be: Washington and Wall Street. On May 21, the one-time investment banker who has served as the Clinton administration budget director since 1992 starts taking over leadership of the government-sponsored mortgage titan. He succeeds James A. Johnson, who built Fannie's profitability to record levels and set a $1 trillion affordable housing initiative into motion. People who have worked with him say Mr. Raines, who worked at Lazard Freres in New York before an earlier stint at Fannie Mae, has the rare background and skills needed to keep the company on course. "He tends to be direct, highly organized, and without sharp elbows," Eugene A. Ludwig, the former comptroller of the currency, said of Mr. Raines. "One's best guess is that he'll be able to manage Fannie Mae in terms of substance and political judgments quite well." Mr. Raines is "the perfect successor to Jim Johnson, who was as close to a perfect CEO as you can think of," said Richard D. Parsons, president of Time Warner Inc. and a member of Fannie's Board of Directors. "He's worked at the company in a high level, he participated in the crafting of the program the company is currently on, he's burnished his public sector skills and understanding of the bigger picture, and it's a perfect time for him to come back to the company," Mr. Parsons said. One of the biggest challenges facing Mr. Raines will be keeping legislative bodies at bay. Some members in the past have proposed levying fees from the agencies and regulating them more tightly - a threat analysts call "political risk." Insiders at Fannie Mae - and the rival agency, Freddie Mac - say this would undercut their ability to serve the public in a profitable way. "I don't look for any extraordinary change in the congressional GSE relationship in the near future," said Rep. Jim Leach, R-Iowa, who chairs the House Banking Committee and has had a prickly relationship with the government-sponsored enterprises. Mr. Johnson has received praise for bringing Fannie into an era of outstanding growth and profitability - and he is known for having particular skill as a promoter of Fannie Mae in the public realm. Mr. Johnson instituted both small and large changes at Fannie, establishing, for example, a business-casual dress code at Fannie Mae's Washington headquarters and delivering double digit earnings-per-share growth. Mr. Johnson came to Fannie Mae in 1990 from Wall Street, where he had been a managing director in corporate finance at Lehman Brothers. Earlier, he had served in various political posts, including executive assistant to Vice President Walter F. Mondale. While he and Mr. Raines each worked extensively in both the public and private sectors before joining Fannie Mae, their management styles are different, according to colleagues. Mr. Johnson is prone to focus on promoting the company's outside relations while Mr. Raines is more likely to focus on its the inner workings. "He's very creative. He's a long-range thinker," said Ellen Seidman, director of office of Thrift Supervision, who worked with Mr. Raines at Fannie Mae when she was senior vice president for regulation, research and economics. "He doesn't get bogged down in the details but he makes sure the details are dealt with by having people that he trusts," Ms. Seidman said. In his new post, Mr. Raines will be one of the most prominent African- Americans in corporate America, continuing the trailblazing that has marked his career. He declined to be interviewed for this article. Mr. Raines, 49, a graduate of Harvard College and Harvard Law School and a Rhodes Scholar, became one of Wall Street's first black partners. At Lazard Freres & Co. in New York, Mr. Raines started as a vice president in 1979 and became a general partner in 1985 where he continued to work in municipal finance until 1990. He is also the first African-American to serve as the director of the Office of Management and Budget. From 1978 to 1979 he served as associate director for economics and government in the department following a year as assistant director of the White House domestic policy staff. Mr. Raines is widely credited with helping to pave the way for a balanced budget. Now he will be the first African-American to head Fannie Mae - the company with the largest balance sheet in America. Mortgage bankers, for their part, say they heartily welcome the Raines era at Fannie Mae. Many got to know him during his previous stint at Fannie Mae, when he headed up efforts to automate underwriting and oritinations. "He comes in with the track record of being the champion of technology at Fannie Mae," said Paul S. Reid, executive vice president of the Mortgage Bankers Association.

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