McCain and Obama Sling Mortgage Mess Mud

June 10, 2008 — -- With the general election campaign now in full swing, the presumptive presidential nominees have wasted little time in trying to taint each other with ties to the sub-prime mortgage crisis.

Republicans have been quick to criticize Democrat Sen. Barack Obama over revelations that an advisor on his newly formed vice presidential search committee may have received preferential loans from Countrywide Financial, one of the nation's largest sub-prime mortgage leaders.

The advisor, James A. Johnson, received millions of dollars in Countrywide loans through an informal program for friends of the company's chief executive Angelo Mozilo, according to the Wall Street Journal. Johnson is the former head of Fannie Mae, the nation's largest buyer of Countrywide's loans.

Johnson has not commented on the brouhaha, but his lawyer told ABCNews.com that the loan terms were well within industry norms.

"These interest rates aren't that different from what you'd expect for a high-net-worth individual who is borrowing less, relative to the value of the house," said attorney Brian Brooks.

Johnson's lawyer did confirm, however, "to the best of our knowledge", that Johnson did receive millions of dollars worth of loans at a reduced rate.

Obama has been a vocal critic of Countrywide on the campaign trail, accusing the company of tricking families into buying homes they couldn't afford and forcing millions of homeowners into foreclosure.

Republican Senator John McCain, on Fox News on Monday, suggested that Obama was guilty of hypocrisy.

"I think it suggests a bit of a contradiction talking about how his campaign is going to be not associated with people like that," said McCain.

Obama spokesman Tommy Vietor fired back stating "it's the height of hypocrisy for the McCain campaign to try and make this an issue when John Green, a top advisor to Mr. McCain, lobbied for Ameriquest, which was one of the nation's largest sub-prime lenders and a key player in the mortgage crisis."

Green, who serves as McCain's top liaison to Congressional Republicans, worked with McCain finance co-chairman Wayne Berman, to lobby Congress on behalf of Ameriquest on issues related to mortgage reform legislation in 2005 and 2006, according to public filings.

The McCain campaign has also faced questions about the role of campaign co-chair Senator Phil Gramm as a McCain economic advisors.

As a Senator, Gramm spearheaded a massive effort to deregulate the financial markets. He retired from the Senate in 2002 and went on to serve as vice chairmen for Swiss banking giant UBS and was registered to lobby Congress on behalf of the company, which has lost billions in the sub-prime mortgage meltdown, up until the end of last year.