Lance's Loan

Questions about another deal

Bert Lance was summoned last week for what was supposed to be an unpublicized interrogation by Comptroller of the Currency John Heimann, who is investigating loans the budget director has received. After the hour-long session, Lance hastily called a press conference to reveal--and rebut--new questions Heimann had raised about a $2.6 million loan to Lance by New York's Manufacturers Hanover Trust in April 1975, soon after he became president of the National Bank of Georgia. The big question is whether Lance got the credit as an improper quid pro quo for having his NBG place an interest-free deposit with "Manny Hanny."

Heimann showed him an internal memo written by a Manufacturers Hanover loan officer on the day his loan was approved. According to Lance, the memo referred to a "hoped-for correspondent relationship" with NBG and an NBG deposit that would be "expressed as a percentage" of the loan to him. Within a few weeks the NBG indeed shifted its correspondent account in New York from Citibank to Manufacturers Hanover, depositing $250,000; later the deposit totaled as much as $ 1.5 million.

Lance said that the transactions were not connected, that he knew nothing of the memo before last week, that his loan carried an interest rate of one-half percent above the prime rate and was backed by considerable collateral. "No commitment nor discussion of any balance requirement was made between me and the bank," he insisted. Last month Lance offered similar denials concerning a $3.4 million personal loan from another bank --Chicago's First National--that received a deposit from NBG.

Should a bank grant a personal loan to the head of another bank that makes an interest-free deposit? Said a high officer of one of Manny Hanny's competitors: "Citibank wouldn't do it. Chase Manhattan wouldn't do it. Morgan Guaranty wouldn't do it." Now Comptroller Heimann will assess whether or not anything was improper. His investigation has been expanded to include all of Lance's loans from NBG correspondent banks --four of the five loans that he has.

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