Budget Director Bert Lance assured the Senate Governmental Affairs Committee yesterday that there was nothing improper about the $3.4 million loan he got last January from the First National Bank of Chicago.
"It was a straightforward, good loan . . . nothing but a straightforward business transaction," he said.
The committee responded sympathetically to Lance's testimony, conferring on him what one member called its "Good Housekeeping seal of approval." Committee Chairman Abraham Ribicoff (D-Conn.), meanwhile, accused the press of having "smeared" the former Atlanta banker.
Dressed in a slightly rumpled gray business suit and testifying in a beguiling drawl, Lance described the loan as completely unaffected by the correspondent banking relationship that his own institution, the National Bank of Georgia, had established with the Chicago bank a month before his personal loan went through.
The Georgia bank opened a non-interest bearing account at the Chicago bank with a $50,000 deposit last Dec. 8 and later increased it to as much as $337,000 after he became budget director. Lance said the deposits were made "with no understanding of a quid pro quo."
A long-standing friend and confidant of President Carter, Lance responded to many questions at the 2 1/4-hour hearing with generalities and put off others by promising to supply details for the record, but committee members pronounced themselves completely satisfied with what they heard.
"There isn't a thing that has developed that impugns your character, your reputation or your ability," Ribicoff told him. He suggested that "maybe we should write finis to the Bert Lance experience."
Lance observed at the outset that questions had been raised about a wide range of activities affecting him, including Teamsters pension funds deposits at the National Bank of Georgia, overdrafts in his 1974 campaign for governor of Georgia, and his relationship with another creditor, Tennessee banker Jake Butcher.
"The combined effect of all of them being raised at one time has certainly created a haze of unwarranted uncertainties about me," the director of the Office of Management and Budget testified.
Ribicoff blamed the press. Investigative reporters, he protested, are trying to "get everybody - that's the name of the game today."
"You have been smeared from one end of the country to the other, in my opinion unjustly," Ribicoff told Lance. "We can just imagine what this has done to you and your family."
Lance got the Chicago bank loan Jan. 7, 1977, largely to pay off an earlier, $2.7 million loan from New York's Manufacturers Hanover Trust Co. that he had used to buy National Bank of Georgia stock.
On taking over as OMB director, Lance had promised to sell all his NBG stock, now some 200,000 shares. by Dec. 31, 1977. But President Carter recently sought lifting of the deadline because the price had dropped so sharply - from the $17-plus a share that Lance paid for most of his holdings to as low as $8.50 in recent months.
The Ribicoff committee had been about to remove the deadline last week when news reports concerning the Chicago bank loan and other aspects of Lance's financial dealings prompted it to schedule yesterday's hearing. The committee agreed yesterday to take no action, in light of a weekend announcement by Lance's trustee, Dalton, Ga., businessman Tom Mitchell, that he was in the final stages of negotiation with a private buyer.
Daniel B. Pattillo, a director of the bank and its single biggest shareholder, said yesterday in a telephone interview that the prospective purchaser is an Atlanta resident with "a substantial net worth . . . large enough to buy what he has to buy without straining," but not widely recognizable in the Atlanta business community and previously unknown to Lance and himself.
Lance told the committee that he did not know who the buyer was, but said he hoped the sale would go through: "Nothing would make me happier."
As for the Chicago bank loan, Lance insisted that he got no special favors. He said it calls for payment of the principal "on demand" and carries an interest rate, payable quarterly, three fourths of a percentage point above the prime rate - the interest that banks charge their best commercial customers.
"I think that's a proper rate," he said. "It may even be a little high."
Under questioning by Sen. Charles Percy (R-Ill.), Lance said that he personally sounded out only one bank, First National of Chicago, about the loan although aides had said last week that there was spirited bidding for it. Lance's press secretary, Robert Dietsch, explained yesterday that he understood other NBG officials had approached other banks about a loan for Lance.
The OMB director described the loan as "fully collateralized," but when asked for details he said he didn't know what the collateral was. He said Mitchell "handled that as my agent."
Similarly, Lance said other bank officials handled the negotiations that led the Georgia bank to open a correspondent banking relationship with the larger Chicago bank; and other NBG officials did most of the work that led to the $23 million Teamsters pension fund trust account.
Comptroller of the Currency John G. Heimann told Ribicoff Sunday that he was "conducting an inquiry concerning possible violations of the National Banking Act" in connection with the loan to Lance, but Lance expressed confidence that nothing improper would be found.
Committee members were plainly inclined to agree. "It's nice of you to drop by and prove your innocence," said Sen. Lawton Chiles (D-Fla.) in awarding Lance "our Good Housekeeping seal of approval."
President Carter added another endorsement at his weekly Cabinet meeting, saying that he had "absolute confidence in Bert Lance." NBG stock also took a turn for the better, closing for the day at $11.75 bid and $12.75 asked, a full $1 a share above Friday's prices.