Bush nominates new housing secretary

President Bush said Friday he would nominate Steven C. Preston, the head of the Small Business Administration, to take over the Department of Housing and Urban Development at a time when the housing industry is in turmoil.

If confirmed by the Senate, Preston would replace Alphonso Jackson, who announced his resignation March 31 amid a criminal investigation into allegations of favoritism in awarding contracts.

Although only nine months remain in Bush’s tenure, the nomination is important because the sub-prime mortgage crisis and foreclosures are rippling through the economy. The president said the department needs “strong leadership at a time when our housing market is experiencing a period of challenge and uncertainty.” Preston, 47, brings “an impressive background in finance” and “understands the important role the housing market plays in the broader economy,” Bush said.

The nomination was greeted with concern by a senior Democrat responsible for housing issues because Preston lacks experience in housing matters, but praise from another senior Democrat for his efforts to rebuild the SBA.

Preston won unanimous support from the Senate when appointed to the SBA post, which he has held since July 2006. He joined the administration after serving as an executive vice president and chief financial officer of ServiceMaster Co., which operates Terminix, TruGreen and Merry Maids, among other companies.

Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee, said the HUD secretary’s job requires dedication “to helping people keep their homes, restoring stability and confidence in the mortgage market, and creating more affordable housing opportunities.”

But, he said, Bush had chosen a candidate with “no apparent housing background, which raises questions.”

Sen. John F. Kerry (D-Mass.), chairman of the Senate Committee on Small Business and Entrepreneurship, however, praised Preston’s work at the SBA. He said the agency was in disarray when Preston arrived and that the administrator had “worked hard to right its course.”

Bush, in a low-key announcement delivered in the White House Roosevelt Room with Jackson seated in the front row, saluted Preston for his work at two “multibillion-dollar corporations and in the financial services industry.” He said that at the SBA, Preston had run loan-guarantee programs similar to those of the Federal Housing Administration, a HUD agency that will be crucial to any plan to refinance mortgages.

“He will play a central role in helping address our nation’s housing challenges,” Bush said.

In addition to serving as chief financial officer at ServiceMaster, Preston was an executive vice president of strategic services. He was also a senior vice president and treasurer of First Data Corp. and a senior vice president in investment banking at Lehman Bros.

In brief remarks, Preston said, “We need to have a market to operate fairly and effectively for all Americans,” and that his mission was to “restore confidence in our markets.”

Friday was Jackson’s last day in office.

The investigation into his work at the agency began after he said in 2006 that he had revoked a contract because the vendor told him he did not like Bush. The housing secretary later said he had misspoken, and has been fending off allegations of cronyism since then.

The FBI is looking into ties between Jackson and a friend who was paid $392,000 by HUD for work as a construction manager in New Orleans after Hurricane Katrina.

james.gerstenzang@ latimes.com