Ken McKay, chief of staff to embattled Republican National Committee Chairman Michael Steele, has resigned after a tumultuous week that has seen the party embarrassed by a series of gaffes: A nearly $2,000 expenditure at a Los Angeles lesbian-bondage themed club; Steele's hiring of a financial aide who'd been ordered in 2007 to repay nearly $70,000 to two DC baseball groups he had chaired, and the departure of a well-regarded top-level fundraiser from Texas.

RNC spokesman Doug Heye declined to say if McKay's exit, first reported by Politico, was forced or voluntary. He said replacing McKay with deputy chief of staff Mike Leavitt was "about ensuring that we have the tight financial controls in place and to ensure that every nickel we spend is done with the goal of winning in November."

Steele said in a statement that he chose Leavitt, a political operative who'd worked on camapigns in Maine, Virginia and his own failed US Senate bid in Maryland, because "I want to do everything in my power to ensure that the committee uses all its resources in the best possible fashion.'
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Leavitt's elevation brought mixed reaction. "Mike is a very smart political operative and effective manager of people and resources," ex-RNC chair Ed Gillespie said in an e-mail to "He knows the chairman well and how best to maximize his strengths. He also has very good relations with the other committees and Republican strategists."

But a Republican close to the RNC has told ABC News that the choice of Leavitt may not quell the turmoil that threatens Republican fundraising as the GOP gears up for mid-term elections. He has been overseeing communications for the past two months, and during that time, four communications staffers have left, fed up with Leavitt's "bluster'' and leadership style, according to the Republican who spoke to ABC on condition that his name not be used.

And fallout continues after Steele told George Stephanopoulos on Good Morning America that his being African-American may have complicated his job. Steele said both he and President Obama have a thinner margin of error because they are black.

Ken Blackwell, who is also African American and lost out to Steele in the 2009 RNC election, called Steele's race remarks "nonsense."

"There is a pattern of missteps, miscues, and misstatements, and as a consequence we now can't fall back on the issue of race," he told ABC News.

Earlier in the day, Politico reported that former Ambassador Sam Fox, a highly respected Texan, recently decided to leave his unpaid post as co-chairman of the RNC's Republican Regents, the party's top-level fundraising group. Republican sources said that Fox was "deeply troubled by the pattern of self-inflicted wounds and missteps," and had "lost confidence" in Steele.

Still unclear is the fate of Neil S. Alpert, whom Steele installed as his special assistant for finance on Mar. 29. On
April 4, Politics Daily was first to report that Alpert, a professional fundraiser, was ordered in 2007 to repay nearly $70,000 in unauthorized expenses -- including rent, parking, gasoline and meals -- and unaccounted donations to the DC Baseball PAC and DC Baseball Association. He chaired both groups and controlled their bank accounts in 2004 and 2005. He did not repay that large figure but did turn over $4,000 in fines to the city's Office of Campaign Finance.

Although OFC general counsel Kathy Williams told me on April 2 that the baseball groups and Alpert had a "mediation agreement" that allowed him to avoid paying the money back, seven former officials of the baseball PAC and Association have told me they had no knowledge of any such agreement.