president and chief operating officer of Fannie Mae, has seized an opportunity to pursue a lifelong interest in culture -- and get paid for it -- as secretary of the Smithsonian Institution.

Mr. Small is making the move from one elite organization chartered by the government to foster homeownership to another elite organization, created in 1847 with funds bequeathed for "an independent trust instrumentality of the United States." After 36 years in the corporate world, Mr. Small will become only the 11th secretary to lead the Smithsonian Institution.

In fact, he was on a search committee to replace former director, I. Michael Heyman, who announced retirement in January, after a five-year tenure.

Mr. Small's salary is still under negotiation, but it is likely to be substantially less than the $4.25 million plus bonuses he made at Fannie Mae last year. But he is eager for the change.

"I was still on the program of expecting to retire at 60 at which point I would have had 38 years in the corporate world," Mr. Small said. "I had recently had my contract renewed by Fannie Mae's board of directors... when this opportunity came along. All of my avocations are at the heart of what the Smithsonian does."

In some respects the new job will be similar to the one Mr. Small is leaving. Both operate with large budgets: Fannie Mae's total book of business is estimated to fall around $1.1 trillion and has total capital of about $17 billion. The Smithsonian's total net revenue -- all federal and trust funds -- for fiscal year 1999 is $570 million, of which $412 million is a direct appropriation from Congress. Fannie employs about 3,800 people; the Smithsonian has about 6,400 employees in Washington and New York

Jonathan Gray, a principal at Sanford C. Bernstein, said Mr. Small would have little trouble making the transition.

"I've not dealt with anyone who has seemed more capable than Larry Small," Mr. Gray said. "He didn't mince words. If you had a conversation with him, he said something and you could take it to the bank."

Mr. Small, 58, joined Fannie Mae as president and chief operating officer in September, 1991. His time with the company spanned covered some "dicey" periods for the financial services industry and in the mortgage sector in particular, he observed The decade has been the most volatile period for interest rate management since the Great Depression, he pointed out. Two major refinancing booms took place as mortgage rates swung between 10% and 6%. Economic meltdowns occurred in Asia, Russia and Latin America, and the U.S. stock market dropped dramatically in 1998.

"There are some character-building moments you go through, every once in a while, as you go through such significant economic volatility," Mr. Small said.

Before joining the agency, Mr. Small spent 27 years at now Citigroup, then Citicorp, in a variety of functions most recently as vice chairman and chairman of the executive committee of the boards of directors of Citicorp/Citibank.

It was a time of dramatic change, Mr. Small said.

"In the mid-1960s, the dollar as currency for the whole world just ballooned. and it created a growth in international banking opportunities that was unprecedented," Mr. Small said. "It created tremendous opportunities and upward movement in so many people's careers because so many offices were being opened in so many places."

Mr. Small said the explosion of information technology also has a tremendous impact over the last 30 years.

"I worked on the installation of the first IBM 1401 computer down in Chile in 1965 when we were still using punch cards and verifying machines," Mr. Small said. "Today, those computerized birthday cards have more power than the first computer. That has been applied to financial services and it's created a revolution."

Though Mr. Small said he has witnessed unprecedented growth and change in housing finance, he sees much to improve upon.

"The housing process is cumbersome and unwieldy and difficult for consumers to understand, even though it's been dramatically improved in the 1990s," Mr. Small said.

"Housing is at the core of our culture. We really believe in it. It's up there with health and education and religion. The American home is the greatest consumer product that has ever been developed in this country and I think it has tremendous potential going forward."

Fannie Mae has retained Tom Neff, chairman of Spencer Stuart USA, an executive search firm, to help find Mr. Small's replacement.

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