Typically, if you're running for president, you'd like to be sure that the people who are helping to vet and select your running mate don't have any skeletons of their own. Unfortunately for Barack Obama, one of the men leading his veep search team is suddenly the object of controversy, and the controversy is related to an issue on which Obama doesn't want to give up any ground with voters.
James Johnson, the former CEO of the Federal National Mortgage Association, has helped Democratic candidates choose their vice-presidential nominee before. He did it for John Kerry in 2004 and for Walter Mondale in 1984. But during the Mondale and Kerry runs, there was no subprime mortgage crisis. Now there is, and Johnson's ties to one of the executives who has taken a lot of heat during the crisis are being scrutinized.
Over the weekend, the Wall Street Journal reported that Johnson took a total of over $7 million in loans from Countrywide Financial Corp., which has become a major part of the crisis because of its history of making bad loans to people who could not afford to pay them. The loans to Johnson came through a special informal program for friends of Countrywide's CEO, Angelo Mozilo, and some may have been given at undermarket rates, though it's impossible to tell for sure without knowing some private information about Johnson.
There's nothing illegal about this. But it sure doesn't look good for Obama, who has previously been unsparing in his criticism of Countrywide and even specifically Mozilo. In a speech he gave in March, Obama said:
Some of you have heard of a company called Countrywide Financial. Countrywide Financial was one of the institutions that was pumping up the subprime lending market and inducing people to take out these subprime loans ...
These are the folks who are responsible for infecting the economy and helping to create a home foreclosure crisis. Two million people are at risk of losing their homes ... [but] the two people in charge of the company got $19 million bonuses. So they get a $19 million bonus while people are at risk of losing their home. What's wrong with this picture?"
(One of the two people Obama referenced is Mozilo.)
As the Atlantic's Marc Ambinder observed, this story is coming out at a particularly bad time for Obama. "The next 17 days of Obama's campaign are tacked to a theme of economic opportunity for all, with government leveling the playing field; his party's populist critique of President Bush frowns on these sorts of special favors between rich folks," Ambinder wrote, noting in a separate post, "In supervising the vice presidential process, Johnson has put together independent teams of lawyers and a full staff; only he really knows how all the parts fit together. With Caroline Kennedy and Eric Holder on board, the circle broadens. But without Johnson, [the Obama campaign would] have to essentially redo everything they've already done."