Jim Johnson Quits Obama's VP Search Team

June 11, 2008 — -- Former Fannie Mae executive Jim Johnson, who was a leader of the vice presidential search committee for presumptive Democratic presidential nominee Sen. Barack Obama, resigned from that unpaid position today amid criticisms that Johnson represented a world of influence and special interests that stood in stark contrast with what Obama's campaign purports to stand for.

"I would not dream of being a party to distracting attention from that historic effort," Johnson said in a statement this afternoon. "I believe Barack Obama's candidacy for president of the United States is the most exciting and important of my lifetime."

Obama immediately 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, so he has made a decision to step aside that I accept. We have a very good selection process under way, and I am confident that it will produce a number of highly qualified candidates for me to choose from in the weeks ahead. I remain grateful to Jim for his service and his efforts in this process."

Watch Jake Tapper's story on ABC's World News tonight at 6:30pmET.

Obama had been under fire for his association with Johnson after the Wall Street Journal reported over the weekend that Johnson had received $7 million in loans for mortgages with rates below market averages from a special account controlled by the CEO of Countrywide Financial Corp., Angelo Mozilo.

Countrywide was a company Obama and his campaign had attacked on the campaign trail for its role in the housing crisis. The perceived chasm between Obama's rhetoric and his association with Johnson served as a distraction for his campaign and an opportunity for his critics.

'Questions About Barack Obama's Judgment'

On Monday, Sen. John McCain, the presumptive Republican presidential candidate, told Fox News that Johnson's role in Obama's vice presidential search "suggests a bit of a contradiction, talking about how his campaign is going to be not associated with people like that. Clearly he is very much associated with that."

"Jim Johnson's resignation raises serious questions about Barack Obama's judgment," said McCain spokesperson Tucker Bounds Wednesday. "By entrusting this process to a man who has now been forced to step down because of questionable loans, the American people have reason to question the judgment of a candidate who has shown he will only make the right call when under pressure from the news media."

The Obama campaign shot back Wednesday: "We don't need any lectures from a campaign that waited fifteen months to purge the lobbyists from their staff, and only did so because they said it was a 'perception problem,'" said Obama campaign spokesperson Bill Burton.

"It's too bad their campaign is still rife with lobbyist influence and doesn't see a similar 'perception problem' with the man currently running their own vice presidential selection process, a prominent DC lobbyist whose firm has represented Exxon and a top Enron executive, or their campaign chair and John McCain's top economic adviser Carly Fiorina, who presided over thousands of layoffs at Hewlett Packard while receiving a $21 million severance package and $650,000 in mortgage assistance," Burton said, initially referring to Arthur Culvahouse, a former Reagan White House counsel turned lobbyist.

VP Vetter an Experienced, Washington Insider

A consummate Washington, D.C., insider, Johnson's leadership role in Obama's campaign seemed to belie the candidate's promise to voters that "the stakes are too high and the challenges too great to play the same Washington game with the same Washington players and expect a different result."

But beyond that contradiction and Johnson's controversial time at Fannie Mae was the issue of what Republicans termed Johnson's "sweetheart" loan from Countrywide. Earlier this year, Obama and his campaign had impugned Sen. Hillary Clinton for taking money from Countrywide lobbyists and for allowing a senior campaign adviser to simultaneously do work for Countrywide.

Campaigning in Pennsylvania in March, Obama made a point of railing against not only Countrywide, a major player in the subprime mortgage industry, but Mozilo, who gave Johnson the loans from a special Friends of Angelo account.

"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," Obama said in Lancaster, Pa. "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 went on to note that when "Countrywide Financial engineered a sale of its company, the two CEOs, the two people in charge of the company, got $19 million bonuses. They get a $19 million bonus while people are at risk of losing their homes. What is wrong with this picture?"

"Everything!" the crowd yelled.

"Everything is wrong with it," Obama agreed. "But the problem is we have almost come to expect it because no one in Washington seems to be outraged by it."

But when Obama was asked about Johnson's special loan from Countrywide Tuesday in St. Louis, outrage seemed the furthest emotion he could muster.

"I am not vetting my VP search committee for their mortgages," he said after ABC News asked him about the apparent contradiction. "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."

Obama: VP Vetters 'Aren't Working for Me'

Obama even claimed that Johnson and another member of the vice presidential search committee, former deputy attorney general Eric Holder, aren't "working for me," presumably since they're not drawing salaries.

Good government groups criticized Obama Wednesday.

"He's got to learn that every decision he makes, he's got to do what he was mocking yesterday, and that is he's got to vet the vetters," said Bob Edgar, Common Cause, a nonpartisan watchdog group.

Johnson conducted the vice presidential searches for former Democratic presidential nominees Walter Mondale in 1984 and Sen. John Kerry in 2004.

Norm Ornstein, a congressional scholar with the American Enterprise Institute, said it's unfortunate that Johnson resigned from Obama's VP search team.

"Jim Johnson was as good as it gets when it comes to this vetting process; it's going to hurt Obama to lose him," he said.

On a conference call today, Kerry praised Johnson as a professional. "Jim Johnson is a very experienced, very discreet, very capable individual," Kerry said. "He's not at a position to do anything except provide information to somebody who wants information. and he's proven himself somebody who has a great skill at gathering that information, keeping it personal and private."

Sunlen Miller, Avery Miller, and Richard Coolidge contributed to this report.