Republican National Committee - No Accountability: Will Obama Cut Ties With Jim Johnson, Who Received Millions From Accounting Manipulations and Sweetheart Mortgage Deals?

Jun 11, 2008, 01:00 ET from Republican National Committee

    WASHINGTON, June 11 /PRNewswire-USNewswire/ -- The following was
 released today by the Republican National Committee:
     (Logo: )
     Jim Johnson, A Former CEO Of Fannie Mae And Top Campaign Adviser,
 Earned Large Bonuses Due To An Accounting Manipulation:
     In 1998, Fannie Mae's Earnings Were Manipulated, Which Resulted In
 "Maximum Payouts" To Executives Including CEO Jim Johnson. "As CEO of
 Fannie Mae, Johnson, a former chief of staff to Vice President Walter F.
 Mondale and chairman of the board of the Kennedy Center, was the
 beneficiary of accounting in which Fannie Mae's earnings were manipulated
 so that executives could earn larger bonuses. The accounting manipulation
 for 1998 resulted in the maximum payouts to Fannie Mae's senior executives
 -- $1.9 million in Johnson's case -- when the company's performance that
 year would have otherwise resulted in no bonuses at all, according to
 reports in 2004 and 2006 by the Office of Federal Housing Enterprise
 Oversight." (Jonathan Weisman and David S. Hilzenrath, "Obama's Choice Of
 Insider Draws Fire," The Washington Post, 6/11/08)
     The Manipulation Resulted In Johnson Receiving A Bonus Of Over $1.9
 Million When He Otherwise Would Not Have Earned A Bonus. "An Office of
 Federal Housing Enterprise Oversight report in September accused the
 company of improperly deferring $200 million of estimated expenses in 1998,
 which allowed management to receive full annual bonuses. Had the expenses
 been recorded that year, no bonuses would have been paid, the report said.
 Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932
 million; Raines, who then was chairman-designate, $1.11 million; Chief
 Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S.
 Gorelick, a former deputy attorney general, $779,625; Chief Financial
 Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive
 vice president for housing and community development, $493,750." (Albert B.
 Crenshaw, "High Pay At Fannie Mae For The Well-Connected," The Washington
 Post, 12/23/04)
     Johnson Also Received Fees And Compensation From Fannie Mae Worth $3.3
 Million Between 2001 And 2006. "Johnson left the company before it was
 swept up in an accounting scandal that tarred its reputation, but even
 during the years of scandal, Johnson was reaping hundreds of thousands of
 dollars in consulting fees and other compensation, $3.3 million in all
 between 2001 and 2006." (Jonathan Weisman and David S. Hilzenrath, "Obama's
 Choice Of Insider Draws Fire," The Washington Post, 6/11/08)
     And Johnson Also Received Special Loans From Countrywide Financial:
     Jim Johnson, A Former CEO Of Fannie Mae Chosen To Lead Obama's Vice
 Presidential Search Committee, Received Special Loans From Countrywide
 Financial CEO Angelo Mozilo. "Countrywide Financial Corp. makes mortgage
 loans through a vast network of offices, brokers and call centers. But a
 few customers have gotten their loans a special way: through Countrywide
 Chief Executive Angelo Mozilo. These borrowers, known internally as
 'friends of Angelo' or FoA, include two former CEOs of Fannie Mae, the
 biggest buyer of Countrywide's mortgages, say people familiar with the
 matter. One was James Johnson, a longtime Democratic Party power and an
 adviser to Sen. Barack Obama's campaign, who this past week was named to a
 panel that is vetting running-mate possibilities for the presumed nominee."
 (Glenn R. Simpson and James R. Hagerty, "Countrywide Friends Got Good
 Loans," The Wall Street Journal, 6/7/08)
     While CEO Of Fannie Mae, Johnson And Mozilo Worked Closely And
 Maintained A "Close Friendship." "From 1991 to 1998, Mr. Johnson served as
 CEO of the Federal National Mortgage Association, also known as Fannie Mae,
 which worked closely with Countrywide, one of the nation's leading lenders
 and loan servicing companies. In 1996, Mr. Johnson named Mr. Mozilo as
 chairman of Fannie Mae's national advisory council. A 1999 article in the
 American Banker said the two men had a 'close friendship.'" (Josh Gerstein,
 "Top Talent Scout For Obama Tied To Subprime Lender," The New York Sun,
     "Property Records Show Mr. Johnson Has Received More Than $7 Million In
 Loans From Countrywide Since 1998, The First Coming In The Waning Days Of
