The 63-year-old LaHood did not seek re-election this fall after 14 years in the House representing a district that includes Peoria.
He is the second Republican that Obama has named to his Cabinet.
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House colleagues respected LaHood for his grasp of issues and parliamentary details, but he sometimes angered Republican leaders by refusing to follow the party line. He was best known as a House appropriator, and has less experience in transportation issues than do some other contenders Obama reportedly considered.