Josh Gerstein, New York Sun
Long-standing ties between a member of Senator Obama’s new vice presidential search team and a prominent mortgage executive the senator has pilloried could become a political liability that hampers the presumptive Democratic presidential nominee’s ability to tap into public ire over the subprime mortgage crisis.
James Johnson, one of three people tapped by Mr. Obama recently to oversee the search for his running mate, took at least five real estate loans totaling more than $7 million from Countrywide Financial Corp. through an informal program for friends of the company’s CEO, Angelo Mozilo, the Wall Street Journal reported Saturday. The Journal said at least two of the mortgages, among a series of loans made available to people Countrywide officials called “friends of Angelo,” were at rates below market averages, though it is difficult to predict a market rate without access to nonpublic information about a borrower’s credit history and other factors that can reduce interest charges on a loan.
Among the loans to Mr. Johnson, according to the Journal, were a $5 million home equity line of credit against a house in Ketchum, Idaho, a 5.25% loan of $1.3 million for a home in Palm Desert, Calif., and a 3.875% loan of $971,650 for a home in Washington, D.C. The interest rates applied for the first five years of the loans.
“That reeks most high,” a public relations specialist and vocal critic of Mr. Mozilo, Bonnie Russell of Del Mar, Calif., said. “Where’s the ‘change to believe in’ if they’re playing the same old game using the same old players?”
On the campaign trail, Mr. Obama has criticized Countrywide’s executives. “These are the people who are responsible for infecting the economy and helping to create a home foreclosure crisis. Two million people may end up losing their homes,” Mr. Obama said in March at a town hall meeting in Lancaster, Pa.
The Chicago Tribune reported that the senator from Illinois “fumed” over a total of $19 million in bonuses set to be paid to Mr. Mozilo and the president of Countrywide, David Sambol. “They get a $19 million bonus while people are at risk of losing their home. What’s wrong with this picture?” Mr. Obama asked.
In a written statement issued in March, the senator called the payments “an outrage” and suggested Mr. Mozilo and others had “tricked” homeowners into unaffordable loans. “These executives crossed the line to boost their bottom line,” Mr. Obama declared.
A spokesman for the Republican National Committee, Danny Diaz, yesterday called the loans to Mr. Johnson “highly questionable” and said they conflicted with Mr. Obama’s public comments. “Barack Obama needs to immediately address this matter; otherwise, his rhetoric will continue to prove to be nothing more than complete hypocrisy,” Mr. Diaz said.
