Domestic dispute: Fannie Mae is doing better than ever, but the man behind the "American Dream" faces tough criticism - Cover Story - Statistical Data Included - Company Profile

Chief Executive, The, May, 2002 by William H. Miller

So it goes for Raines--responding to charge after charge. But his role in rebuffing criticism has overshadowed his significant management moves. Morgan Stanley Dean Witter analyst Ken Posner praises, for example, Raines' "focused business model" and technology initiatives that have helped the firm "successfully improve efficiency despite the expansion in business volume."

Raines considers his most significant accomplishments to be the launching of the American Dream plan, decentralizing decision-making and tightening earnings goals. Moreover, he cites his strengthening of Fannie's effort to create customized -- rather than one-size-fits-all -- mortgage products. In fact, he says, "developing custom solutions in a market that people think of as a commodity" is his company's biggest long-term challenge. Unfortunately, critics disagree.

OPERATING NET INCOME

1986-2001 IN $BILLIONS

1986   $.10
1987   $.37
1988   $.50
1989   $.80
1990  $1.17
1991  $1.36
1992  $1.62
1993  $1.87
1994  $2.13
1995  $2.14
1996  $2.72
1997  $3.05
1998  $3.41
1999  $3.91
2000  $4.44
2001  $5.36

Note: Table made from bar graph
OPERATING EARNINGS PER SHARE

1986-2001

1986  $0.12
1987  $0.39
1988  $0.53
1989  $0.78
1990  $1.12
1991  $1.25
1992  $1.48
1993  $1.71
1994  $1.94
1995  $2.15
1996  $2.48
1997  $2.83
1998  $3.23
1999  $3.72
2000  $4.29
2001  $5.20

Source: Fannie Mae

Note: Table made from bar graph

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RELATED ARTICLE: African-American Pioneer

WHEN FRANKLIN RAINES TOOK OVER as Fannie Mae's chairman and CEO in January 1999, he became the first African-American to head a top-100 U.S. corporation.

He's rapidly getting company. Last year Kenneth Chenault became chairman and CEO of American Express and Stan O'Neal president and COO at Merrill Lynch. Richard Parsons will lead AOL Time Warner as CEO starting this month.

Raines' success at Fannie is credited with paving the way. But he attributes the rise of minority CEOs to civil rights laws passed in the 1960S and 1970s. "For 30 years, blacks have been allowed to go to the best schools and the best graduate schools," he says. "Now (the nation] is reaping the benefit."