The White House yesterday denied that President-elect Carter or his staff withheld information from the Senate relevant to the nomination of Bert Lance in January.
At virtually the same time that press secretary Jody Powell was making this denial, the comptroller of the currency issued a new report on some of Lance's financial dealings, again criticizing the director of the Office of Management and Budget for indulging in questionable banking practices.
The White House denial was a response to Robert Bloom, the acting comptroller of the currency in January, who had told a House subcommittee Tuesday that he expected Carter or his aides to tell the Senate about Lance's past difficulties with federal bank examiners.
Powell said Carter did not know the full details of those difficulties, which have since become well known, and so did not hide anything from the Senate.
"The President is not disappointed in his appointment of Mr. Lance," and Carter has not asked for Lance's resignation, Powell said yesterday.
Speculation was intense on Capitol Hill, however, that Lance would resign after testifying next week before Sen. Abraham A. Ribicoff's (D-Conn.) Governmental Affairs Committee.
Clark M. Clifford, the attorney and pillar of the Washington establishment whom Lance has retained as counsel, said yesterday he expected that Lance and Carter would "sit down and assess the entire situation and reach some conclusion" after Lance gets his "day in court" before Ribicoff. Clifford said he had no idea what they would decide.
The new comptroller's reports on Lance, like the first one issued last month, did not say investigators had found any cases of illegal behavior deserving possible prosecution. But also, like the first report, it described practices that appeared to violate banking law.
Sources inside the comproller's office said the new report had provoked sharp dispute among those who prepared it. The sources said some attorneys on the staff thought new information about Lance overdrafts this year warranted more serious treatment than it eventually received in the final document.
The new report offers a partial description of an elaborate system, maintained by Lance since he came to Washington in January, involving the Calhoun First National Bank and National Bank of Georgia. The system has allowed Lance to write checks which exceeded his balances at the Calboun bank. When this occurred the Calboun bank could ask the NBG in Atlanta to make quick deposits from other Lance accounts to cover the checks.
The report describes but fails to comment on one series of transactions involving Lance accounts which, if done deliberately, might fit the classic definition of "check kiting."
According to the report, Lance's personal account at the National Bank of Georgia became $20,100 overdrawn on May 9 of this year after funds were transferred to Calhoun to cover checks Lance had written on the bank there.
In other words, Lance had written checks whose total value was $20,100 greater than the amounts he had on deposit in his personal accounts in Calhoun and Atlanta combined.
The report shows that Lance, his trustee and his wife had nearly $11,700 in five other accounts in the NBG at the time of these transactions. So even if all those accounts had been applied to covering the overdraft, Lance would have been more than $8,300 short.
Lance's NBG account remained $20,100 overdrawn from May 9 until May 16, when the overdraft was paid off. "NBG account records do not show any interest or service charge made in connection with this overdraft," the new report said.
The report described an elaborate pattern of loans from the Fulton National Bank in Atlanta to Lance and other directors of the First National Bank of Calhoun, Ga. Much of the money loaned help Lance and the others buy stock in two other small Georgia banks.
The comptroller suggested no illegality in these loans. But the report included documents from the Fulton Bank revealed the bank's own low opinion of its large loans to Lance, which ranged up to nearly $1 million.
The bank's internal documents show that the Lance loans were rated at "4" on a scale of 1 to 4.This meant, according to the documents, that they were seen as "problem loans with some probable loss."
Later they were upgraded to "3," which meant they were "unstable . . . loans frequently past due, and little or no margin in the balance sheet and/or income to justify the loan."
The report does not explain why the Fulton bank made such loans, but points out that the Calhoun bank and the other two institutions Lance and his colleagues controlled maintained substantial interest-free cash balances in the Fulton bank at the time in return for correspondent bank services.
The new report also contains a document from the Manufacturers Hanover Trust Co. of New York (Manny Hanny) which suggests that the bank's policy - at least in the 1960s - was to ask for a "corresponding balance" when lending money to an officer in a bank with which Manufacturers had a correspondent relationship.
This was an issue in Lance's $3.25 million loan from Manny Hanny in 1975 which he used to buy stock in the National Bank of Georgia. He made that loan at about the same time the NBG, which he then ran, opened a correspondent account with Manny Hanny and began to maintain large corresponding balances in the New York bank.
Both Lance and the bank denied previously that the corresponding balances were a quid pro quo for the Lance loan. The new document yesterday, an excerpt from a Manufacturers Hanover loan manual, said it was bank policy (in the 1960s) to ask for corresponding balances when lending money to a bank official to buy stock in his own bank.
But this manual was accompanied by a new statement from a bank official that the manual was not a formal statement of bank policy.
The official said again that the bank had not insisted on the corresponding balance from NBG as a condition for the Lance loan.
Powell said yesterday that neither he nor President Carter had ever seen the embarrassing comptroller's agreement with the Calhoun bank which was signed in December, 1975. That agreement - made public Tuesday for the first time - spelled out the apparently shoddy management of the Calhoun bank under Lance's leadership in vivid terms.
Powell said in a telephone interview that Carter's staff - like the Senate Governmental Affairs Committee, which quesitoned Lance before recommending his confirmation - knew that the Calhoun bank had difficulties, but at the same time, "to the best of everybody's knowledge, these matters had been closed" and no one wanted to pursue them.