Democratic presidential candidate Barack Obama was roiled by another campaign scandal on Wednesday when a key adviser resigned amid damaging reports that he had received preferential home loans.
Although Jim Johnson, who has been leading the hunt for a vice-presidential candidate, denies any favourable treatment, the accusations could dent Obama’s image as an untarnished newcomer who has vowed to clean up Washington politics.
Johnson, a former chief executive of mortgage giant Fannie Mae, resigned just hours after Obama took part in a round table in Chicago highlighting the impact of predatory lending on Americans.
Millions have lost their homes over the past two years, unable to keep up with soaring mortgage payments. About 1,5-million foreclosures were initiated in 2007, marking a 53% spike from the prior year, according to the Federal Reserve.
Johnson has denied a weekend Wall Street Journal report that he may have received favourable treatment from Countrywide Financial — a bank Obama has sharply criticised for its role in the subprime lending crisis — while he was at Fannie Mae.
But the Washington Post further alleged on Wednesday that Johnson benefited from an earnings manipulation in 1998 that allowed the company’s executives to earn large bonuses, pocketing $1,9-million.
Obama said in a statement that Johnson had resigned because he “did not want to distract in any way from the very important task of gathering information about my vice-presidential nominee”.
The 46-year-old Obama, who has campaigned with a call to change, has vowed to reject all contributions from lobbyists and to rid politics of corruption and self-interest.
Criticised
His Republican rival, John McCain, who regularly vows to get rid of “pork barrel” spending in Washington, has been criticised for giving lobbyists key positions in his campaign.
McCain has lost five advisers in recent weeks, two of whom had lobbied for the Burma junta while others had lobbied on behalf of Saudi Arabia or Russia.
In the ethics war, McCain’s campaign jumped on reports of Johnson’s alleged conflict of interest to accuse Obama of hypocrisy and poor judgement.
“The American people have reason to question the judgement of a candidate who has shown he will only make the right call when under pressure from the news media,” McCain spokesperson Tucker Bounds said in a statement.
“America can’t afford a president who flip-flops on key questions in the course of 24 hours. That’s not change we can believe in.”
The Obama campaign countered by accusing McCain of hypocrisy in return, noting that a prominent lobbyist is currently heading the Republican’s vice-presidential selection process and that his top economic adviser received a $21-million severance package while presiding over “thousands of lay-offs at Hewlett Packard”.
“We don’t need any lectures from a campaign that waited 15 months to purge the lobbyists from their staff, and only did so because they said it was a ‘perception problem’,” said Obama campaign spokesperson Bill Burton.
National polls this week showed Obama widening his lead over McCain, particularly picking up support among women following his defeat of former first lady Hillary Clinton in the Democratic primary.
The struggling economy has dominated the White House campaign in recent days as the two candidates battle ahead of the November 4 general elections.
“We know there are tough times. I don’t have to tell you,” McCain (71) told a town hall meeting in Philadelphia, Pennsylvania, a key swing state.
“We need to keep taxes low. Why in the world would anyone consider raising your taxes in difficult economic times?” — AFP