John McCain has decided to attack Barack Obama on his connections to Fannie Mae CEO Franklin Raines.  With Obama attempting to pass off McCain as a newcomer to the Hope-Change Express, McCain points out Obama’s complete lack of economic experience — and points out that his adviser has a great deal of responsibility for Fannie Mae’s insolvency:

Obama has no background in economics. Who advises him? The Post says it’s Franklin Raines, for “advice on mortgage and housing policy.”

Shocking.

Under Raines, Fannie Mae committed “extensive financial fraud.” Raines made millions. Fannie Mae collapsed.

Taxpayers? Stuck with the bill.

Barack Obama. Bad advice. Bad instincts. Not ready to lead.

Team McCain knows that this will be a big problem for voters looking for a change in Washington.  Raines, and Obama’s other Fannie Mae advisor Jim Johnson, are exactly the kind of CEOs and big shots that Obama usually demonizes on the campaign trail.  They took exorbitant salaries and ran Fannie into the ground.

Here are a few articles of interest about Raines from the Washington Post:

  • March 2005: Perverse executive pay forced Raines out of his job.
  • May 2006: Extensive fraud at Fannie Mae under Raines’ direction, generating over $50 million in bonuses for nonexistent growth.
  • April 2008: Raines gives up $24 million in future payouts to avoid criminal charges in Fannie Mae fraud, although most of that was in worthless options; he pays $2 million in cash.

Note that Raines continued to advise Obama even after that settlement.  It’s not as though Obama didn’t know Raines’ past.  Apparently, he just didn’t care.

Excellent ad.  McCain needs to expand on this.

Update: JWF has the Obama response, which falls back on the “seven houses” meme:

This is another flat-out lie from a dishonorable campaign that is increasingly incapable of telling the truth. Frank Raines has never advised Senator Obama about anything — ever. And by the way, someone whose campaign manager and top advisor worked and lobbied for Fannie Mae and Freddie Mac shouldn’t be throwing stones from his seven glass houses.

Uh-huh.  By the way, it wasn’t the McCain campaign that “smeared” Obama, but also the Washington Post:

  • 7/16/08: “In the four years since he stepped down as Fannie Mae’s chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case’s D.C. conglomeration of finance, entertainment and health-care companies and more recently, taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.”
  • 8/28/08: “In the current crisis, their biggest backers have been Democrats such as Senate Banking Committee Chairman Christopher J. Dodd (Conn.) and House Financial Services Committee Chairman Barney Frank (Mass.). Two members of Mr. Obama’s political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae.

Team Obama never objected to this reporting before tonight.  Jim Johnson will almost certainly get the next starring role in a McCain ad, and what will Obama have to say about the man he originally tapped to pick his running mate?