On the Outside Now, Watching Fannie Falter

He now finds himself in that peculiar limbo of having been accused and the charges dropped -- but forever footnoted.

He's lunched with Lawrence Small, the Smithsonian head who resigned last year after questions were raised about his salary and spending habits. He's engaging in charities and new projects like the Mall restoration and African American history museum. He's taken to repeating an old saw, "If you want a friend in Washington, get a dog."

Ted Leonsis, who has known Raines for 15 years from when Raines served on AOL's board, describes him as "unflappable" and "focused," particularly in his involvement with Revolution Money. The company, which Leonsis and Case launched last fall, is an online credit card company. It combines a Paypal-like money transfer service with a credit card that can also be linked like a debit card to a bank account.

Raines is an investor and board member in Revolution Money and Revolution Health, a health-care business launched two years ago by Case, the former chairman of AOL. Raines has an office in Revolution's modern steel, glass and wood-paneled offices on Rhode Island Avenue Northwest and, unlike other board members and investors, is in the office several days a week.

Case said he asked Raines to come on board at the end of 2004, just a week after he stepped down from Fannie Mae, because he considers him "terrifically thoughtful and intelligent."

Raines is active in both companies and switches easily from talking about debt markets and margins to the impacts of inaccessible and costly health care on poor working families.

Raines's personal experience colors his perspective, but he has lived longer now in the world of power and privilege. He drives a sleek BMW sedan ("I buy one every 10 years, whether I need one or not," he quipped) and has been trying to clear his name through the courts.

When Daniel H. Mudd stepped in to succeed Raines after his ouster, Mudd promised a House committee that the days "of arrogant, defiant, 'my way' Fannie Mae" would end. Congress has recently moved forward on legislation that would create stronger federal oversight of Fannie Mae and Freddie Mac.

As investor confidence in Fannie Mae and Freddie Mac has waned, Raines discussed with his lawyers several months ago his desire to re-engage in public policy debates.

"I finally got pushed by my friends to do it," he said. It was important to get Fannie Mae and Freddie Mac "back to doing what they have been doing and not spending all their time fighting for their lives in Washington."

Aside from his work with Revolution, Raines gives no hints of future ambitions. But he heeds the advice of Small, with whom he once worked at Fannie Mae in an earlier stint at the company.

"He's very good at reminding people that whatever happened, you're not dead," Raines said. "Get up, go out and do stuff."