Well, one reason is that Steele tended to get himself, and the RNC, into the spotlight for the wrong reasons, including verbal missteps, small scandals, and an RNC debt of around $21 million. But I think there's another reason, as well.
Steele was brought in at a time when Barack Obama had just been elected President, and the country was celebrating the fact that an African-American had finally been elected. It was a momentous change of course, and, after stinging electoral defeats in 2006 and in other 2008 races, the RNC undoubtedly felt compelled to show that it, too, had a diverse face.
Two years later, however, the political landscape shifted dramatically with the rise of the inaptly-named Tea Party. The Tea Party movement is seen by many as instrumental in the electoral surge that swept Republicans back into power in the House in 2010. Lately, however, the Tea Party has been showing it's racist roots.
Given this change of climate, it wouldn't be surprising if many in the Republican Party made the political calculation that catering to ideas of diversity wasn't so important, after all, and that Republicans needed to return to their core principles. The Southern Strategy was, after all, a creature of the Republican Party.
This is not to say the RNC is becoming overtly racist. Priebus was elected only after 7 ballots, indicating significant remaining support for Steele, who bowed out after 4 ballots. Instead, it reflects more a political calculation about which leader would make the RNC stronger going into 2012. In making that calculation, however, Republcans confirm that they are a party of power, not principle.
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