Secretary of Housing and Urban Development
With less than nine months left in his Administration, President Bush nominated Preston to be HUD Secretary on April 18, 2008.
As his predecessor departed amid scandal, housing advocates and Senate Banking, Housing, and Urban Affairs Committee chairman Chris Dodd (D-CT) criticized Preston for his lack of housing policy experience. With the housing crisis unfolding, President Bush said he needed someone with Preston’s background in finance: “I looked for a leader with an impressive background in finance; someone who understands the important role the housing market plays in the broader economy. I sought a reformer who would act aggressively to help Americans obtain affordable mortgages … and be able to keep their homes. I sought a consensus-builder who’s earned the respect of Republicans and Democrats, who can get things done.”
Sen. Dodd and his colleagues ultimately supported Preston, who was confirmed by the U.S. Senate by unanimous consent on June 5. (Preston was sworn in the same day.)
During his tenure, the federal government implemented some of the most sweeping and controversial changes to housing and financial policy since the Great Depression, including: the Housing and Economic Recovery Act of 2008; the Economic Stabilization Act of 2008; the Troubled Asset Relief Program; government takeovers of Fannie Mae and Freddie Mac; an expansion of Federal Housing Administration (FHA) refinancing.
Though he emphasized the importance of government action in crisis by saying “mortgage markets have remained open almost entirely due to government support,” Preston said the private sector should ultimately restore the housing market. He argued too many homeowners who should be getting help were still falling through the cracks, and urged financial institutions to “be bold” in their actions to assist troubled homeowners. Preston warned the private sector that Congress and state attorneys general would continue to intervene if private financial institutions didn’t act strongly enough, specifically citing a congressional plan to allow bankruptcy judges to modify mortgages.
While at HUD, Preston continued to be an outspoken advocate for transparency, effectiveness, and efficiency in government programs. He initiated reforms to enable the FHA to handle its increasing volume of loans; broke ground on two public housing developments in New Orleans that had been on hold due to lack of funding; and finalized regulations that had been stalled since 2002 to help consumers find lower costs mortgages and avoid harmful loan offers.
After leaving Washington, Preston continued to be an active commentator on the housing market and the mortgage crisis. In an October 2010 appearance on CNBC, Preston laid out a path forward, noting, “e’ve got a situation right now where, you know, the federal government’s basically doing all the mortgages. The Fed owns over a trillion dollars worth of mortgage securities. We don’t know what that’s going to look like going forward. … I think it’s absolutely essential that we get on with the task of laying out a path toward a private mortgage finance system in our country.” Preston also discussed the causes of, and solutions for, the housing crisis in an April 2011 interview with World magazine.
Read more about this topic: Steve Preston
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