Member of Obama's VP team quits over finances

Johnson had drawn criticism for perks, Countrywide mortgage

Election 2008

June 12, 2008|By Tom Hamburger | Tom Hamburger,LOS ANGELES TIMES

WASHINGTON - Jim Johnson, the former top aide to Walter F. Mondale whose later career as a highly compensated businessman and political insider stirred controversy, resigned as adviser to Barrack Obama's presidential campaign yesterday, saying attention to his personal finances had become a distraction to the campaign.

Obama had appointed Johnson as part of a three-member team heading the search for a vice presidential running mate. Johnson had drawn criticism for compensation and other perks he received as an official of mortgage giant Fannie Mae and as a board member of United HealthCare, one of the nation's largest providers of medical insurance.

Also, The Wall Street Journal reported last week that he got what may have been preferential loans from Countrywide, which had done business with Fannie Mae at a time when Johnson was departing as Fannie Mae's CEO.

The controversy over Johnson is one of a series of dust-ups involving Washington insiders that have struck both Obama and John McCain as the two presumptive presidential nominees compete to win voters with promises to distance themselves from Washington's traditional system of insider politics.

Indeed, both Obama and McCain have found it difficult to prepare for the presidency without calling on those who are steeped in that culture. Its members have skills, contacts and experience in Washington's inner workings, as well as the ability to raise campaign funds. They also often represent powerful constituencies that no president can entirely ignore.

For years, Johnson has been a fixture of establishment Washington, with ties to Wall Street and the powerful members of both political parties.

Reflecting the difficulty both candidates have had squaring their reformist rhetoric with their practical needs, the McCain campaign had begun to accuse Obama of hypocrisy for keeping Johnson as an adviser while criticizing Countrywide and other mortgage lenders, as well as extravagant compensation of corporate figures.

The Obama campaign returned fire by calling attention to McCain's reliance on Carly Fiorini, the former CEO of Hewlett Packard, who has been one of McCain's close advisers.

Fiorini received a $21 million severance package when she ended her controversial tenure at Hewlett Packard. McCain has also complained of excessive corporate compensation, a charge he reiterated this week.

Johnson said in a statement that he had done nothing wrong, and Obama issued a statement saying, "Jim did not want to distract in any way from the very important task of gathering information about my vice presidential nominee. ... I remain grateful to Jim for his service and his efforts in this process."

With Johnson's departure, Obama's vice presidential vetting team now includes only former Deputy Attorney General Eric Holder and Caroline Kennedy, the daughter of former President Kennedy, neither of whom has participated in the vice presidential selection process in the past.

Johnson helped vet running mates for Mondale in 1984 and for John Kerry in 2004.

In between service in those campaigns and in various public-sector jobs, Johnson worked in the private sector, amassing a sizable nest egg. After leaving his post as executive assistant to Mondale, he founded Public Strategies, a consulting firm, before leaving in 1985 for Lehman Brothers. From 1991 to 1998, he served as chief executive officer of the Fannie Mae. Currently, he is vice chairman of a private banking firm, Perseus LLC.

When he left Fannie Mae, Johnson was receiving between $6 million and $7 million a year in compensation. In addition, The Wall Street Journal reported, he received a total of $1.7 million in mortgage loans with the help of the CEO of Countrywide Financial Corp., which is a subject of a federal investigation in the midst of the subprime mortgage crisis. The first loan was secured as Johnson was winding up his work at Fannie Mae.

Another compensation package also dogged Johnson's reputation: At United HealthCare in Minnesota, the company's CEO resigned after it was reported that he was granted more than $1.4 billion in stock options. Some of that money was returned as a result of legal settlements but the CEO, William McGuire, left with more than $800 million from the company.

Tom Hamburger writes for the Los Angeles Times

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