Amid the greatest financial crisis in nearly a century, President-elect Obama has tapped Timothy Geithner, president of the New York Federal Reserve, to take the reins of the Treasury Department from Henry Paulson next year, Democratic sources told FOX News.

Geithner, a key figure in the financial crisis who helped formulate the rescue of insurer American International Group (AIG), is set to be formally announced as the incoming Treasury Secretary next week as Obama rolls out his economic team.

There won’t be a shortage of challenges facing Geithner, as the U.S. is in the midst of what many economists believe is the worst recession in decades and a financial crisis that has taken down a cascade of Wall Street titans. 

With that backdrop in mind, the pick of Treasury Secretary was deemed by many the most important choice for Obama, even topping the high-profile positions of Secretaries of State and Defense. Obama was said to have been considering a number of other well-known individuals, including former Treasury Secretary Larry Summers and former Federal Reserve Chairman Paul Volcker. 

The announcement comes as Democratic sources also told FOX News that Obama will nominate Bill Richardson, the governor of New Mexico, to the post of Commerce Secretary.

Separately, a source told FOX News that Senator Hillary Clinton of New York, Obama’s former rival for the Democratic nomination, has accepted the position of Secretary of State in the incoming Obama administration. The formal announcement is slated for after Thanksgiving.

News of Geithner's appointment was well-received by Wall Street, where stocks surged Friday afternoon. Billionaire investor and Berkshire Hathaway (BRK.A) head Warren Buffett, a supporter of Obama during the general election, also told FOX Business he believes Geithner is a good choice for Treasury. 

Geithner is no stranger to the Treasury Department, as he first arrived at the agency in 1988. He served a variety of positions, including Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Summers.

At 47 years old, Geithner brings a more youthful look to Obama's new economic team. Also, unlike Paulson and New Jersey Governor Jon Corzine, who was also rumored to be considered for the job, Geithner doesn't come from Wall Street.

Appointed to head the Federal Reserve Bank of New York in 2003, Geithner also serves as vice chairman and a permanent member of the Federal Open Market Committee, the Fed’s policy arm. Prior to joining the New York Fed, Geithner served on the Council on Foreign Relations and the International Monetary Fund. 

Then again, Geithner might be a tough sell as representing change from the status quo as he was intimately involved in a number of controversial decisions, including the decision to allow Lehman Brothers to become the largest bankruptcy filing in U.S. history, a move thought to have worsened the credit crisis. 

Geithner is also tied to the hotly-debated decision to give AIG an emergency loan and helped orchestrate the firesale of Bear Stearns to JPMorgan Chase (JPM) last March.