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In spite of allegations of cronyism, easing terms on subprime mortgages, and federal investigations into possible partisan awarding of contracts, Alphonso Jackson — a longtime friend of President Bush and former president of a billion-dollar Texas electric utility — remained at the helm of the Department of Housing and Urban Development (HUD) until April 2008. Jackson joined the administration in 2001 as deputy secretary of HUD. In 2004, the Senate unanimously confirmed Jackson as secretary. Earlier that week, Jackson had blocked implementation of consumer protection standards that forced mortgage lenders to disclose kickbacks and stopped their last-minute changes to interest rates and closing costs. Two years later, the HUD Office of Inspector General launched the first of an array of investigations of Jackson; it found that Jackson had encouraged his staff to consider political affiliation when awarding contracts.

By spring 2008, the inspector general was investigating Jackson again, while the FBI and Congress had opened their own investigations into multiple allegations of cronyism and retaliation. Jackson allegedly pressured the New Orleans office of HUD to hire a friend for a no-bid contract; the contractor also performed renovations on Jackson’s vacation home. The Philadelphia office of HUD filed a lawsuit accusing Jackson of hindering funding in retaliation for refusing to hand over a $2 million vacant lot at a deep discount to a developer friend. Jackson stepped down in March. Bush said he still had confidence in Jackson, calling him “a strong leader and a good man.” A call to Jackson’s home requesting comment was not returned.

A Washington Post investigation found HUD management had dismissed repeated expressions of concern about Jackson’s dealings by veteran contracting specialists within the agency. The lawsuit filed by the Philadelphia office was settled in October 2008.

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