CONCORD, N.H. (AP) – Democratic Gov. John Lynch has introduced his pick to replace Sen. Judd Gregg in the U.S. Senate – businesswoman and former government official Bonnie Newman.

Newman is a Republican, but Lynch confirmed at a news conference Tuesday that she has agreed to serve only the remaining two years of Gregg’s six-year Senate term. Gregg’s departure should make the seat more competitive next year for Democrats.

President Barack Obama nominated Gregg Tuesday morning to be U.S. commerce secretary. Gregg had indicated he would take it only if the balance of power in the Senate didn’t change. Having Newman replace him would fulfill that condition.

But Lynch, who said he has known Newman for 40 years, said that didn’t drive his choice.

“Bonnie is someone I would have considered regardless of party,” he said.

Lynch said Newman had never held elective office “but Bonnie understands government and how it works.”

“I must admit in my wildest, wildest dreams I never thought we would be standing here today,” she said.

Newman praised Gregg and Lynch and promised to throw herself into the job wholeheartedly.

“My primary reason for accepting this assignment is my belief that we are at a critical time in our nation’s history,” she said.

Newman, 63, was Gregg’s chief of staff in the 1980s and has held prominent leadership positions in government, higher education and the private sector. She has never held elective office.

Gregg said Newman has excelled over the years at the challenges she’s undertaken.

Newman oversaw administrative operations for the White House under President George H.W. Bush, and has served as interim president of the University of New Hampshire and executive dean at Harvard’s Kennedy School of Government.

Despite being a Republican, she was an early and strong backer of Lynch’s campaigns.

She pledged to put the well-being of New Hampshire and the country above partisan politics.

“I am a proud and independent-minded Republican. This assignment is not about politics and business as usual. It is about governing,” she said.

She described herself as a “reasonable Republican who some might call a moderate Republican.”

Newman said she had just finished as interim president at the University of New Hampshire and decided to “step back a bit and smell the roses” when Lynch called.

“I said, ‘Oh, John,”‘ she said, adding that she asked him several times if he was sure.

Newman said she will resign as lead director on the FairPoint Communications board and from several other boards if Gregg is confirmed.

Some Democrats have questioned why Lynch did not appoint a Democrat and bring Democrats closer to controlling the Senate.

But Lynch said appointing a Democrat was not an option because Gregg made it clear he would not accept Obama’s offer if it shifted the balance of power in the Senate.

Newman assured Lynch she would only serve two years. Once in the Senate, her interests are in committees dealing with national security, the economy and education, she said.

Newman, who lives in North Hampton, grew up in Lawrence, Mass., and has an undergraduate degree in sociology and a master’s in education in higher education administration. She started her career at UNH as assistant dean of students in 1969.

In the private sector, she founded a radio station, was executive vice president at Exeter Trust and was president of the New England Council, a regional business association.

Newman would be New Hampshire’s second female senator in a matter of months. Democratic Sen. Jeanne Shaheen beat Republican incumbent John E. Sununu in November to become the first woman from the state to hold a Senate seat.

“I’m confident she’ll always keep the interests of the people of New Hampshire in mind as the Senate confronts the many challenges our nation faces,” said Shaheen.

A source close to Democratic U.S. Rep. Paul Hodes said he will announce for the seat by the end of the week. Hodes’ entry into the race comes as no surprise. He has been positioning himself for a run for weeks, but the departure of Gregg – a formidable foe for Democrats – should make it easier for Democrats to take the seat.

House Speaker Terie Norelli, a Democrat, praised the choice and said Newman is careful, thoughtful and considerate in her approach.

“It’s been my experience that’s how she approaches problems,” she said.

She said she has no concerns about Newman’s party affiliation.

“President Obama ran on change. This is change,” she said.

AP-ES-02-03-09 1758EST

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