Franklin Delano Raines
government official
Personal Information
Born January 14, 1949 in Seattle, WA; son of a civil servant and a maintenance worker at Boeing Co.; married; children: three.
Education: Harvard University, B.A. (with honors), 1971; Harvard Law School, LL.D. (with honors), 1974; also attended Oxford University on Rhodes Scholarship. Avocational interests: Running, reading, golf.
Career
Attorney in Seattle, WA, 1974-77; Office of Management and Budget, Washington, DC, associate director of economics and government, 1977-79; Lazard Freres & Co., New York, NY, investment banker with responsibilities in municipal finance division, 1979-85, partner, 1985-90; Federal National Mortgage Association, Washington, DC, vice chairman, 1991-96; Office of Management and Budget, Washington, DC, director, 1996--. Former director of Robert Wood Johnson foundation and Rockefeller foundation; visiting committee member, Harvard University and Harvard Business School. Member of board of directors of corporations, including Boeing and Pfizer.
Life's Work
Franklin Raines has been charged with the daunting task of helping Democrats and Republicans hammer out a balanced budget agreement by the year 2002. In 1996, President Bill Clinton hired him to head the crucial Office of Management and Budget, a Cabinet-level position with responsibility for all federal finances. The first African American to ever hold this important office, Raines has assumed his responsibilities at a pivotal time: he must help a Democratic president and a Republican-controlled Congress resolve their differences and make the decisions necessary to regain control of the burgeoning budget deficit. Business Week correspondent Howard Gleckman called Raines's mandate "one of government's toughest jobs" and predicted that the soft-spoken executive "will find himself in the midst of Washington's ugliest political brawl--the battle to balance the budget."
Many observers feel that Raines is ideally suited for the task at hand. A former Rhodes Scholar with a Harvard Law degree and two decades of experience as an investment banker, Raines has been cited for his ability to negotiate and to bridge gaps between differing political ideologies. For his part, Raines sees the efforts to balance the federal budget as more than a dollars-and- cents issue. "Now that there's an agreement on balancing the budget, what values will that budget embody?" he asked in the New York Times. "That's the most important fiscal issue that's facing the country now, and I'm happy to be able to have a part in it."
Franklin Delano Raines was born in Seattle, Washington in 1949 and named after the famous liberal Democratic president Franklin Delano Roosevelt. His father was a city laborer, and his mother cleaned offices at the Boeing aircraft company. Raines told the New York Times that his parents believed in the governmental ideals of President Roosevelt and instilled the same beliefs in him. "You don't grow up with the initials F.D.R. without having some appreciation of the role, and the positive role, that Government can play in the lives of people throughout this nation and throughout this world," he said.
Raines attended public schools in Seattle and exhibited a high level of scholarship. In high school, he excelled academically, was president of the student council and state debate champion. In 1967, Raines entered Harvard College to study political science. He received his bachelor's degree with honors in 1971 and also won a prestigious Rhodes Scholarship for a year's study at Oxford University in England. Upon his return to America in 1972, he entered Harvard Law School and received his legal degree in 1974-- also with honors.
Interested in combining his legal expertise with service to the government, Raines accepted a position with the Carter administration in 1977. For two years, he served in the Office of Management and Budget as associate director of economics and government. In 1979, Raines moved into the private sector by accepting a position with Lazard Freres & Company, a Wall Street investment banking firm. He worked at Lazard Freres for more than a decade. In 1985, Raines was named a partner, becoming the first African American to achieve a partnership in a private Wall Street firm.
Among Raines's responsibilities at Lazard Freres was building the investment potential of big city governments. This often involved working closely with mayors from cities such as Cleveland, Chicago, Detroit, and Washington D.C. to investigate ways of reducing the costs of running a major city while maximizing incoming revenues. Raines told the Washington Post that his work involved counseling "high profile black mayors" on ways to meet and surmount financial pressures. "Even though it's said that they're liberals, that they're big spenders," he concluded, "the record is that most of them are managers of fiscal difficulties."
In 1990, Raines left Lazard Freres because the constant travel demands of his job left little time for him to spend with his wife and three children. He was not idle long, however. In 1991, he accepted the number-three job at the Federal National Mortgage Association, a conglomerate better known as Fannie Mae. As vice- chairman of Fannie Mae, Raines earned an estimated $2 million a year in salary, bonuses, and stock options. The company is a huge and profitable institution that provides funds for mortgages with implicit backing by the federal Treasury. "Fannie has done good works," wrote James K. Glassman in the Washington Post. "The company has made it easier for middle-class Americans to buy houses by streamlining the borrowing process and allowing banks and thrifts to stay liquid (that is, maintain their cash for more loans)."
Raines, with his background in investment banking, saw ways to improve the bottom line at Fannie Mae. As Howard Gleckman remarked in Business Week, he "launched an overhaul of the way loans were originated, targeting the reams of paper that accompany home loans. He was convinced that streamlining the process could cut costs by more than one-third and trim approval times from weeks to hours." Gleckman concluded that Raines's initiative "helped jump-start automation in that insular [mortgage lending] industry."
When Bill Clinton named Raines to head the Office of Management and Budget early in 1996, he quipped that Raines would be looking out for the middle class--and soon would be in it himself. The joke was based on the stunning reduction in salary Raines accepted by agreeing to serve in the Clinton administration. While his annual salary at Fannie Mae was more than $500,000, he earns about $145,000 a year at the Office of Management and Budget. Along with the cut in pay, Raines's position offers an enormous challenge. He must find common ground between the political differences of the Democratic White House and a Republican-controlled Congress and steer both sides to a budget agreement that will help ensure America's financial solvency as she moves into the twenty-first century.
Washington, D.C. delegate to Congress, Eleanor Holmes Norton, perhaps summed up the feeling of African Americans when she reflected on Raines's appointment in the Washington Post. "All things federal, whether legislative or financial, go through OMB and therefore through Frank Raines," she said. "No African American has ever had this post. There's a special pride in the black community today." She added that, in her estimation, Raines is "brilliant." Howard Gleckman's assessment of Raines in Business Week was less enthusiastic than Norton's, but reflected cautious optimism. "Raines's fresh take is a welcome one," Gleckman wrote. "His success is anything but certain, but after years of fiscal gridlock, a fresh face and a willingness to try a new swing can't hurt."
For his part, Raines is proud to be both an African American and a relative political outsider who might indeed bring a fresh perspective to what is expected to be a long and bitter battle between Democrats and Republicans for a balanced budget agreement. "There are enough experts in the budget process," Raines told Business Week. "The much more important advantage is to be able to look past the rules and the process and not be constrained by them." Although Raines believes that the federal government can be a force for positive action, years of experience helping big city mayors make tough budget decisions have infused him with a sense of realism about budget-balancing. He predicted in the Washington Post that the prospects of reaching a balanced-budget agreement "are good if you measure what people are saying about the substance....They [Democrats and Republicans] were close to an agreement in the past, and I hope I can bridge any differences."
Further Reading
- Business Week, October 21, 1996, pp. 88-89.
- Chicago Tribune, April 13, 1996, section 2, p. 1.
- New York Times, April 13, 1996, p. 8.
- Wall Street Journal, October 25, 1990, p. B4; April 15, 1996, p. A20.
- Washington Post, December 28, 1990, p. F1; June 19, 1991, p. B3; April 13, 1996, p. A8; April 16, 1996, p. A15.
— Anne Janette Johnson
