James Johnson, a longtime aide to former Democrat Vice President Walter Mondale, headed the mortgage lender Fannie Mae (Federal National Mortgage Association) from 1991 to 1998. During those years, Fannie Mae (along with Freddie Mac, a.k.a. the Federal Home Loan Mortgage Corporation) was heavily involved in making subprime loans to high-risk borrowers -- particularly racial and ethnic minorities -- who failed to meet traditional loan criteria. In 2007, Obama stated that “subprime lending started off as a good idea -- helping Americans buy homes who couldn’t previously afford to.”
But as a result of such lending practices, Fannie Mae and Freddie Mac in September 2008 suffered a financial collapse that required a $700 billion government bailout. Though Johnson had been instrumental in setting the stage for that collapse, he personally earned tens of millions of dollars in his Fannie Mae post, including $21 million in 1998 alone.
In the summer of 2008, Barack Obama tapped Johnson to chair his vice presidential selection committee. But soon thereafter, Johnson had to resign in disgrace from that position when it was revealed that he personally had taken at least five real estate loans (totaling more than $7 million) at below-market rates from Countrywide Financial Corporation, a company which, as Obama had repeatedly charged, played a major role in the subprime mortgage crisis. “These are the folks who are responsible for infecting the economy and helping to create a home-foreclosure crisis,” Obama had said of Countrywide at a March 31 campaign appearance in Pennsylvania. “Two million people may end up losing their homes.”