"She understands the needs of small business owners like herself. She knows how they can lift entire communities, and ultimately how they lift our country," Obama said in making the announcement at the White House.

She is the second Hispanic nominated to Obama's second-term cabinet after Labor Secretary Tom Perez.

Contreras-Sweet founded ProAmerica Bank, a Latino-owned community bank in Los Angeles, which focuses on lending to small- and medium-sized Latino businesses.

"Maria knows how hard it is to get started on a business, the grueling hours, the stress, the occasional self-doubt - although I have not yet seen self-doubt out of Maria," Obama said.

The Mexican-born Contreras-Sweet was California's secretary of business, transportation and housing in the Democratic administration of Gray Davis. She immigrated to the United States as a child.