Lew, an observant Jew who doesn't work on Saturday, is well-liked in Washington by both Democrats and Republicans, and well-respected by staffers at the White House, where he has served as chief of staff since January 2012.
A pragmatic liberal, Lew has also been a key player in several negotiations between the White House and Capitol Hill, including the recent talks to avert the "fiscal cliff."
If confirmed by the Senate, Lew would replace current Treasury Secretary Timothy Geithner, who plans to leave around Obama's Jan. 21 inauguration. He is expected to be easily confirmed by the Democratic-led Senate.
The sources spoke on the condition of anonymity in order to discuss the expected nomination ahead of the president.
A fresh series of economic deadlines would await Lew at the Treasury Department. The first will be the need, around the end of February, to raise the $16.4 trillion federal borrowing limit to avert a first-ever default by the government. That deadline will likely trigger a confrontation with congressional Republicans over spending cuts.
At the beginning of March, $110 billion in cuts to military and domestic programs will automatically kick in if no congressional budget deal has been reached by then. Congress and the administration postponed that issue in the fiscal cliff agreement that received final congressional passage on New Year's Day.
The third pressing deadline will occur March 27. That's when a congressional resolution that's keeping the government operating without a budget will expire. Without a new bill, the government would shut down.