The aspect of the Iran-Contra Affair that most damaged President Reagan’s reputation was that

The Iran-Contra Affair damaged Reagan’s reputation because members of his administration secretly diverted proceeds from arms sales to Iran to support the Contras in Nicaragua, despite restrictions set by Congress. This meant laws were sidestepped and raised questions about whether Reagan had allowed his administration to evade congressional oversight. The hostages were part of the broader crisis, but taking or releasing hostages was not the central reason his reputation suffered.

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