Holder, 58, is a former federal judge, U.S. prosecutor and prominent white-collar attorney.
Obama last week designated Holder to oversee plans to close the Guantanamo prison for terrorism suspects, and develop new policies on detaining and interrogating terrorism suspects.
The project is a centerpiece of Obama's push to restore America's image, which has been tarnished by charges of human rights abuses in the antiterrorism campaign launched by former President George W. Bush after the Sept. 11 attacks.
In the meantime, former SenatorTom Daschle withdrew his name for Secretary of Health and Human Services. The action comes after Daschle admitted failure to pay past taxes.
Faced with problems over back taxes and potential conflicts of interest, Tom Daschle withdrew his nomination on Tuesday to be President Barack Obama's Health and Human Services secretary.
"Now we must move forward," Obama said in a written statement accepting Daschle's request to be taken out of consideration.
A day earlier, Obama had said he "absolutely" stood by Daschle.
Daschle, the former Senate Democratic leader, said he would have not been able to operate "with the full faith of Congress and the American people." "I am not that leader, and will not be a distraction" to Obama's agenda, he said.
Keep track of what Obama has been doing since taking office:
Day 14: Obama Targets CEO Pay (Feb. 2)
- The Obama administration indicated that it will not unveil new measures to aid the financial services industry this week, but will instead move on the issue of Wall Street bonuses and executive compensation. (Full Story)
- Fighting to save his Cabinet nomination, Tom Daschle pleaded his case in a closed meeting with former Senate colleagues after publicly apologizing for failing to pay more than $120,000 in taxes. Obama said he was "absolutely" sticking with his nominee for health secretary, and a key senator added an important endorsement. (Full Story)
Day 13: Obama's Bill 'Wastes a Ton of Money': Sen. Kyl (Feb. 1)
- The U.S. Senate's No. 2 Republican warned his party's support for Obama's economic stimulus bill was eroding and "major structural changes" were needed to win Republican support. "You have to start from scratch and reconstruct this," said Sen. Jon Kyl of Arizona. He said the proposed bill, with a price approaching $900 billion, "wastes a ton of money." (Full Story)
- Discussions between the Obama administration and financial industry representatives continued for a third day with the focus moving to new terms on lending, transparency and executive compensation for companies receiving financial aid, according to a source familiar with the situation. (Full Story)