HUD's Crisis Management Evaluated

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Carol Leonnig of the Washington Post discusses how the Department of Housing and Urban Development has handled the crises brought on by Hurricanes Katrina and Rita through the subprime mortgage meltdown.

MICHELE NORRIS, host:

With the nation in the midst of a housing crisis, we thought it was worth taking a closer look at the Housing and Urban Development Agency. From the millions of home owners displaced by hurricanes Katrina and Rita to the subprime mortgage meltdown, HUD has faced significant challenges during the Bush administration.

To find out how the agency has handled these issues, we're joined by Carol Leonnig. She covers HUD for the Washington Post.

Welcome to the program.

Ms. CAROL LEONNIG (Journalist, Washington Post): Thank you, Michele.

NORRIS: In the housing crisis, what HUD's role in this, and how would it be assessed in the role that it played in foreseeing the housing crisis and in managing it once that exploded?

Ms. LEONNIG: Experts on this subject, whether they be advocates for more flexible and affordable housing for people who are buying homes to staffers on the Hill and senators and Congress members who are looking at this, their view of this is that HUD has been fairly late to the crisis, even though they are number three on the list of federal agencies that really have to attack this problem and their role is much smaller, say, than the Fed's or the Treasury Department's.

They still, in the view of these experts, did not take any proactive stance as the crisis was building, as the number of foreclosures in specific neighborhoods - even in our own suburban communities outside D.C. - was spiraling upward.

NORRIS: For a lot of people, HUD is associated with low-income housing, either Section 8 or public housing. What's the agency's record in managing the nation's low-income housing programs?

Ms. LEONNIG: There's a lot of public housing that is really run and operated by public housing authorities, and they rely on HUD for their federal funding. However, HUD's Section 8 program, which they help decide how many Section 8 vouchers are made available, has kept the number at a pretty flat figure so that instead of having 1 million vouchers to spread around to families to help them make the gap between what they can afford and what they actually have to pay for rent in an apartment, that number is dwindling because they're not keeping up with the cost of inflation. And it's hard to find advocates of this community, low-income residents who feel this administration has anything but maybe one of the worst in their memory.

NORRIS: And the agency's record in dealing with the post-Katrina housing crisis?

Ms. LEONNIG: Post-Katrina, there's been a lot of concern that the administration has not invested the resources, the money to make sure that when they demolish - as they did in December 2007 - 4,500 housing public units, that they find a place for those people to stay.

It's hard to dissuade public housing residents who live there from the conspiracy notion that HUD and the administration in New Orleans don't want them to return because there will be a dramatic reduction in how many units replaced that 4,500. There will be more market-rate housing that middle-income people can afford, but not that low-income can afford.

NORRIS: The former HUD Secretary, Alphonso Jackson, is resigning under a cloud; there are several investigations. But if he were to point to something that he is particularly proud of in his record, a bright spot during his tenure, what might that be?

Ms. LEONNIG: Well, you know, I think it's interesting. He said, when the housing authority in New Orleans voted to demolish these units in New Orleans, he said that he felt it took great moral courage and that it was going to be a bright day for the future of low-income residents and low-income families in New Orleans. He said that they would no longer be isolated in poverty, that there would be market-rate residents living near them, they'd be in a bustling community in the future when they came back to return.

And he says he feels that that was quite a stellar moment for him, for HUD, for New Orleans. The question is, how many families won't be able to enjoy that picture? How many families won't be able to join in that, what he called a high moral stand that the New Orleans public housing authority took?

NORRIS: Carol Leonnig, thank you very much for speaking with us.

Ms. LEONING: Thank you.

NORRIS: Carol Leonnig covers HUD for the Washington Post.

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HUD Chief Jackson Resigns Under Pressure

The Bush administration's top housing official resigned Monday amid a criminal investigation and a lawsuit over alleged favoritism in awarding contracts.

Housing and Urban Development Secretary Alphonso Jackson did not say why he was stepping down, but some prominent Democrats in Congress have called for his resignation.

"There comes a time when one must attend more diligently to personal and family matters. Now is such a time for me," he said. His resignation will take effect on April 18.

Jackson, 62, has been fending off allegations of cronyism and favoritism involving HUD contractors for the past two years. The FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans after Hurricane Katrina. Jackson has denied any wrongdoing.

He is also being sued by the housing authority in Philadelphia because he allegedly interfered with a land deal there.

Jackson's resignation comes at a difficult time for President Bush's agenda to deal with the mortgage crisis.

Falling prices and rising rates of home foreclosures have led to a major economic downturn. Congress is considering a number of options to reform the housing and mortgage industries.

From NPR and wire reports

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