Obama accepts resignation of VP team leader

Jim Johnson, the veteran Washington insider who was born and bred in Minnesota DFL politics, resigned Wednesday as head of Barack Obama's vice presidential search committee after questions about mortgage rates he received from Countrywide Financial Corp., a lender entangled in the subprime mortgage mess.

Johnson, a native of Benson, Minn., said in a statement that he had done nothing wrong but was stepping down to spare the Obama campaign unneeded publicity.

"I would not dream of being a party to distracting attention from that historic effort," he said, despite the "blatantly false statements and misrepresentations" made about him since a Wall Street Journal story ran last Saturday.

After the article appeared, Republican presidential candidate John McCain accused Obama of hypocrisy in naming Johnson to lead the vetting panel after Obama had repeatedly blasted Countrywide for selling billions of dollars' worth of subprime mortgages. Countrywide is the largest home mortgage lender in the country.

The Journal reported that Johnson was in his waning days as CEO of Fannie Mae, the quasi-public lending agency he headed from 1991 to 1998, when he received the first of several loans from Countrywide.

The Journal, which reported that Johnson got loans through Countrywide CEO Angelo Mozilo, said a comparison of rates raised the possibility that Johnson was given preferential treatment.

However, it added that it was impossible to tell for sure from documents because the disparity could be explained by other factors. It also said there is nothing illegal about giving some borrowers better treatment than others.

"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 said.

It wasn't clear when or whether Obama would replace Johnson on the search team, which also includes former Deputy U.S. Attorney General Eric Holder and Caroline Kennedy, the daughter of President John F. Kennedy and an early Obama booster.

Reaction from Mondale

Neither Johnson nor his attorney returned calls seeking comments Wednesday. However, Johnson's most famous boss -- former Vice President Walter Mondale -- said he thought Johnson did the right thing by resigning, although he was sorry to see it.

"He's a very gifted person, a solid and honest person," Mondale said. "I hate to see a talent like this forced out of the political process. We've worked side by side for 40 years, including the four years I was vice president. As far as I'm concerned, he's as honest as they come."

Minnesota background

Johnson, 64, is the son of the late A.I. Johnson, a longtime Minnesota legislator who served as speaker of the House in the 1950s. After graduating from Benson High in 1961, Johnson earned degrees at the University of Minnesota and Princeton University. He worked for Dayton-Hudson and on campaigns for Sens. Eugene McCarthy and George McGovern before becoming Mondale's chief of staff.

He chaired Mondale's presidential campaign in 1984 and vetted vice presidential possibilities for Mondale and again for Sen. John Kerry in 2004.

Johnson currently is vice chairman of Perseus, a private equity bank, and lives in Washington, D.C.

Reed Anfinson, owner and publisher of the Swift County Monitor-News in Benson and a cousin of Johnson's, said stepping down was "true to Jim's nature. ... He's not about the limelight, he's about serving the candidate."

He still returns occasionally to Minnesota for family reunions, Anfinson said.

Loans at issue

According to the Journal story, the interest rates Johnson got for two loans totaling $2.3 million were lower than prevailing rates at the time. Johnson received another loan, for $390,000, for a rate equivalent to the market at the time.

Whether the terms were preferential is another question, the Journal noted; several factors might account for lower rates, including a borrower's income and credit score and the number of points a borrower might have paid upfront to secure a lower rate. Johnson's lawyer told the Journal that his loan terms met industry standards.

Johnson sits on the board of Target Corp., and from 1993 until this month also was a director for UnitedHealth, the Minnetonka-based insurer that drew sharp criticism for the way the board handled compensation for former CEO William McGuire.