Wow. It certainly didn't take long for Barack Obama to show us that he has no idea about our little housing situation. The day he picked Jim Johnson to vet vice presidential candidates (he was "un-picked" yesterday), the man who put the FANNIE in Fannie Mae, Obama spoke volumes about what he doesn't know. James A. Johnson! When they write the book on our current financial crisis, Johnson will have his own chapter. Let's review:
- Johnson ran Fannie Mae from 1991 to 1998 and then has been a paid consultant to the present day.
- He hand picked the Fannie management of Franklin Raines and Tim Howard, the guys who cooked Fannie's books to get themselves paid millions. Also, under his watch, the fabulous risk management and accounting infrastructure that helped Fannie lose billions this decade was built.
- Johnson built one of the greatest lobbying machines known to man. It was that lobbying machine that made sure that no one would interfere in Fannie Mae's abuse of the their Government Sponsored Enterprise status. He's a political powerbroker because he handed out millions to just about any member of congress who might have a hand in housing finance.
- He took millions of dollars of loans from Countrywide's Angelo Mozilo. These loans were often outside Countrywide's own guidlines (He was in a program called "Friends of Angelo"!). At the same time as he was getting these loans from Countrywide, he was "advising" Fannie Mae on what to charge Countrywide for the insurance fee (the guarantor fee) to guarantee Countrywide loans going into Fannie Mae Mortgage Backed Securities (MBS). Over the first few years of the decade the price of that insurance was halved more than 50%. Naturally, there were many factors involved (like the silly price war that Freddie Mac and Fannie conducted 1999-2004) that lowered these fees, but there was certainly a conflict of interest there between Johnson and Countrywide. One of the reasons Fannie Mae is in so much trouble now is they did not charge enough for the insurance from 1999-2007, thus severly reducing Fannie's cushion for credit losses.
- He has also been on the Board of Directors of KB Homes. In 2007 KB had to restate seven years of earnings because of the backdating of executive stock options. Guess who was on the compensation committee? Johnson was also on the board of UnitedHealth Group, another company who had an stock option backdating issue.
- He also ran Walter Mondale's run for the White House in 1984. Enough said. He also advised John Kerry in 2004. Again, enough said.
So the fact that Barak Obama let this sleazeball anywhere near his campaign is troubling. The fact that he put Johnson in charge of vetting potential vice president candidates shows he, along with all the rest of these chuckle-heads, has no clue.
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