Sunday, March 30, 2008

March 30, 2008 10:03 p.m.

HUD Secretary Expected to Resign

WASHINGTON -- Housing and Urban Development Secretary Alphonso Jackson is expected to announce his resignation Monday, according to people familiar with the matter, a decision that will deal a blow to the Bush administration's efforts to tackle the housing and mortgage mess.

The exact reasons for Mr. Jackson's decision couldn't be learned.

secretary has been beset recently by allegations of cronyism and
favoritism. Earlier this month, two Democratic senators, Patty Murray of Washington state and Christopher Dodd of Connecticut, sent a letter to President Bush urging him to request Mr. Jackson's resignation, arguing that the distraction has made him ineffective.

Associated Press
HUD Secretary Alphonso Jackson

The news is a setback for the Bush administration and its efforts to
combat the housing and mortgage mess. HUD, usually a backwater federal agency, has been at the heart of the administration's attempts to ease problems for homeowners. Although Treasury Secretary Henry Paulson has taken the lead on many initiatives, Mr. Jackson has been a partner on many, including programs such as Hope Now, an administration-backed industry plan to loosen the terms on hundreds of thousands of subprime mortgages.

HUD also runs the Federal Housing Administration, a big government
division that insures mortgages for low-income homeowners and first-time home buyers. Many Democrats and Republicans have envisioned expanding the power of FHA to play a bigger role in stabilizing the mortgage market.

Mr. Jackson's problems stem from his refusal to answer questions about his role in a Philadelphia redevelopment deal. The city's housing authority has filed a lawsuit charging that Mr. Jackson tried to punish the agency for nixing a deal involving music-producer-turned-developer Kenny Gamble, a friend of Jackson.

The department's inspector general, after a four-month inquiry, turned up no evidence of a canceled contract. But the report found what it called "some problematic instances'' involving HUD contracts and grants, including Jackson's opposition to money for a contractor whose executives donated exclusively to Democratic candidates.

Asked if Mr. Jackson was planning to resign, HUD spokeswoman D.J.
Nordquist wrote in an emailed statement that she was "not at liberty to say what the announcement is."

Mr. Jackson has consistently denied any wrongdoing.

--The Associate Press contributed to this report.


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