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2001 Horatio Alger Award Winner

Franklin D. Raines

Former Chairman and CEO
Fannie Mae

"My definition of luck is preparation meeting opportunity."

Franklin Raines was born in 1949 in Seattle, Washington. His parents had five boys and one girl, and then later took in a nephew whose mother had died. "I was the third from the last in that mix," says Raines. His father had some high school, but his mother never made it beyond elementary school. For most of his life, Raines's father was a custodian. At one time, he had a promising job with Boeing, but severe bouts of depression made him unable to keep the job. When Raines was seven, his father became so severely depressed he was hospitalized for a year. For the remainder of his life, he had periodic relapses of depression. Raines's mother worked nights as a custodian so that she could care for her large family during the day.

When he was eight, Raines got a job making $2 a week at the local grocery store stocking shelves and sweeping floors. By the time he was 16, his wages had reached $10 a week. When his father was hospitalized, Raines gave half his income to his mother and kept the rest to pay for his own needs. In high school, he worked in a department store and refereed basketball games.

Raines was a star debater and captain of the football team in high school. He served a summer internship with the Secretary of State of his home state, which became his first foray into government. He became interested in politics and served as his junior class president and then as student body president. Raines applied to Harvard, Yale, Stanford, Wesleyan, and Princeton. On April 15, the day the answers from colleges would arrive in the mail, he left school early to see if he had been accepted to any of his choices. "When I opened the mailbox," he says, "there were five fat envelopes. That's always good news."

With the help of a large scholarship, Raines accepted Harvard's offer. Upon his arrival, he immediately felt inferior to his classmates financially, educationally, and socially. He quickly got involved with campus governance and the political life of the college. He served as vice president of the Freshman Council and became the chairman of Harvard's first Student/Faculty Committee. During summers, he worked as an intern in Washington, D.C., including on the staff of Daniel Patrick Moynihan, who was President Nixon's urban affairs advisor. Raines graduated magna cum laude in 1971, and then left for England to study at Oxford as a Rhodes Scholar. He took a leave from Oxford to work for the Seattle Model Cities Program. In 1973, he returned to Massachusetts to attend Harvard Law School, again on scholarship. To pay for his own expenses, however, he was a graduate assistant for an undergraduate course on the Supreme Court; he consulted with local governments, and he earned free room and board by serving as a freshman advisor.

Raines earned his law degree in 1976 and accepted a job offer from a Seattle law firm. He was there for only seven months, however, when President Carter appointed him to work in the White House on welfare reform. Raines had done his senior thesis in college on welfare reform, and he had continued studying it and writing about it at Oxford and in law school. In 1978, he was promoted to associate director of the Office of Management and Budget. Before he was 30, he was in charge of one-quarter of the federal budget.

In 1979, looking for an opportunity outside government, Raines accepted the offer of a vice presidency with Lazard Freres in New York. Twelve years later, now a partner with Lazard Freres, he decided it was time for another change. In 1991, he became vice chairman of Fannie Mae and focused his attention on new business development, technology, and strategic planning. In 1996, he returned to government to serve as director of the Office of Management and Budget, becoming the first OMB director in 30 years to balance the federal budget. After two years of government service and serving as the President's key negotiator for the Balanced Budget Act of 1997, he returned to Fannie Mae as chairman-designate. He served as chairman and CEO from 1999 to 2004.

Many would say that Franklin Raines is a lucky man, and he would be the first to agree. But he has his own definition of luck. "My definition of luck is preparation meeting opportunity," he says. "When others look at your success, they may say you were simply lucky with the opportunities that came your way. You have to be prepared for opportunities because if they come your way and you aren't prepared, nothing is going to happen. It just looks like luck. My advice is to be good at something, rather than mediocre at everything. Get yourself prepared, and then expose yourself to opportunities."