Ranieri quits as Franklin Bank CEO, stays chairman

NEW YORK, Aug 28 (Reuters) - Mortgage bond pioneer Lewis Ranieri said he is resigning as interim chief executive of Franklin Bank Corp FBTX.O but will remain chairman, allowing him to focus on raising operating capital for the struggling Texas bank.

Alan Master, who had been Franklin's president since May, was named chief executive. Master has been a director of Houston-based Franklin and its banking unit since April 2002. He has also been chief executive of The Master Group, a financial services consultant, since 1991.

Ranieri is a former Salomon Brothers Inc vice chairman.

In May, Franklin disclosed a U.S. Securities and Exchange Commission inquiry into its lending practices. A previous internal probe found the company failed to properly account for some loan modification programs, charge off uncollectable home equity loans, write down some properties in foreclosure, and record write-downs on loans in its investment portfolio.

Last month, the Nasdaq Stock Market found that Franklin no longer met its listing requirements, but that it had until Jan. 20, 2009, to regain compliance without being delisted.

Franklin shares closed Thursday down 1 cent at 57 cents on the Nasdaq. Their 52-week high is $9.86, set last Aug. 31. (Reporting by Jonathan Stempel; Editing by Gary Hill)