 His Fannie Mae Tenure." (Glenn R. Simpson and James R. Hagerty,
 "Countrywide Friends Got Good Loans," The Wall Street Journal, 6/7/08)
     At Least Two Of The Mortgages Were At Rates "Below Market Averages."
 "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." (Josh Gerstein, "Top Talent Scout For Obama Tied To Subprime
 Lender," The New York Sun, 6/9/08)
     Johnson Did Not Inform Fannie Mae's Board Of His "Sweetheart Mortgage
 Deals." "Fannie Mae tells us that Mr. Johnson did not inform the company's
 board of these sweetheart mortgage deals, nor did his CEO successor
 Franklin Raines, who also received such loans." (Editorial, "Friends Of
 Barack," The Wall Street Journal, 6/11/08)
     As Recently As 2003, Johnson Has Praised Mozilo's Leadership Of Fannie
 Mae, Calling It "Remarkably Impressive." "Since leaving Fannie Mae, Mr.
 Johnson has lavished praise on Mr. Mozilo's performance, calling it
 'remarkably impressive ' in a 2003 interview with BusinessWeek. 'By
 strengthening servicing in good times, Countrywide has done a brilliant job
 of insulating itself for the down cycle,' Mr. Johnson told Fortune in
 2003." (Josh Gerstein, "Top Talent Scout For Obama Tied To Subprime
 Lender," The New York Sun, 6/9/08)
     NOTE: "In Recent Months, The Job Has Been Looking Less Than Brilliant,
 As Countrywide Reported Billions In Losses, Much Of It From So-Called
 Subprime Loans Made To Borrowers Unqualified For Typical Loans." (Josh
 Gerstein, "Top Talent Scout For Obama Tied To Subprime Lender," The New
 York Sun, 6/9/08)
     NOTE: Johnson Is Also A Bundler For Obama's Presidential Campaign And
 Has Committed To Raising $100,000 To $200,000. (Obama For America Website,, Accessed 5/19/08)
     FLASHBACK: Obama's Campaign Attacked Sen. Clinton's Campaign For Its
 Countrywide Ties:
     Obama Senior Campaign Strategist David Axelrod Criticized Sen. Clinton
 For Employing Mark Penn, Whose Firm Once Represented Countrywide. MSNBC's
 Keith Olbermann: "Senator Clinton not stopping to hear a reporter's
 question about Mark Penn, let alone answer it, leading Penn's counterpart
 in the Obama campaign to fill in the vacuum about Penn's non-departure
 departure this morning on MSNBC." David Axelrod: "She's stuck him with him
 through the revelation that his firm was working fro Blackwater and working
 for Countrywide, and, you know, so, it's kind of stunning. Remember that
 the embassy said they weren't sure whether he was there as a representative
 of his firm or a representative of Senator Clinton. I mean, I think there
 are issues associated with this. I'm not - you can use the word hypocrisy,
 but there are certainly questions that arise from this." (MSNBC's
 "Countdown," 4/7/08)
     Watch David Axelrod Here:
     Axelrod: "Penn's Business Dealings Have Always Been An Issue." "Last
 week, she turned her fire on a huge proposed pay-out to the founder of
 Countrywide Financial, the mortgage company at the centre of the storm. Yet
 two months ago, Countrywide turned for temporary help with its tattered
 image to the public relations firm Burson-Marsteller, whose president is Mr
 Penn. ... Mrs Clinton's criticism of lenders also raised fresh questions
 over the role of Mr Penn. Mr Obama's chief strategist, David Axelrod, said:
 'Penn's business dealings have always been an issue. The Clinton campaign
 is clearly not too worried who its chief strat-egist does business with.'
 Burson-Marsteller said it was no longer working with Countrywide and that
 Mr Penn did not have a hands-on role with many of its 2,000 clients."
 (Philip Sherwell, "Clintons' Pain And Gain In Housing Crisis," The Sunday
 Telegraph, 1/20/08)
     The Obama Campaign Criticized Sen. Clinton For Accepting Contributions
 From Representatives Of Countrywide. "Obama aides also said Clinton is in
 no position to stiffen oversight after taking contributions from mortgage
 industry lobbyists, including funds from representatives of Countrywide,
 which has been at the center of the mortgage meltdown. 'If we're really
 going to crack down on the practices that caused the credit and housing
 crises, we're going to need a leader who doesn't owe these industries any
 favors,' campaign manager David Plouffe said." (Anne E. Kornblut, "Clinton
 Unveils Plan To Ease Housing Crisis," The Washington Post, 3/25/08)
     Paid for by the Republican National Committee.
     Not Authorized By Any Candidate Or Candidate's Committee.

SOURCE Republican National Committee