WASHINGTON - THE first black man elected US president is poised to name Washington lawyer Eric Holder as the nation's first black attorney general - a historic appointment but one with some potential political problems over a 2001 pardon.

Mr Holder, 57, met President-elect Barack Obama only four years ago, but the affable Bronx-born son of a Barbados immigrant quickly won a seat in the Democrat's inner circle.

If he becomes the next chief US law enforcement officer, Mr Holder similarly will try to win back the public's confidence in the Justice Department - an agency whose fiercely independent image was tarnished in recent years by Republican political meddling during the Bush administration.

'Internally, there is a morale problem the likes of which I have never seen before,' Mr Holder said in an interview late last year.

'Externally, there is a crisis of confidence that the nation has with regard to the department.'

Mr Holder's nomination is expected to be formally announced as soon as this week. He did not return messages seeking comment Tuesday, even though an Obama official and two Democrats in touch with his transition team confirmed that he is the top choice for attorney general.

Word of Holder's likely appointment surfaced while Washington was abuzz with reports that Sen Hillary Rodham Clinton, the former president's wife, was at the top of Mr Obama's list to be the next secretary of state, the top US diplomat.

Mr Obama, who ran for president on a platform of change, was raising eyebrows with his heavy focus on officials from the former Clinton administration in his transition team and his consideration of them for his Cabinet.

He has already named Mr Rahm Emanuel, a key Democrat in Congress and a top White House official under Clinton, to serve as his chief of staff.

Mrs Hillary Clinton has engaged a team of prominent lawyers to help Mr Obama vet her candidacy for secretary of state.

They are working with the Obama transition team to review information about the Clintons' background and finances, including Bill Clinton's post-presidential business deals and relationships with foreign governments.

Mr Obama also appears to have settled on Congressional Budget Office chief Peter Orszag to be his budget director, Capitol Hill Democrats said on Tuesday.

The 39-year-old CBO chief has been reluctant to leave Capitol Hill's budget agency in the middle of his four-year term but would find it virtually impossible to turn down a request from Mr Obama, they said.

The aides spoke on condition of anonymity because the Obama transition team has requested silence about internal deliberations.

Neither the Obama campaign nor Mr Orszag responded to requests for comment.

As CBO director, Mr Orszag would bring an in-depth view of the budget to Mr Obama's still unnamed economic team.

Mr Holder helped lead the team that selected Delaware Sen Joe Biden as Mr Obama's running mate.

Throughout his career as a judge, a prosecutor and a defense attorney for the prestigious law firm Covington & Burling, Mr Holder's independence rarely has been questioned.

But one of his final acts as President Bill Clinton's deputy attorney general in 2001 could come back to haunt him as he seeks Senate confirmation for the Justice Department's top job.

On the last day of Mr Clinton's term, Mr Holder told the White House he was 'neutral, leaning toward favourable' for a presidential pardon for Mr Marc Rich, a prominent Democratic Party donor and wealthy commodities dealer who had spent years running from tax charges.

It turned out to be a bad call. The pardon provoked howls of protests and a congressional investigation over whether it was politically motivated. Mr Holder later publicly apologised for what he called a snap decision and said he would have advised against it had he paid more attention to the case.

Sen Arlen Specter of Pennsylvania, top Republican on the Senate Judiciary Committee, which will vote on Mr Holder's nomination, said the pardon 'would be a factor to consider'.

'I wouldn't want to articulate it among the top items but it's worthwhile to look at,' he told reporters on Tuesday, adding that it is 'too soon for me to say' whether Holder would be a satisfactory attorney general.

With Democrats in control of the Senate, however, Holder's confirmation would be virtually assured.

Mr Holder 'would make an outstanding nominee, and should have the support of senators from both sides of the aisle if President-elect Obama were to choose him for this critical position,' said Senate Judiciary Chairman Patrick Leahy, a Vermont Democrat.

Since Mr Obama's election, Holder has privately told colleagues he is concerned the Rich pardon would bloody his nomination hearings and further strain the department's credibility. Still, he is widely respected in legal circles and among Justice Department career lawyers.

'He will immediately raise the morale and spirit of the department,' said Mr Jamie Gorelick, Mr Holder's predecessor as deputy attorney general and the one who recommended him for the job.

Some of Mr Holder's cases remain in front of the Justice Department.

Mr Holder is handling civil case negotiations for the Chiquita International Brands, which claims it was forced to agree to a plea deal and $25 million fine to avoid indictment over security payments the company made to a right-wing Colombian paramilitary group that the US government designated as a terrorist group.

Also on Tuesday, the Obama daughters got a tour of their new White House residence from Jenna and Barbara Bush.

President George W. Bush's twin daughters showed their rooms to Sasha, 7, and Malia, 10, as they toured the residential areas of the White House for about an hour with their mother, Michelle, at the invitation of first lady Laura Bush, said Ms Sally McDonough, a spokesman for Laura Bush.

Mrs Obama's mother, Ms Marian Robinson, was also with the group.

Earlier in the day, the Obama family visited top choices for schools, Michelle Obama's spokesman, Ms Katie McCormick Lelyveld said. She would not name the schools.

A small motorcade was seen outside the Sidwell Friends, a Quaker school attended by Chelsea Clinton, and the back entrance of Georgetown Day School. Both schools are private institutions.

Mr Barack Obama, meanwhile, spoke by video to Gov Arnold Schwarzenegger's international climate change summit on Tuesday in Beverly Hills, California.

'Once I take office, you can be sure that the United States will ... help lead the world toward a new era of global cooperation on climate change,' Mr Obama said. -- AP