Budget Director Raines Resigns

Budget Director Franklin D. Raines announced Tuesday that he is resigning to become chairman and chief executive officer of mortgage company Fannie Mae, and President Clinton chose Jack Lew, a longtime White House and congressional aide, as Raines’ replacement.

Raines was Fannie Mae’s vice chairman when he was picked to be director of Clinton’s Office of Management and Budget. Fannie Mae, the Federal National Mortgage Assn., is the country’s biggest source of money for home mortgages, providing hundreds of billions of dollars for low- and middle-income people to buy homes.

“Accepting this once-in-a-lifetime opportunity, here in Washington, D.C., is the right thing to do for me and my family,” Raines, 49, wrote in his resignation letter to Clinton.

Though Fannie Mae spokeswoman Janice Daue said Raines’ compensation had not yet been determined, she said the man he will replace, James A. Johnson, earned about $7 million last year. Raines reported making $5.8 million in 1996 as the company’s vice chairman. As budget director, he earned $151,800 annually.

Raines will join Fannie Mae’s board of directors May 21 and become chairman and chief executive officer Jan. 1.