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Levada is certainly academically qualified for the post and is familiar with the workings of the Congregation, having worked there from 1976 to 1982 under both Cardinal Franjo Seper and then-Cardinal Ratzinger.
Some of the speculation goes that Benedict wants to retain strict oversight of his former office, and his past friendship with Levada will help him do that.
To some it is puzzling that an American would be chosen for such an important post, but perhaps that’s the logic of it. The United States is certainly a trouble spot when it comes to matters of doctrine. Many Americans, conditioned by American democracy, have difficulty accepting Church teaching when they (mistakenly) believe it will impinge on their personal liberties.
As an American, Levada may be just the man for understanding and communicating the issues to uncomprehending Americans and theology professors.
Further speculation: Why Levada? - post and commentary on Amy Welborn's blog, from the bitterly disappointed and the cynical to those who would simply trust in Benedict's decision and "wait and see what happens" with occasional insights into Levada's views on various theological topics.
The San Francisco Solution, First Things 75 (August/September 1997): 17-19. Archbishop Levada defends the "'compromise' worked out to allow the Archdiocese to comply with a new city ordinance that requires any business or agency doing business with the city to offer to domestic partners the same benefits it offers to spouses." (Responses from First Things readers).
Statement of Archbishop William Levada released Friday by Archbishop William Levada of San Francisco on the occasion of his appointment by Benedict XVI to be prefect of the Congregation for the Doctrine of the Faith. May 15, 2005.
Quotes from Archbishop Levada on Catholic politicians, physician assisted suicide, gay marriage and Catholic doctrine from the Seattle Post Intelligencer. May 13, 2005.