partly on the grounds that he had advised on so-called corporate inversion deals that would allow US firms to avoid tax.

Amid mounting concern among progressive Democrats in the Senate, Weiss has written to the White House withdrawing his interest and opting for a more junior advisory role instead.

“Mr Weiss made the request to avoid the distraction of the lengthy confirmation process that his renomination would likely entail,” said the White House spokeswoman, Jen Friedman. “We continue to believe that Mr Weiss is an extremely well-qualified individual, who is committed to the policy goals of this administration and firmly supports the administration’s policies on fostering economic growth and supporting our middle class.”

The climbdown follows a similar intervention by Warren over Obama’s initial choice of Larry Summers to succeed Ben Bernanke as chairman of the Federal Reserve, a post that eventually went to Janet Yellen instead.

It also comes amid growing signs of Warren’s influence among Democrats on Capitol Hill, where she led opposition to Wall Street deregulation contained in the budget passed at the end of last year and was recently appointed to the Senate minority leadership team.

But some Wall Street critics criticised the decision to appoint Weiss to the Treasury as a counsellor instead, a role that does not require Senate confirmation.

“Avoiding the public Senate confirmation process but nevertheless installing Mr Weiss in a very senior position at the Treasury Department is unfortunate for the American people,” said Dennis Kelleher, president and CEO of Better Markets, an independent nonprofit that promotes the public interest in the financial markets. “The country would have benefited from an open, public debate about the Wall Street-centric view that what is good for Wall Street is really good for America. Given the suffering inflicted on the American people from the 2008 financial crash, they deserved no less.”

“I do not believe that the Treasury Department would be well served by the lengthy confirmation process my renomination would likely entail,” said Weiss in the letter, which was first obtained by Politico.

Some commentators, such as the New York Times columnist Andrew Ross Sorkin, had accused Warren of unfairly attacking Weiss.

Jack Lew, the treasury secretary, said in a statement: “Given his tremendous expertise and shared passion for helping working families, I asked Antonio to join Treasury in a different role – as a counselor to me – and he accepted.

“In that role he will provide advice to me on a broad range of domestic and international issues, including financial markets, regulatory reform, job creation, and fostering broad-based economic growth.”