The grandfather clock in Franklin D. Raines' office evokes the grandeur of an old-fashioned finance firm, but its steady ticking could just as aptly represent the rising pressure on Fannie Mae to stay ahead of the times.

In the nine months since Mr. Raines became chairman of the largest buyer of home loans, its share price has ticked steadily lower, as investors worried about how it will fare in the face of rising interest rates and increasingly organized political opposition. At issue is whether Fannie can safely expand in a mature mortgage market without overstepping the bounds of its government charter, which specifies that it provide liquidity for home lending.

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