CLINTON ON ROAD TO STATE DEPT.

President-elect Barack Obama has settled on former rival Hillary Rodham Clinton to be secretary of State, following a high-stakes courtship that is expected to lead to a formal announcement after the Thanksgiving holiday, aides to both said.

After an extensive examination of her husband’s complicated financial dealings, the Obama transition team is satisfied that the nomination will not pose any conflicts of interest, an aide to the president-elect said.

On her end, Clinton is ready to give up her Senate seat and become the nation’s top diplomat, friends and advisors said Friday. They added that she had not yet accepted the job.

The developments came amid leaks Friday that Obama was close to naming other members of his Cabinet, among them New Mexico Gov. Bill Richardson for Commerce secretary and Arizona Gov. Janet Napolitano for Homeland Security, both Democrats.

As recently as a few days ago, Clinton was prepared to return to her role as the junior senator from New York. Democrats in the Senate considered creating a new leadership position for Clinton in recognition of her stature within the party.

Obama’s overture surprised her, colleagues said. The two met face to face Nov. 13 in Chicago.

Sen. Barbara Boxer (D-Calif.) said she had spoken privately with Clinton about the Cabinet prospect during a Democratic organizational meeting Tuesday in the old Senate chamber.

“I kept saying I thought it was such a good fit for her,” Boxer recalled. “And she said: ‘I just wasn’t thinking about this. This wasn’t in my mind.’ She was a bit thrown off by it. My strong impression was she really didn’t expect it. She was planning her role in the Senate. Hillary is a very thoughtful person, and I could see she was really thinking it through.”

The Obama transition team and Clinton’s Senate office both said the nomination was “on track.”

Richardson, who abandoned his own presidential candidacy in January, and Sen. John F. Kerry of Massachusetts, the Democratic presidential nominee in 2004, have also been mentioned as possible candidates for the job.

After a blistering presidential primary campaign, bringing Clinton into Obama’s circle was a feat of diplomacy in itself. The two had competed hard for the nomination, with loyalists trading tough charges.

In March, Obama’s team put out a memo challenging Clinton’s foreign policy credentials. Gregory Craig, who worked in President Clinton’s State Department, wrote that as first lady she “did not do any heavy lifting with foreign governments, whether they were friendly or not. She never managed a foreign policy crisis, and there is no evidence to suggest that she participated in the decision-making that occurred in connection with any such crisis.”

Obama recently named Craig to the post of White House counsel.

Obama and Clinton also have represented different factions in the party. He was favored by better-educated, wealthier voters; she was the hero of many women and blue-collar workers.

For Clinton and Obama to have gotten to this point testifies to their political maturity, Boxer said.

“If this were to happen, it’s a wonderful signal about our president-elect and also shows that Hillary is willing to forgive and forget too,” the California senator said. “There’s no question the campaign was tough. It was very tough. It says a lot about Barack Obama that he’s willing to put it aside.”

One obstacle to the appointment was Bill Clinton’s finances. The former president has made a fortune delivering speeches around the world, while taking in hundreds of millions of dollars from anonymous donors for his private foundation and library. Some of the money has come from foreign sources, including a $10-million gift from the Saudi royal family.

During the campaign, Obama released a memo stating that the secrecy surrounding the donors showed that Sen. Clinton, despite her years in public life, had not yet been fully vetted and had a “history of misleading voters.”

To clear a path for his wife’s appointment, Bill Clinton agreed to several concessions: He gave the Obama team the names of more than 200,000 donors to his foundation and library; he agreed to clear any future paid speeches with the White House and State Department; and he said he would distance himself from his foundation.

An Obama aide said Friday that the “financial disclosure issues have been worked out.” And an aide to Bill Clinton aide: “If she does not do it, it won’t be because of my boss.”

Some Democrats doubt that the alliance can work, or that it will avoid controversy. Obama is famously averse to drama; the Clintons have proved to be drama magnets. The pairing could prove awkward, in part because Bill Clinton is a prominent world figure in his own right.

“He is a former president,” said Donald Fowler, a Democratic National Committee chairman during the Clinton administration. “I just don’t know how you’d expect someone that smart, with that many thoughts on that many subjects, to hold his peace.”

Fowler added that Sen. Clinton is “a brilliant woman, and she’d make a great secretary of State. It’s just a thicket, it seems to me.”

Friends said the job was an irresistible one for Clinton, whereas the Senate may have lost some of its allure for her. Elected relatively recently -- in 2000 -- she is stuck in a system that prizes seniority, forcing her to wait for coveted committee chairmanships.

At the State Department, one of her projects is expected to be women’s rights, a topic she discussed throughout the presidential campaign.

In an appearance in Beijing in 1995, she gave a speech in which she famously declared that “women’s rights are human rights.”

Jill Iscol, a longtime Clinton friend and fundraiser, said: “Hillary has traveled throughout the world and is known by world leaders. Women activists worship her.”

The selection of Clinton for the State Department prompted Latino groups to ask Obama to consider the ethnic makeup of his Cabinet.

Richardson, who is Latino, had hoped for the State job, a Democrat close to him said. He is now a top choice for Commerce secretary, a member of Obama’s circle said.

Rep. Raul M. Grijalva (D-Ariz.) surfaced Friday as a possible candidate for secretary of the Interior.

“Everybody’s hope in the Latino community was to see Gov. Richardson as secretary of State,” said Janet Murguia, president and chief executive of the National Council of La Raza, the country’s largest Latino civil rights and advocacy organization.

“Obviously, we felt like he was eminently qualified.”

Though Clinton would be an “excellent” secretary of State, Murguia said, Latino activists want to see Richardson installed in an important Cabinet position, and want to see several Latino candidates -- Grijalva and others -- considered for other positions.

“We’ve got qualified Hispanic candidates who could fill any Cabinet role,” she said. “Giving them due consideration is only right.”

A Democrat close to Richardson brushed aside talk of the Commerce slot, at the same time acknowledging Richardson’s interest in a Cabinet position: “Richardson’s interested in being secretary of State. Until that’s resolved, he doesn’t want to think or talk about anything else.”

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peter.nicholas@latimes.com

cparsons@tribune.com

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Times staff writer Mark Z. Barabak in San Francisco contributed to this report.