Politics & Government

Head of Obama's VP search resigns over loan allegations

WASHINGTON — The head of Barack Obama's vice presidential-selection committee resigned Wednesday, saying he'd done nothing improper in accepting special home loans from a company that's at the center of the subprime mortgage crisis but didn't want the controversy to hurt Obama's election chances.

Jim Johnson "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 released by his campaign. Obama said he was grateful for Johnson's guidance over recent weeks and expressed confidence that the selection process he put in motion would proceed without him.

The Obama campaign had no immediate word on whether Johnson would be replaced with another unpaid adviser to head the vetting process for a running mate.

Two others also tapped to look at potential running mates were expected to stay on. They're Caroline Kennedy, the daughter of President Kennedy, and Eric Holder, a former deputy attorney general under President Clinton.

Johnson is a former chairman of Fannie Mae, the quasi-public mortgage guarantee organization, and a Washington insider, having served previously as the chairman of the Kennedy Center and The Brookings Institution, a center-left policy organization. Known for his discretion, he also had vetted potential running mates for John Kerry in 2004 and assisted Walter Mondale two decades earlier.

Critics had pointed to Johnson's insider reputation as a contradiction for Obama, who promises to change "politics as usual" and to look outside Washington for solutions.

That argument had found little traction until a Wall Street Journal report Saturday that Johnson was among a group of friends of the chief executive officer of Countrywide Financial Corp. who received below-market-rate home mortgages.

Republican presidential nominee John McCain and the Republican National Committee seized on the story, saying Obama was a hypocrite for criticizing Countrywide's practices publicly then tapping advisers who benefited from the company's practices. Democrats have criticized McCain for lobbyists' involvement in his campaign.

Obama stood by Johnson on Tuesday when he was asked about the controversy, saying, "I am not vetting my VP search committee for their mortgages," and that to know everything about everyone tangentially connected to his campaign, "I would have to hire a vetter to vet the vetters."

Obama also had dismissed the criticism as a "game" by his opponents and said it was an important distinction that Johnson was serving in an unpaid campaign position as opposed to a government job that had an impact on policy.

Republicans responded to news of Johnson's departure by turning up the heat on others connected to Obama.

They noted that Holder of the vice presidential panel had been involved in President Clinton's controversial pardon of Marc Rich. While Obama purports to keep registered lobbyists at arm's length, they said, one of the key fundraisers for the Democratic convention this year is a lobbyist.