WASHINGTON – James A. Johnson, a consummate Washington insider and former Fannie Mae chief executive, resigned Wednesday from Sen. Barack Obama’s vice presidential search committee, just four days after he was caught up in controversy over low-interest home loans and lucrative business deals.
Obama announced that Johnson would head the selection team shortly after he claimed the delegates needed to secure the Democratic nomination, but he had spent much of the week since then defending Johnson’s role as leader of the vetting of potential running mates. Wednesday, Johnson became a casualty in the back-and-forth over ties to special interests in the presidential campaign as Obama cut him loose.
“Jim did not want to distract in any way from the very important task of gathering information about my vice presidential nominee, so he has made a decision to step aside that I accept,” Obama said in a statement.
The two other members of the search committee, former Deputy Attorney General Eric Holder and Caroline Kennedy, the daughter of the late President John F. Kennedy, will press forward with the process, Obama’s campaign said.
The resignation followed a week of headlines targeting a low-key political professional who has operated in the inner circles of power since the Carter administration. Johnson, 64, was pulled into Obama’s orbit last year by former Commerce Secretary William M. Daley, a close friend of Johnson’s and an Obama ally, according to a Johnson confidant. Johnson had led Sen. John Kerry’s vice presidential vetting committee in 2004. Because Johnson had pored over the financial and personal secrets of many Democratic vice presidential candidates, Obama aides reasoned, he had already done much of the work that would be required this year.
But the Obama campaign found itself on the defensive after the Wall Street Journal reported Saturday that the former Fannie Mae chief had received millions of dollars in home loans – some of which may have been below average market rates – from Countrywide Financial, a partner of Fannie Mae and a leading purveyor of subprime mortgages.
The Washington Post reported Wednesday that alleged accounting manipulations for 1998 had resulted in maximum payouts to Fannie Mae’s senior executives – $1.9 million in Johnson’s case – when the company’s performance that year would have yielded no bonuses. Even after he left Fannie Mae in 1999, Johnson received millions of dollars in guaranteed consulting fees and perks that included an office, two secretaries and a car and driver for himself and his wife.
Still more questions emerged about Johnson’s role on corporate boards that had approved the kind of lucrative executive pay packages that Obama routinely excoriates on the campaign trail.
By Wednesday, Republicans were using Johnson’s role in the Obama campaign to question the basic premise of Obama’s candidacy.
“Jim Johnson’s resignation raises serious questions about Barack Obama’s judgment,” said Tucker Bounds, a spokesman for Sen. John McCain.
To Republicans, and even some Democrats, Johnson undermined Obama’s claim to be an outsider, untainted by the cozy relationships that envelop Washingtonians. Johnson’s personal baggage, critics said, called into question his capacity to recognize political vulnerabilities in potential Democratic running mates and Obama’s judgment in entrusting him with the task.