UPDATED: In addition to New York Gov. David Paterson, U.S. Sen. Edward Kennedy has contacted his colleagues Charles Schumer and Robert Menendez about appointing Caroline Kennedy, his niece, to replace Hillary Clinton in the U.S. Senate, the New York Times reports.

The elder Kennedy, a Hyannis Port Democrat, impressed upon Schumer, New York's senior senator, and Menendez, who recently took over for Schumer as head of the Democratic Senatorial Campaign Committee, that his niece would be an effective fundraiser, according to the Times. Fund-raising would be a key concern for Paterson, a Democrat, and Menendez, of New Jersey, because whoever is appointed will have to run for re-election in 2010 and again in 2012.

When Clinton steps down from her U.S. Senate seat to become secretary of state, Paterson will appoint her replacement. Caroline Kennedy is one of several names that has been speculated as a possibility.

UPDATE, Tuesday, 4:35 P.M.: Kennedy's office issued a statement Tuesday saying this story is inaccurate and that Kennedy has not reached out to anyone in New York.