Here is a NY Times report. Here is a statement from President Obama. Here is Craig’s letter of resignation, effective Jan. 3.
I have known Bob for many years and I have the greatest respect for him. He is one of the smartest people I know, with an apparently unlimited supply of energy and intellectual curiosity. His is also passionate about the principles in which he believes and loyal to his friends. The country is stronger to have him serving. Good luck Bob!
UPDATE: Marc Ambinder gets these quotes from a “senior administration official”:

“Bob’s expertise in election law isn’t just relevant so we can write great briefs in litigation. As we enter 2010, having clear rules of the road on what the White House and its staff can and cannot do to help Democratic candidates will become a critical aspect of the White House Counsel’s job — and there’s no lawyer in America who knows that better than Bob,” a senior administration official said. “Such skill is even more critical as we approach 2012 — and — here’s the wild card — if the Supreme Court does major violence to the campaign finance regulation regime (as most observers expect by June), then deciding how to try to rewrite those laws, or what to do in the wild west regime that will replace current law, will be a critical task. And who better to have on point than Bob Bauer.”