In another embarrassment for Democratic presidential nominee Barack Obama's [Images] White House campaign, the person heading the team looking for his running mate has abruptly resigned following outcry over his personal loan dealings.

James A Johnson, a Washington insider for about three decades, stepped down Wednesday as questions were raised over the terms on which he borrowed loans from a company involved in the US housing crisis.

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He is the second high ranking adviser of Obama to resign. Earlier Samantha Power had left after she came under criticism for referring to Hillary Clinton [Images] as 'a monster'.

The US media as also the Republicans had been scrutinising what are believed to be favourable terms Johnson received from the Countrywide Financial Corporation, a company which played central role in subprime lending crisis which is now dragging down the whole US economy.

The Wall Street Journal had reported that Johnson, a former chief executive of Fannie Mae, got loans at below the market rates from the company.

Johnson, also faced questions about his role on compensation committees that awarded large payouts to corporate executives, media reports said.

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But Johnson denied any wrongdoing, asserting in a statement that he was leaving only to save Obama 'further grief'.

Obama, who defeated Hillary Clinton in an acrimoniously fought campaign for the nomination and now faces Republican John McCain [Images], said, "Jim did not want to distract in any way from the very important task of gathering information about my vice presidential nominee, so he made the decision to step aside which I accept."

Johnson was heading a three-member committee which include Caroline Kennedy, daughter of President John F Kennedy and former attorney general Eric Holder.

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Johnson's stepping down is an indication of the close scrutiny Obama and his close associates would face at the hands of both Republicans and the media over next five months.

Earlier this week, Obama had defended Johnson, saying that his was only a tangential role and asserting that his campaign would not hire people to 'vet the vetters'.

The New York Times quoted one of his aides, as saying that Obama, a relative newcomer to Washington, had little loyalty to Johnson, a major presence in Democratic politics for more than two decades.

Promptly after the resignation, the McCain campaign took the opportunity to attack Obama and to paint him in poor light by saying the incident showed he makes the right call "only when under pressure of news media".

In an e-mail quoted by the Times, Obama's spokesman, Bill Burton snapped back, "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'."