Jackson Resigns as HUD Secretary
Longtime Bush Friend Is Facing Cronyism Investigations

By Dan Eggen and Carol D. Leonnig
Washington Post Staff Writers
Tuesday, April 1, 2008

Embattled Housing and Urban Development Secretary Alphonso Jackson announced his resignation yesterday, leaving the Bush administration without a top housing official in the midst of a vast mortgage crisis that has shaken the global economy.

Jackson, a longtime friend and former neighbor of President Bush, departed after the White House concluded he had too many controversies swirling around him to be an effective Cabinet member, several HUD officials said privately.

Jackson has been accused of favoritism involving HUD contractors for two years, and the FBI and the Justice Department are investigating whether he steered business to friends.

Several Democratic lawmakers demanded Jackson's resignation last month after he refused to answer questions about the accusations including a lawsuit filed by the Philadelphia Housing Authority against HUD that alleged Jackson and his aides used the department to punish the authority for refusing to transfer valuable property to one of Jackson's friends.

"There are times when one must attend more diligently to personal and family matters," Jackson said in a statement that he read at a news conference yesterday morning. "Now is such a time for me."

Jackson, 62, said his resignation will be effective April 18. He took no questions and made no mention of the criminal probes or controversies. Bush, who departed yesterday on a trip to Eastern Europe for his final NATO summit, issued a written statement calling Jackson "a good man" and "a great American success story." Bush said he accepted the resignation "with regret."

HUD is a $35 billion agency that funds public housing and rental assistance for low-income families. It also runs the Federal Housing Administration, which helps struggling and first-time buyers with low-down-payment home purchases and with refinancings.

Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) endorsed Jackson's departure, saying Jackson could not provide leadership on crucial housing issues "while under the cloud of various investigations into alleged impropriety."

Dodd and Sen. Patty Murray (D-Wash.) wrote to Bush last month that Jackson's refusal to answer lawmakers' questions about the Philadelphia lawsuit made him unable to lead the agency. A White House spokesman said then that Bush had confidence in Jackson.

But two government sources who work on housing issues said Jackson was called March 24 to the White House, where top aides discussed his ability to lead the agency. The sources spoke on the condition of anonymity because of the sensitivity of the subject. Jackson met with Bush on Saturday to discuss his plans to resign, according to White House spokesman Tony Fratto.

Jackson, who previously worked as head of the Dallas housing authority and at an Austin power company, is one of the few remaining senior administration officials who followed Bush to Washington from Texas in 2001. Other close Texas friends who have left in Bush's second term include former senior advisers Dan Bartlett, Karen Hughes and Karl Rove and former attorney general Alberto R. Gonzales.

Jackson, who also headed housing authorities in the District and St. Louis, was a key defender of the administration's relatively cautious approach to the housing crisis, including a program called Hope Now, a government and industry initiative to ease terms on subprime mortgages.

"We have helped families keep their homes," Jackson said yesterday. "We have reduced chronic homelessness. And we have preserved affordable housing and increased minority homeownership."

But Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said HUD "has fallen far short" under Jackson's leadership and said Bush must appoint a replacement "who will have the full authority to work with us in making the decisions we need to deal with the housing finance crisis."

The department's inspector general has been looking at whether Jackson improperly sought to punish the Philadelphia Housing Authority for refusing to turn over a $2 million property to a Jackson friend. A federal judge ruled yesterday that the city agency had not clearly shown HUD overstepped its authority by allowing an agreement on the spending of federal funds to lapse.

Jackson is also the target of investigations by a federal grand jury, the FBI and the Justice Department. Those investigations began after a speech in Dallas in April 2006, in which Jackson said he had arranged the firing of a contractor who told him, "I don't like President Bush."

Jackson later said he concocted the anecdote, and HUD's inspector general concluded that Jackson had not exercised improper influence over contracts. But the continuing probes are looking at whether Jackson was truthful when he told the Senate Banking Committee last May, "I don't touch contracts."

HUD sources have told the inspector general that Jackson intervened in the business of the New Orleans and Virgin Islands housing authorities to steer work to friends. Two government sources briefed on the probe said investigators have been working to get a key former aide to cooperate.

The inspector general has also been looking at whether an occasional golfing buddy of Jackson's had performed work on Jackson's property on Hilton Head Island, S.C. It is unclear whether that remains a part of the investigators' work. James Martin, a St. Louis defense lawyer representing Jackson, did not respond to e-mail or telephone messages left yesterday.

Staff writer Carrie Johnson contributed to this report.

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