Obama, McCain's ties to Fannie Mae

Andrew Zajac

Barack Obama's taking serious heat for his reliance on former Fannie Mae CEO James Johnson to vet potential vice presidential prospects.

Obama has presented himself as an outsider and a Washington change agent and Johnson, whose favorable loan deals with Countrywide Financial Corp. made him a lightning rod, is as inside as they come in the capital.

How much of an outsider can Obama be, really, GOP skeptics ask, if he's turned to somebody like Johnson for important spadework in finding a running mate?

Johnson announced he quit the Obama campaign earlier today, but the question likely will linger.

John McCain's campaign manager, Rick Davis, also has ties to Fannie Mae, though less directly.

Davis, was president of the Homeownership Alliance, a Fannie Mae and Freddie Mac-led advocacy group which has tried to fend off regulation sought by large private banks and mortgage lenders.

The front story of the Homeownership Alliance is that it sought to make home ownership affordable to the broadest possible range of people and feared that that this mission would be compromised if Congress stepped in with too many rules.

The back story, according to critics, is that Fannie Mae and Freddie Mac feared that Congressional meddling would lower their healthy profits.

The issue really hasn't been who could buy a home. It's been more about the playing field for the vast mortgage market.

Fannie and Freddie are publicly-traded companies, but they are federally-chartered, which creates the widespread impression that if they really screw up, the government will bail them out.

Private banks don't operate with that perception and so, they argue, their costs of doing business are higher.

For years, banks' Hill allies, mostly Republicans, including Richard Baker, of Louisiana, have sought 'reforms' to level the playing field.

Davis, who has a 25+ year pedigree as a lobbyist and Republican political consultant, was hired in 2000 and the Homeownership Alliance was ginned up, to help Fannie and Freddie build support to rebuff Baker's efforts. The organization dissolved about two years ago.

To be clear, Davis's tenure at the Alliance wasn't accompanied by the same criticism that dogged Johnson's links to Fannie Mae and Countrywide.

But the involvements of both men in a Washington honey pot like Fannie Mae underscore the difficulties of selling the message of reform in both the McCain and Obama campaigns.

It defies belief -- actually it's a practical impossibility -- that Obama could be elected without some reliance on the Washington establishment represented by people like Johnson.

Same thing for McCain, who has raged against the influence of big money lobbying while entrusting his campaign to some of the oldest and most accomplished practitioners in the capital.