Jan. 30 (Bloomberg) -- President Barack Obama will keep Republican John Dugan, chief supervisor of national banks, on the job for another year as the administration grapples with the worst financial crisis since the Great Depression, two people familiar with the decision said.

Dugan, who heads the U.S. Treasury’s Office of the Comptroller of the Currency, has been involved in the policy decisions to rescue the nation’s banks. His agency oversees the banks of institutions including Citigroup Inc. and Bank of America Corp. His term expires in August 2010.

OCC spokesman Kevin Mukri declined to comment.

Dugan, 53, participated in discussions this week with Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Timothy Geithner and Federal Deposit Insurance Corp. Chairman Sheila Bair on reshaping the administration’s approach to the $700 billion bank bailout. Obama has decided to keep Bair, House Financial Services Committee Chairman Barney Frank has said.

While details could change, the bank-rescue initiative is likely to feature an aggressive effort to remove toxic assets clogging lenders’ balance sheets. The FDIC will probably run a so-called bad bank to buy some of the underwater securities; others will be insured by the government against losses but remain on lenders’ books. In addition, another round of capital injections for the biggest banks is planned.

The Obama economic team also has said it will spend $50 billion to $100 billion to help homeowners facing foreclosure, and will provide aid to cities unable to borrow money.

Geithner, speaking to reporters this week, said the administration is “putting together a comprehensive plan for helping repair the financial system.”

Dugan, appointed by President George W. Bush, was sworn into office in August 2005. He was a partner at the law firm Covington & Burling in Washington, where he led the financial institutions group and specialized in banking regulation.

He served at the Treasury Department from 1989 to 1993, including an appointment as assistant secretary for domestic finance in 1992. He also has served as counsel for the U.S. Senate Banking Committee.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

Last Updated: January 30, 2009 20:03 EST