WASHINGTON: - Mr Barack Obama has stumbled in his hitherto smooth transition to the US presidency after his choice for Commerce Secretary was forced to pull out.

New Mexico Governor Bill Richardson, a former Democratic presidential candidate and one of the country's most prominent Hispanic politicians, said on Sunday he was withdrawing owing to an investigation into a financial company doing business with his state.

Mr Richardson's withdrawal came hours before Mr Obama left Chicago for Washington to join his family at a hotel overlooking the White House and begin the final countdown before his inauguration as President on Jan 20.

After winning plaudits for a smooth transition process thus far, Mr Obama must now rapidly find a replacement for Mr Richardson on top of crafting a mammoth economic rescue Bill worth up to US$1 trillion (S$1.47 trillion) that Democrats in Congress hope to pass early next month.

In a joint statement issued with Mr Obama, Mr Richardson said he had asked the President-elect to pull his name from the Senate confirmation process with 'great sorrow'.

'But a pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks or, perhaps, even months,' he said in the statement, without going into details.

A federal grand jury in Albuquerque, New Mexico, is investigating how the company, CDR Financial Products, won lucrative contracts to advise New Mexico state authorities four years ago after donating money to Mr Richardson.

The governor insisted he had done nothing wrong, and said he would continue in his job 'for now' as the investigation into the California-based firm plays out.

Mr Obama nominated the top Hispanic politician to the Commerce Department on Dec 3, when the federal grand jury investigation into the company was already under way.

'It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet in order to avoid any delay in filling this important economic post at this critical time,' Mr Obama said.

Yesterday, the President-elect was to hold a flurry of meetings on Capitol Hill and convene his economic team - now shorn of Mr Richardson.

Mr Obama arrived in Washington on Sunday night, flying for the first time as President-elect on one of the Air Force planes used to ferry presidents and top government officials.

Before he departed from Chicago, he told reporters: 'I gotta say I choked up a little bit leaving my house today.'

He joined his wife, Michelle, and their two daughters Malia, 10, and Sasha, seven, who had flown a day earlier to the capital to prepare for the girls' new start at the exclusive Sidwell Friends School yesterday.

The family is staying at the luxury Hay-Adams Hotel, with a view of the White House, before moving to the President's official guest home, Blair House, on Jan 15.

About 100 well-wishers and two dozen Gaza-offensive protesters braved the winter chill to greet Mr Obama, many straining to catch a glimpse of him over a heavy security presence encircling the historic hotel.

Mrs Louisa Dietsch, 53, came out with her husband and their two daughters to watch the arrival of the man who on Jan 20 will be inaugurated the 44th US President and the first African-American to ever hold the post.

'We are so excited about the change in this country,' she said. 'It's 'Obama world' at our house. Hard to believe. We cry so much.'

More than 20 people gathered on the steps of a church near the Hay-Adams Hotel to protest against Israel's military incursion in Gaza. Some held candles, while others waved Palestinian flags and raised signs that read: 'Obama call for ceasefire, please,' and 'Not in our name.'

'Where is Barack Obama's voice? Has he been muzzled already?' asked protester Medea Benjamin, speaking over a microphone.

AGENCE FRANCE-PRESSE