Barack Obama has campaigned as an outsider with a pronounced disdain for Washington establishment insiders; he has promised us a respite from the old politics. And yet, in virtually his first act as the presumptive Democratic nominee, he has enlisted, as a key vetter of potential running mates, a classic Washington establishment insider, an old-politics fixer who has feathered his own nest thanks to sweetheart favors bestowed by corporate pals with close links to the subprime mortgage fiasco.
Obama felt compelled yesterday to defend his tin-eared enlistment of Jim Johnson. His defense was actually quite lame, as I'll explain later. But first, let us list the ways that Johnson is a bad idea:
1. His presence contradicts the spirit of the Obama message. Obama has set his bar very high; he has vowed to repudiate politics as usual. Johnson epitomizes politics as usual. Washington insiders typically bring their baggage with them. Johnson's baggage includes longstanding personal dealings with Countrywide Federal Corp. - which Obama himself assailed back in March as "a company that is as responsible as any firm in the country for the housing crisis we're facing today...These are the folks who are responsible for infecting the economy and helping to create a home foreclosure crisis." And his baggage includes a '90s stint as CEO of Fannie Mae, the federally-chartered secondary market mortgage investor. Federal investigators have authored reports on mismanagement and corruption inside Fannie Mae. Johnson has never been charged with any wrongdoing, but the link looks bad. Symbolism matters, particularly since Obama is seeking to symbolize something new.
2. Johnson is a bad idea on the substance. As news reports first indicated last weekend, Johnson has received at least $7 million in home loans from Countrywide Federal - at rates considerably below market average - simply because Countrywide CEO Angelo Mozilo considered Johnson a worthy friend. Mozilo reportedly aided other friends in a similar fashion. Mozilo is also one of the Countrywide principals that Obama singled out for criticism in March.
3. On substance, the Countrywide link is only part of the story. Johnson has served on the boards of five corporations that have granted lavish pay and perk packages to their CEOs. Actually, it's worse than that: Johnson has served on their compensation committees (and headed at least one of them), with the job of deciding the size of those pay and perk packages. These five companies have reportedly been rebuked by various corporate-responsibility watchdogs (Institutional Shareholder Services and The Corporate Library) for various accounting errors and for lavishing executive perks far in excess of job performance. In the case of one Minnesota company, where Johnson headed the compensation committee, the CEO was awarded $1.4 billion in stock options - but, after federal regulators and shareholders protested, the CEO was forced to give back almost half the amount. Ironically, Obama has sponsored a Senate bill that would curb the kind of excesses that his own vetter has engaged in.
4. As stressed earlier, Johnson has never been charged with any wrongdoing in connection with his '90s stint as the CEO of Fannie Mae. But he got a great deal there nevertheless. According to a 2006 report by the Office of Federal Housing Enterprise Oversight, Fannie Mae employed some accounting tricks to mask the true size of Johnson's 1998 post-employment compensation package. His official take was roughly $7 million; the actual amount was $21 million. In the words of the report, Fannie Mae "failed to disclose to (us) in a timely manner" the full scope of the Johnson deal.
5. Some might take note of items one through four and say, "So what? That's just old stuff that has nothing to do with Johnson's long experience vetting prospective Democratic running mates." Well, here's the thing: his track record as a vetter isn't that great, anyway.
Four years ago, working for the Kerry campaign, Johnson came up with John Edwards - who, in terms of chemistry, turned out to be a bad fit for Kerry, and who, in terms of states and constituencies, wound up delivering squat. And let's recall what happened in 1984, when Johnson - as chairman of the Walter Mondale campaign - was the key guy who came up with the disastrous Geraldine Ferraro. Ferraro's husband, John Zaccaro, was a New York wheeler dealer with questionable business connections, yet his records were never scrutinized in advance. As Time magazine reported, in the late summer of 1984, "the Mondale camp's pre-nomination review of the finances of Ferraro and her husband John Zaccaro fell short of the rigorous inquisition some other potential vice-presidential choices and their families have been put through."
Obama was asked about Johnson yesterday, at least with respect to the sweet loan deals with Countrywide. Here's what the candidate said: "I am not vetting my VP search committee for their mortgages...I mean, 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...These aren't people who are working for me. They're not people, you know, who I have assigned to a job in a future administration..."
So let's review: Obama taps, as a chief vetter of prospective running mates, a guy whose track record and pedigree contradict the core Obama message. Then, when he is called on this, he insists that the guy is only "tangentially related" to the campaign, and not really working for him. Which is an odd characterization, given the fact that Johnson had been entrusted with helping to find the best person qualified to spend eight years a mere heartbeat away from the presidency.
I assume that Johnson probably learned some valuable lessons about his Ferraro experience in 1984. But it appears Obama still have a few things to learn about the challenge of meeting the high expectation and standards that he has established for himself.
MIDDAY UPDATE: Well, guess what. The guy who Obama says is only "tangentially related" to the campaign announced this afternoon that he is severing all his tangents. In other words, Jim Johnson has quit.
Here's the statement from Obama: "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 underway, 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."
Obama was smart to kill this story dead today, rather than keep wobbling as he did yesterday.
Did you know that the Boston Red Sox are terrorists? I learned this last night, when I saw Coco Crisp bump fists with the first-base coach. I'm not sure what secret al Qaeda messages passed between them, but it sure looked shady. And it appears that the Detroit Tigers are even worse; when they left the field last night, I saw two of the outfielders bump their gloves. Perhaps that's a signal to launch nukes.
Thanks to Fox News, we do need to watch out for those fist bumps, so there I was, just being vigilant.
The other day, as you may have heard, a Fox News host named E. D. Hill critiqued the now-famous bumping of fists between Obama and wife Michelle on the night he clinched the nomination. What could that gesture possibly signify, she playfully wondered. Perchance could it be, in her words, "a terrorist fist jab"?
But after it became apparent that not even Fox News could abide by its own innuendo, Hill felt compelled yesterday to issue a mea culpa on the air: "I mentioned various ways that the Obamas' fist bump in St. Paul had been characterized in the media. I apologize, because, unfortunately, some thought I personally had characterized it inappropriately. I regret that. It was not my intention."