James' most likely successor is seen by Blackstone investment staff to be Jonathan Gray, the global head of Blackstone's real estate team. But the sources stressed head of private equity Joseph Baratta, head of credit investments Bennett Goodman, and head of tactical opportunities David Blitzer are also in contention. Blackstone declined to comment on their behalf.
It would be controversial for any Democrat President to appoint someone who has been so integral to Wall Street's buyout industry to the most senior finance job. The private equity industry, which is epitomized by Blackstone, has often come under fire for the low tax rates on profits that its partners like James pay under the current tax system. Buyout firms are also often criticized for cost cutting, including making layoffs, at some companies they take over.
Friends and former colleagues of James said that it would be a waste for any U.S. administration to ignore his talent given his track record of developing successful businesses and his understanding of the financial system.
"Tony James would succeed in anything you put in front of him," said Ken Moelis, CEO of investment bank Moelis & Co . Moelis was a former colleague of James at Donaldson, Lufkin & Jenrette and has kept in touch with him.
Other interests James will pursue once he steps down include charitable work and environmental causes, one of the sources said. He sits on the board of trustees of New York's Metropolitan Museum of Art and on the board of Costco Wholesale Corp, and would consider other corporate directorships, that person added.
James is likely to continue to be involved with Blackstone in some capacity once he steps down, the sources said. James has a net worth of $1.7 billion, according to Forbes. More than $1.5 billion of that is the value of his Blackstone shares.
He has been one of Obama's most loyal backers on Wall Street, hosting fundraisers for him at his home and providing a counterweight to Schwarzman's Republican allegiances.
James has met Clinton less than ten times, one of the sources said. James meets occasionally with Thomas Nides, a Morgan Stanley veteran who served Clinton in the State Department between 2011 and 2013 as deputy secretary and has historically been one of her closest connections with Wall Street. James worked with Nides when they were both at Credit Suisse Group AG. A Morgan Stanley spokewoman conveyed a request for comment to Nides, but offered no immediate comment.
Even if James does not get an official government role, he will likely continue to try to affect policy through think tanks such as the Center for American Progress, on whose board he sits, and through his connections with political insiders, the sources said.