Linda Chavez

It wasn't exactly the news the Obama campaign hoped to make this week: "Obama Aide Quits Under Fire for His Business Ties." But that was the headline in The New York Times, with variations in other major papers. The aide in question was the head of Barack Obama's vice presidential search committee, Jim Johnson, described by the Washington Post as "a consummate Washington insider." But the insider is now out, and the flap raises new questions about Obama's judgment. Why is it that Obama surrounds himself with people who carry so much baggage?

You would think that a candidate who has railed against the subprime mortgage business and blamed certain companies by name would steer clear of anyone with ties to that industry or those companies. Yet Obama picked Johnson to head up his vice presidential search committee even though Johnson had previously been CEO of Fannie Mae, the troubled institution that guarantees most home mortgages. Now, it turns out, Johnson received millions of dollars in loans with lower-than-market interest rates from one of Fannie Mae's partners, Countrywide Financial -- a company Obama has heavily criticized.

During the Pennsylvania primary, Obama said, "Countrywide Financial was one of the folks, 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 may end up losing their homes." Obama also blamed Countrywide's top two executives, who, he said, paid themselves $19 million in bonuses as part of the sale of their company.

But when reporters revealed that Johnson had received preferential treatment from Countrywide, Obama's response was, "I am not vetting my VP search committee for their mortgages," and then went on to blame those who raised questions. "This is a game that can be played. Everybody you know who is tangentially related to our campaign I think is going to have a whole host of relationships. I would have to hire the vetter to vet the vetters," he said.

Johnson's departure doesn't end the controversy around Obama's VP search committee, however. One of the other members of the committee, Eric Holder, has his own problems. Holder was the No. 2 man in the Clinton Justice Department and played an important role in a controversial, last-minute presidential pardon of financier Marc Rich. Rich spent nearly two decades as a fugitive dodging charges for federal tax evasion and trading with Iran while that country held U.S. citizens as prisoners. These pardons have been the subject of federal investigations and congressional hearings, tarnishing Holder's reputation.


Linda Chavez

Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .

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