Bush taps Small Business Administration chief for top HUD job

President Bush introduced Steve Preston, his nominee for HUD secretary, yesterday. Preston was nominated to replace Alphonso Jackson, who resigned amid allegations of misconduct. (NICHOLAS KAMM/AFP/Getty Images)

WASHINGTON - President Bush yesterday named Steven Preston as his new secretary of Housing and Urban Development, installing a well regarded administrator - yet one with little experience in housing issues - as his point person in dealing with the consequences of the subprime mortgage meltdown.

For the past 18 months, Preston has headed the Small Business Administration, where he upgraded an agency that had been criticized for its response to Hurricane Katrina. He came to government from a career in the private sector, most recently as executive vice president of ServiceMaster, a large home-cleaning and pest-control company.

Preston, 47, will replace Alphonso Jackson, who resigned last month amid allegations of favoritism in his dealings with a Philadelphia developer. Jackson, who was present yesterday at the White House for the announcement of his successor, was praised by Bush as a "decent man" who "has transformed a lot of lives."

In explaining the appointment, Bush singled out Preston's work in managing loan guarantee programs at the Small Business Administration, which he likened to the work he will be doing at HUD if he is confirmed by the Senate. He cited Preston's success in clearing a lengthy backlog of loans for businesses devastated by the hurricane in the Gulf Coast.

"The department requires strong leadership at a time when our housing market is experiencing a period of challenge and uncertainty," Bush said, describing Preston as "a reformer who would act aggressively to help Americans obtain affordable mortgages."

If confirmed by the Senate, Preston would take over a $38 billion agency that has been a key player in the administration's response to the mortgage crisis.

A debate rages in Washington over how aggressive the government should be in helping borrowers with high-rate loans refinance their mortgages to prevent foreclosures. Advocates say that each week an additional 20,000 face the threat of foreclosure.

Preston's nomination drew a mixed response. Those who have worked with him on small-business issues appeared impressed, with Senator John Kerry, Democrat of Massachusetts, who chairs the Small Business Committee, declaring himself "sorry to see him go" from the Small Business Administration. "Mr. Preston inherited an agency in disarray, and he's worked hard to right its course," Kerry said in a statement.

Consumer advocates and some housing specialists appeared surprised. Howard Glaser, a consultant and former HUD official in the Clinton administration, predicted Preston would be a "caretaker" until the next administration.

"Installing someone at HUD who continues to have no expertise in housing is a major flaw," Glaser said. "We've gone through this entire crisis without any significant leadership from HUD, and it doesn't look like it's going to change."

Christopher Dodd, a Connecticut Democrat who chairs the Senate Banking Committee, said the department is facing the biggest housing crisis in recent history. His committee will consider the nomination.

"These priorities call for a leader with expertise in housing issues, yet the president's choice has no apparent housing background, which raises questions," Dodd said.