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Obama Adviser Faces Scrutiny Over Mortgage Deals

By Shailagh Murray
Here's the trouble with running a squeaky clean campaign: there's very little margin for ethical error.

James A. Johnson, former Fannie Mae CEO and consummate Washington insider, is leading Sen. Barack Obama's vice-presidential search process. He just conducted an early round of interviews on Capitol Hill today. But Johnson also is proving a ripe target for Republicans looking to spot hypocrisy in Obama's pledge to reject business as usual in Washington.

The Wall Street Journal reported Saturday that Johnson had received mortgages worth more than $7 million from beleaguered lender Countrywide Financial, including at least two loans below market average. The article noted that the transactions may have been perfectly aboveboard -- but several could prove too cozy, depending on how much they overlapped with Johnson's Fannie Mae tenure.

"There is nothing illegal about a mortgage firm treating some borrowers better than others," the Journal article noted. "But if Fannie Mae officials received special treatment, that could cause a political problem for the government-sponsored, shareholder-owned company."

Countrywide was severely battered by the subprime mortgage crisis and is in the process of being bought out by Bank of America Corp. for a fraction of its former value. The lender also is under federal investigation for possible securities fraud, the Journal noted.

The Republican National Committee responded as if it had won the lottery. "Barack Obama routinely rails against lobbyists and corporate insiders, yet his campaign is stocked with both. Now it turns out that the man leading his vice presidential selection team is receiving highly questionable loans," spokesman Alex Conant declared in a statement. "With millions of Americans struggling to pay their mortgages, it raises serious questions about Obama's judgment when we learn members of his campaign leadership are receiving favors that the average American would never get."

Sen. John McCain piled on during an interview this afternoon with Carl Cameron of Fox News. "I think it suggests a bit of a contradiction, talking about how his campaign is gonna be not associated with people like that. Clearly he is very much associated with that," McCain said, according to statement circulated by his campaign.

Obama spokesman Tommy Vietor shot back, "It's the height of hypocrisy for the McCain campaign to try and make this an issue when John Green, one of John McCain's top advisors, lobbied for Ameriquest, which was one of the nation's largest subprime lenders and a key player in the mortgage crisis. As President, Senator Obama will crack down on fraudulent lenders and bring real relief to Americans struggling in the grip of the housing crisis-the kind of change that works for the American people."

In a town where even the lowliest campaign aides bill themselves as "political advisers" on cable news, Johnson is a master of discretion who rarely gives interviews, much less overstates his usefulness. He also vetted running mates for John Kerry and Walter Mondale.

But as adroitly as Johnson has navigated the political world, he also has risen to the highest levels in the business one. After an early career spent teaching at Princeton University and running the public affairs office of Target Corp., Johnson went to work for Mondale, a fellow Minnesotan, when he was vice president.

In 1985, Johnson rose to the highest ranks of Wall Street when he was named managing director of Lehman Brothers.

In 1991, he moved to Fannie Mae, serving as CEO of the mortgage-guarantee behemoth for most of the Clinton administration. He later became vice-chairman of Perseus LLC, a private banking firm, and joined the boards of Goldman Sachs, Gannett Co. Inc., and United Health Group, among other high-profile companies.

He chaired the Kennedy Center for the Arts and is a member of exclusive clubs such as American Friends of Bilderberg, the Trilateral Commission and the Council on Foreign Relations.

By Web Politics Editor  |  June 9, 2008; 5:52 PM ET
Categories:  Barack Obama  
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