President Bush on Friday chose SBA Administrator Steve Preston to lead the government's housing agency at a time of crisis in the industry, praising him as a skilled manager. Democrats hailed Preston as a problem-solver.
If confirmed by the Senate, Preston would replace Housing and Urban Development Secretary Alphonso Jackson, who announced his resignation last month amid a criminal investigation and allegations of political favoritism. Jackson's last day on the job was Friday and he sat in the Roosevelt Room to hear Bush announce his successor.
Bush called Jackson "a decent man ... a dedicated man ... a compassionate man" and added, "America is a better place because of your service."
Preston is widely credited with correcting major problems at the Small Business Administration, and he drew praise from Democrats for his work. "I'll be sorry to see him go," said Sen. John Kerry, D-Mass., chairman of the Committee on Small Business and Entrepreneurship.
"Mr. Preston inherited an agency in disarray, and he's worked hard to right its course and to improve relationships with Congress," Kerry said. "We may have some differences on policy, but he's always been professional, responsive, and dedicated to the mission."
A consensus builder
Bush called Preston "a reformer who would act aggressively to help Americans obtain affordable mortgages and be able to keep their homes."
"I sought a consensus builder who's earned the respect of Republicans and Democrats, who can get things done," Bush said. "I found these qualities and much more in Steve Preston."
Preston thanked Bush and said: "When I joined your administration almost two years ago, it was because I believed so strongly in the vision of helping people reach their dreams of owning a business, owning a retirement portfolio and of course, owning a home.
"Our solutions must restore confidence in our markets while not erecting barriers to future enterpreneurs, investors and home buyers," Preston said.
Jackson leaves behind the wreckage of a national housing crisis and a trail of unanswered questions about whether he tilted the Housing and Urban Development Department toward Republican contractors and cronies.
Preston steps in at a chaotic time when foreclosures have surged to record highs. Rising interest rates and the collapse of the once high-flying housing market have made it impossible for some to afford their monthly mortgage payments or sell their homes.
The administration has taken some steps to provide relief to millions of people at risk of losing their homes. However, Democrats on Capitol Hill insist more needs to be done and have been moving ahead on additional rescue plans.
A poll released on Monday said one in seven mortgage holders worry they may soon fail to make their monthly payments, and even more fret that their home's value is shrinking. The Associated Press-AOL Money & Finance poll also found that 60 percent said they definitely won't a buy a home in the next two years. That was up from 53 percent who said so in an AP-AOL poll in September 2006. Only 11 percent are certain or very likely to buy soon, down slightly from 15 percent two years ago.
Preston was sworn in as head of SBA in July 2006, after his nomination was unanimously confirmed by the Senate. Bush was expected to praise him as an effective manager who can take on complex challenges, officials said. Preston's selection to the HUD job was first reported by National Journal's CongressDaily.
Preston has a background of 25 years in financial and operational leadership positions. Before joining SBA, he was executive vice president of The ServiceMaster Co., where he also served as chief financial officer. Before that, he was a senior vice president and treasurer of First Data Corp. and an investment banker at Lehman Brothers.
The FBI is examining the ties between Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans. Jackson's friend got the job after Jackson asked a staff member to pass along his name to the Housing Authority of New Orleans.
In another instance of alleged favoritism that came to light in February, the Philadelphia housing authority alleges that Jackson retaliated against the agency because it refused to award a vacant lot worth $2 million to soul music producer-turned-community developer Kenny Gamble for redevelopment of a public housing complex. U.S. District Judge Paul S. Diamond ruled on March 31 in Philadelphia that HUD acted legally and did not retaliate against the housing authority.
Jackson's problems began in 2006, when he told a group of commercial real estate executives that he had revoked a contract because the applicant who thanked him said he did not like Bush. Jackson later told investigators "I lied" when he made the remark about taking back the contract.