He was a member of the board of directors of the $35 billion Federal Home Loan Bank of Topeka, a principal secured credit source for saving and loans, savings banks, commercial banks, credit unions and insurance companies in Nebraska, Colorado, Oklahoma and Kansas. Running in his own right in 1988, Karnes successfully captured the Republican nomination against Congressman Hal Daub, but lost to former governor Bob Kerrey, a Democrat, in the general election. Kerrey took 57% to Karnes's 42%. Karnes made a memorable faux pas when, during a campaign stop at the State Fair, he said, "What this nation needs is fewer farmers." Karnes has also served on the boards of, or acts as an advisor to, publicly traded U.S. companies, including Fannie Mae, Data Transmission Network Corporation and RJT Securities, Inc.  Currently he serves as a director of several private companies, including Frontier Bank, FSB of Park City, Utah, El Paseo Bank of Palm Desert, California, Orion Healthcare Corporation (healthcare technology), Waitt Media, Inc. (broadcasting, commercial advertising and entertainment), Tri Med Research, Inc. (medical technology), Farnam Group, Inc. (multifamily real estate development), Regency Court, L.L.C. (retail real estate), and Big Red Companies, Inc. (gaming and technology). Recent additional affiliations include the Advisory Board of Financial Institutions Partners II ($100 million financial services hedge fund), the University of Nebraska Technology Park L.L.C. (director and executive committee), eOne Group, Inc. (web development and systems integration) (director) and Solutionary, Inc. (data, internet and systems security) (director). Karnes has served as a member of the United States Advisory Committee on Trade Policy and Negotiations. This committee is appointed by the president and is composed of chief executive officers of 40 of America's largest corporations as well as presidents of key agriculture and labor organizations. The Committee, established by Congress in 1974, is the principal trade advisory group representing America's private sector to the president and Congress on all trade issues such as the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the World Trade Organization and the North American Free Trade Agreement. He was married to Dr. Elizabeth Karnes (deceased) and has four daughters Korey, Kalen, Kara and Laurel. He went to Benson High School, and Liz graduated from Westside High School, both in Omaha.