Budget Chief, HLS Grad Speaks

Raines will step down to head Fannie Mae in 99

Franklin D. Raines '71, director of the White House Office of Management and Budget (OMB), summed up last year's budget debate as "the need to create a win-win situation for both Republicans and Democrats."

Honored at the Harvard Black Law Students Association Alumni Speaker Series, Raines, who also graduated from the Law School in 1976, spoke at the Harvard Faculty Club yesterday about his long experience in both the public and private spheres.

Raines has been a principal figure in the recently-completed balanced budget agreement, and will step down next year to become CEO of Fannie Mae. As such, he will be the first black CEO of a Fortune 100 company in the United States.

Appointed OMB Director in 1996, Raines compared his office to that of the X-Wing commander in Star Wars navigating fighters towards the ship's small target.

"We have to remind people to stay on target," Raines said, describing the tendency of today's representatives to let fiscally unwise pet projects distract them.

"There is almost no conversation [at the OMB] that does not involve implicit negotiation. There is almost no idle chitchat," Raines said, describing the daily tensions of his office.

For Raines, the budget negotiations' success hinged on realizing "the importance of knowing...what [the GOP's] position is."

He and the other negotiators eventually realized that the Republicans' basic goal was "being able to say they could govern."

Raines will conclude his tenure at the OMB next month, but is a long way from leaving public service.

He is slated to head Fannie Mae, a company dedicated to helping families achieve home ownership. Founded as a public corporation to ameliorate housing loss during the Great Depression, the Federal National Mortgage Association went private in 1968 as Fannie Mae, and today has more assets than any other corporation in America.

The government created Fannie Mae as a buyer for fully amortized mortgages. Although nearly all homes are bought on amortized mortgages today, these simple payment plans were very unorthodox during the Depression and needed a government corporation to provide backing for them.

Raines expressed a guarded optimism regarding Fannie Mae's continuing role in helping improve family life in the years ahead. With the economy as strong as it has ever been, the constant low unemployment and minimal inflation have helped black families make significant strides in overcoming the economic obstacles they face today, but further progresscan still be made, Raines said.

"The home ownership rates for blacks are halfthose for whites," he said.

Raines charged audience members to stay on theleading edge of technology, calling the currentcomputer revolution "a calling of opportunity" forall Americans. Young people today can make hugeadvances in technological fields, so there is atremendous chance for young blacks to close theracial gap in business, he said.

"In periods of instability we have a greaterchance for equality," Raines said