Franklin Raines facts for kids

Quick facts for kids Frank Raines
Raines in 2002
31st Director of the Office of Management and Budget
In office April 13, 1996 – May 21, 1998
President	Bill Clinton
Preceded by	Alice Rivlin
Succeeded by	Jack Lew
Personal details
Born	Franklin Delano Raines (1949-01-14) January 14, 1949 (age 76) Seattle, Washington, U.S.
Political party	Democratic
Education	Harvard University (BA, JD) Magdalen College, Oxford

Franklin Delano Raines (born January 14, 1949), also known as Frank Raines, is an American business leader. He used to be the head of Fannie Mae, a big company that helps people get home loans. He also worked for President Bill Clinton as the White House budget director.

Early Life and Education

Frank Raines was born in Seattle, Washington. His father worked as a janitor. Raines studied at some of the best universities. He went to Harvard College and Harvard Law School. He also studied at Magdalen College, Oxford in England as a Rhodes Scholar.

Career Highlights

Raines started working in national politics in 1969. He helped the government understand why young people were protesting the Vietnam War. Later, he worked for President Jimmy Carter. He helped manage the government's money and worked on domestic policy.

After that, he worked for a company called Lazard Freres for 11 years. In 1991, he joined Fannie Mae. Fannie Mae is a company that helps make sure money is available for people to buy homes. He became the vice chairman there.

In 1996, Raines left Fannie Mae to join President Bill Clinton's team. He became the director of the U.S. Office of Management and Budget. This office helps the President prepare the national budget. He served in this role until 1998. In 1999, he returned to Fannie Mae and became its CEO.

Questions About Accounting

In 2004, Raines decided to retire early from Fannie Mae. This happened while investigators were looking into how the company handled its money. There were questions about how Fannie Mae recorded its earnings. Some believed that losses were moved around so that top executives, like Raines, could get big bonuses.

A government agency called OFHEO looked into these issues. They said that Raines and other executives had made accounting mistakes. In 2006, OFHEO tried to get back some of the money paid to Raines. They said he received about $90 million based on earnings that were too high.

Later, Raines and two other former executives settled the charges. They continued to say they did nothing wrong. However, they agreed to pay fines totaling about $3 million. These fines were covered by Fannie Mae's insurance. Raines also agreed to give away money from selling some of his Fannie Mae stock to charity. He also gave up some stock options.

A judge later looked at a big lawsuit against Raines and others. After reviewing millions of pages of documents, the judge found no evidence. The judge said there was no proof that Raines knew Fannie Mae's accounting was wrong. The judge also said there was no evidence that Raines intentionally misled investors.

Fannie Mae itself paid a large fine of $400 million. The company also agreed to change how it managed its money and risks. No charges were ever brought against Raines by the SEC or the Justice Department.

Loans and Denials

In 2008, it was reported that Raines received loans from a company called Countrywide Financial. He received loans for over $3 million while he was the CEO of Fannie Mae. Raines has said that he received the same loan terms as anyone else who qualified based on their credit. He denied getting any special treatment.

Role in the Financial Crisis

Many people have discussed whether companies like Fannie Mae caused the financial crisis of 2008. Most experts who have studied this topic believe that Fannie Mae's role was small. The Financial Crisis Inquiry Commission (FCIC) looked into the crisis. They found that Fannie Mae "contributed to the crisis, but were not a primary cause."

Fannie Mae started buying certain types of loans later than other companies. They began buying these loans in a big way around 2005. They did this because they were losing business in the home loan market.

Helping More People Buy Homes

While Raines was in charge, Fannie Mae started a program in 1999. This program aimed to make it easier for people to get home loans. It helped people who might not have met the usual strict requirements. Raines said this program would help people who were "a notch below" the normal standards. The goal was to help more minority and lower-income families buy homes.

Some people believe that making it easier to get loans contributed to the financial crisis. However, the loans Fannie Mae bought through this program did not cause major losses. They actually performed much better than similar loans from other companies. For example, in 2008, far fewer Fannie Mae loans were in serious trouble compared to other loans.

Fannie Mae did not start buying risky "subprime" loans directly until 2006. This was after Raines had already left the company. The buying of these loans increased under the next CEO, Daniel H. Mudd.

In December 2008, Raines spoke before a committee in the U.S. House of Representatives. He talked about Fannie Mae and the stability of the financial markets.

Alleged Connection to Obama

In 2008, there were reports that Franklin Raines had advised Barack Obama's presidential campaign. The reports said he gave advice on housing and mortgage issues. Later, a campaign ad from John McCain mentioned this connection. The ad also noted that Raines made a lot of money and left Fannie Mae during an investigation.

After the ad came out, both Raines and the Obama campaign denied these claims. They said Raines was not providing advice to the campaign. The original news source later said that their reporting was based on a single conversation. In that talk, Raines said he had received "a couple of calls" about "general housing, economy issues."

There was also a false email rumor. It wrongly claimed that Raines was made Obama's "chief economic advisor."

See also

• Raines v. Byrd
• Raines' Rules