When Gov. Bill Richardson called her Sunday to say he was withdrawing his name as Commerce Secretary, Lt. Gov. Diane Denish wasn't surprised.

"He had said once or twice that he had some concerns," Denish said Monday.

Richardson on Sunday took his name out of consideration, saying an ongoing federal investigation could cause an "untenable delay in the confirmation process."

A federal grand jury in Albuquerque reportedly is looking into a possible "pay-to-play" connection between a Beverly Hills financial company's large contributions to Richardson political action committees and nearly $1.5 million the company received for work on a state construction program dubbed the Governor Richardson Investment Partnership.

CDR Financial Products and its chief executive officer, David Rubin, gave at least $110,000 to three PACs formed by Richardson. The company has denied any wrongdoing.

The governor at a news conference Monday explained his decision a little more, saying "the ongoing CDR investigation would have forced an untenable delay in the confirmation process. Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the president-elect and his administration to delay for one day the important work that needs to be done," he said.

He added that he has "faith in the criminal-justice process, and we must allow it to run its course."

The governor denied any wrongdoing and said the deal handled by the New Mexico Finance Authority with CDR "was thoroughly scrutinized through a rigorous procurement process."

"I have always fully expected that my administration would be clear that nothing improper took place," he said. He thought, however, that the investigation would have ended in December.

"As you might expect, I am disappointed in this turn of events," he said. "There were a lot of ways in which I thought I could help the country in this time of financial crisis."

Denish, perhaps the person most affected by the move apart from Richardson, said she accepted the governor's decision.

"I was ready; I will be ready if the time comes before the end of his term," she said.

Denish widely was expected to take the reins of the Roundhouse once Richardson was confirmed in Barack Obama's administration.

The transition team she had in place will continue working at least until Jan. 15. She had enlisted 125 volunteers to give her ideas on ways to save money and better run state government. She'll now forward that information to Richardson.

"I think this will be very valuable," she said in an interview from Washington, where she is working with the state's congressional delegation and will attend a swearing-in ceremony for new members today.

Denish said she hasn't decided what is next for the two people hired for the transition team, Kathy Keith and Chris Cervini.

Richardson took few questions at the news conference and declined to answer when asked if his administration did an internal investigation of the situation with CDR.

He also declined to say whether he had hired an attorney, but The Associated Press later reported he has hired a prominent white-collar attorney, Peter Schoenburg.

The governor tried to focus on his tasks at hand, saying he would be meeting today with members of his Cabinet and make an announcement Wednesday about jobs in the state.

"My focus is going to be New Mexico," he said.

A Richardson spokesman said Sunday that the governor is concentrating on getting ready for the 60-day legislative session that starts Jan. 20, and in particular on the budget crisis. The state this fiscal year is facing at least a $454 million shortfall, and predictions say the 2010 fiscal year could be worse.

During the news conference, Richardson at one point seemed uncharacteristically emotional.

"Yesterday, I was hurting over this decision," he said, pausing between sentences.

"I lost a Cabinet appointment, but I think we have to focus on what people are losing in this country — you know the American people, people in New Mexico are losing jobs, they are losing their savings, they are losing their homes and that's the real tragedy," Richardson said. "You know, mine is minor compared to that."

Richardson might face a tough time with the Legislature; political observers have said he's going to have to work to rebuild his relationship with lawmakers, particularly in the Senate.

Senate Majority Leader Michael Sanchez, D-Belen, said he expects lawmakers to focus on the budget more than politics this session.

"We've kind of gotten used to the governor and how he likes to get things done," Sanchez said. "Not that we always agree. But he's been more congenial in the last years and he's come around."

Contact Kate Nash at 986-3036 or knash@sfnewmexican.com. Read her blog at www.greenchilechatter.com.