HUD secretary remains at agency, despite controversies

Alphonso Jackson, the secretary of Housing and Urban Development, has hung tough for months in the face of a widening criminal investigation into whether he misused his office to favor friends with housing contracts. Just last week, he blew off calls for his resignation from two senior Democratic senators who oversee HUD's funding and programs.

Jackson's staying power should not surprise his critics. He has one very powerful supporter -- President Bush, a close friend, who has given no indication that he plans to remove Jackson. Indeed, the White House issued a statement last week that the president "continues to have confidence in Secretary Jackson."

Still, some senior administration officials worry that Jackson's troubles could tarnish the final nine months of Bush's presidency, especially if disclosures continue about suspected ethical missteps. "That is an interesting dilemma he is getting into with the Hill," says one official, who asked to remain anonymous. "He is the secretary of the department, they control his budget, and he refuses to answer their questions. Obviously that's a concern."

Morale at HUD, meanwhile, is said to be sinking. "There are more resumes out on the street than you can believe," a department official says. "The political appointees are trying to get out of there ... and career people have no confidence in the secretary whatsoever." A longtime friend acknowledges that Jackson's ethics problems are obscuring important policy issues. "No one can get past the prism of this ethics issue," he says. "HUD is not an island. It needs the support of Congress ... and Jackson has lost the confidence of the people he needs to court."

Asked whether Jackson would stay on, spokesman Jerry Brown said he had nothing to add to a statement he issued after the calls for Jackson's resignation last week. Rather than responding to the resignation requests, Brown's statement blamed Congress for failing to pass legislation to stabilize the housing market.

Jackson has been under investigation since last year. The inquiry is headed by Justice Department prosecutors, and it includes a grand jury and the participation of agents from the FBI and the HUD inspector general's office. The probe is focused on his role in HUD contracting and on friends who purportedly benefited from his assistance. In an interview with the IG's office in July 2006, Jackson denied intervening in contracting awards. He later told a Senate panel, "I don't touch contracts." Those denials are at the heart of the criminal inquiry.

In its own review, National Journal has found that Jackson helped to arrange lucrative contract work for friends and associates at HUD-controlled housing authorities in New Orleans and the Virgin Islands.

One friend, William Hairston, said in an interview that Jackson helped him land a contracting job around January 2006 at the Housing Authority of New Orleans, or HANO. Hairston, a stucco contractor who lives in Hilton Head Island, S.C., was paid more than $485,000 for working as a construction manager at HANO during an 18-month period. Separately, Atlanta lawyer Michael Hollis, another Jackson friend, appears to have been paid about $1 million for managing the troubled Virgin Islands Housing Authority.

Additionally, HANO awarded a $127 million redevelopment project to a contracting team last year that included an Atlanta company, Columbia Residential, that has financial ties to Jackson. Before joining HUD as deputy secretary in 2001, Jackson was associated with Columbia Residential, which still owes him at least $250,000 "for past services," according to his financial disclosure reports.

Jackson has clearly frustrated some in Congress. Sens. Patty Murray, D-Wash., and Christopher Dodd, D-Conn., chairman of the Banking, Housing, and Urban Affairs Committee, called for Jackson to resign after he repeatedly refused, in separate hearings, to respond to allegations of ethical misconduct. HUD must be headed by a leader who can "find solutions to the problems plaguing the housing and mortgage markets," the senators said. Jackson, they added in a letter to President Bush, has been irreparably crippled by the investigation.

Murray, who chairs the Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee, said in an interview that the Senate had given Jackson "a chance to clear his name, and he refused." Jackson oversees a sprawling $40 billion agency, Murray said, and he needs to demonstrate to taxpayers "that he is spending their money wisely," not on cronies.

Although the White House continues to support Jackson publicly, some think that the president may soon have to let his old friend go. "You have a housing crisis, families in peril, and a distracted HUD secretary," says a person who knows Bush and Jackson well. "The administration needs someone tending the boat 100 percent."