WASHINGTON (Reuters) - U.S. President-elect Barack Obama’s choice for attorney general broke with the Bush administration to call waterboarding “torture” and vowed to fight financial fraud at his Senate confirmation hearing on Thursday.

Eric Holder also addressed a major criticism by Republicans and acknowledged that he had erred when, as a deputy attorney general, he supporting a pardon by former President Bill Clinton for a fugitive financier, Marc Rich.

He pledged that the Guantanamo prison for foreign terrorism suspects, opened after the September 11 attacks and denounced internationally by human rights groups, would be closed but said it would take longer than some hope.

Republicans had been expected to make Holder’s confirmation one of the most contentious of any of Obama’s nominations, partly because of the Rich pardon issue. But the 57-year-old Holder, who would be the first African-American U.S. attorney general, appeared almost certain to win approval in the Democrat-controlled Senate.

With Obama to be sworn in as president on Tuesday, Judiciary Committee Chairman Patrick Leahy urged Holder’s quick confirmation in view of the attorney general’s key role in national security and prosecution of financial crimes.

“The responsibilities of the attorney general of the United States are too important to have this appointment delayed by partisan bickering,” Leahy, a Democrat, said.

Holder said in his opening statement that the Justice Department, “must wage an aggressive effort against financial fraud and market manipulation. As taxpayers are asked to rescue large segments of our economy, they have a right to demand accountability for wrongdoing.” He also pledged tough enforcement of antitrust laws.

Holder said he would fight terrorism “with every available tool,” as well as protect public safety and civil rights.

“WATERBOARDING IS TORTURE”

Questioned by Leahy about waterboarding, Holder said, “I agree with you, Mr. Chairman, that waterboarding is torture.”

President George W. Bush insists that his administration has not tortured people, but the CIA has acknowledged using waterboarding, which is widely condemned internationally, in at least three cases of interrogating terrorism suspects.

CIA officials said the agency acted within the law, using Justice Department advice.

Bush’s current attorney general, Michael Mukasey, riled Democrats and some fellow Republicans when he repeatedly refused to answer whether he considered waterboarding to be torture during his 2007 confirmation hearing.

Holder said he would ensure that interrogations were within international treaty obligations and effective.

Holder’s comments signalled that Obama’s Justice Department would not tolerate waterboarding. Yet it remained unclear if Holder would seek to prosecute past instances.

He said the Guantanamo prison “will be closed,” but there were difficulties in deciding what to do with inmates who cannot be tried for crimes but are known to be dangerous, and it could take time to come up with a system. “It will be seen as fair,” he said.

Leahy and Republicans questioned Holder about the Rich pardon, which some critics have said showed he may be subject to political calculations as attorney general.

“I will be a better attorney general, having the Marc Rich experience,” Holder said. He acknowledged was unaware at the time of elements of Rich’s full record.

The committee’s ranking Republican, Sen. Arlen Specter of Pennsylvania, noted that unlike many other presidential appointments, “the attorney general has an independent duty to the people.”

The comments put Holder and the incoming Obama administration on notice that Republicans would be watchful.

Former Attorney General Alberto Gonzales, a Bush appointee, resigned in 2007 amid charges he had allowed the department to become politicized.

“I will be an independent attorney general, I will be the people’s lawyer,” Holder said.

Specter also said the Justice Department should review its policy of fines for financial crimes. “When contrasted with the fraud, it’s insufficient,” he said.

(Additional reporting by Thomas Ferraro)