Federal bank examiners described budget director Bert Lance in 1975 as a "very weak" administrator who was "not considered a capable lending officer."
At a Senate hearing into Lance's affairs yesterday, Sen. Abraham A. Ribicoff (D-Conn.) read from a bank examiner's report that said the managers of the Calhoun, Ga., First National Bank (Lance was its chief executive) "have replaced sound banking policies and procedures with an unhealthy degree of nepotism."
(The Calhoun bank allowed Lance, his wife and her relatives large overdrafts over several years.)
Sen. Charles H. Percy (R-III) read from another 1975 bank examiner's report on the National Bank of Georgia that criticized loans made by Lance and said that "hopefully" he would henceforth limit himself "to business development and public relations activities."
Bank examiners' reports are traditionally kept confidential, even from the bank officers being examined. By reading these excerpts yesterday, Ribicoff and Percy provided the first public glimpses of Lance's reputation among the government's bank regulations.
President Carter yesterday postponed a news conference he had planned to hold Wednesday to answer questions about Lance, as speculation continued on Capitol Hill and elsewhere that the budget director would have to resign after defending himself before the Ribicoff committee Thursday.
Ribicoff said yesterday that his Governmental Affairs Committee would not have recommended Lance's confirmation if it had known in January what it knows now.
Yesterday's hearing was devoted to grueling questioning of Robert Bloom, who was acting comptroller of the currency at the time Lance was nominated and confirmed . Bloom wrote the Ribicoff committee on Jan. 18 that Lance "enjoys a very good reputation in the banking community" and was "well qualified to serve" as director of the Office of Management and Budget.
Ribicoff and Percy both asked Bloom how he could have written such an endorsement after reading the bank examiners' reports on Lance's banks. Under intense questioning Bloom acknowledged that the committee had been misled about Lance's past, but insisted this was not intentional.
Bloom began his testimony in a thin voice choked with tension, and more than once during the 3 1/2 hours he shouted justifications for his past behaviour, many of which appeared not to impress the senators.
Bloom is one of two officials from the comptroller's office who face possible disciplinary action for their handling of Lance-related matters.
The other is Donald Tarleton, regional director of the office in Atlanta. Tarleton is scheduled to testify before the committee today. The hearing will be broadcast live on WETA-TV (Channel 26), beginning at 10 a.m.
The Secretary of the Treasury, W. Michael Blumenthal, will have to decide if disciplinary action should be taken.
Sen. William Roth (R-Del.) yesterday suggested that Bloom had been too chummy with Lance, which Bloom denied. But Bloom did acknowledge that he "thought of my own future" when deciding how to handle Lance related matters.
Bloom also provided new details of his relationship with lance and his lawyer, Sidney Smith of Atlanta.
Bloom was questioned about a press release that was drafted last Dec. 1 and 2 in answer to a reporter's question about possible disciplinary action by bank examiners against the Calhoun bank when Lance was its chairman.Bloom acknowledged discussing the press relese several times with Smith before a final version of it was agreed on.
The press release is potentially significant because - according to documentary evidence released during the Lance affair - it was substantially watered down during final drafting. Some of the important transgressions bank examiners had found at the Calhoun bank - including Lance's personal overdrafts - were not mentioned in the final version.
Bloom said yesterday, under questioning, that he thought Smith, Lance's lawyer, "wanted to drop a word here and there" in the release. But he also said, "I'm damned if I can remember who said what" during discussions of the press release.
The senators were more concerned about omissions or what several of them called misleading elements in Bloom's answers to questions about his behaviour last December and January took him over a wide range. Among the points he advanced:
He was really trying to "communicate Mr. Lance's record as a banker" to the Senate by putting "red flags" in his letter of endorsement of Lance as "well qualified."
Bloom admitted witholding a copy of the comptroller's 1975 disciplinary agreement with the Calhoun bank from an FBI agent investigating Lance, but added: "It takes two to conceal something, a concealer and a concealee." Bloom said the FBI agent asked to see that agreement, but not persistently. "I'm not ready to accept the idea that the FBI seriously wanted" to see the agreement, he testified.
(That agreement spelled out in vivid language the poor management bank examiners found at Calhoun, noted Lance's personal overdrafts and even challenged the salary he was being paid.)
Ribicoff should have called Bloom personally to ask for background information, Bloom said, instead of asking a staff member to do so. If he had, Bloom added, he would have told the senator more than he included in his Jan. 18 letter.
Bloom was not prepared to try to block Lance's confirmation at the "11th hour" of what he termed a "wedding ceremony" that was to bind Lance to the new administration.
"You're asking me to shoot to kill, Bloom shouted at Roth, who asked why he hadn't spoken out more forcefully in January about Lance's banking record, "because if I shoot and miss I'd better go back to private enterprise."
Bloom said he tried to tell the incoming Carter administration what he knew about Lance's banking career by telephoning Lance himself."I believed that by calling Mr. Lance was the quickest and surest way of my communicating to others high up in the inocming administration the facts I knew," Bloom testified.
Despite all this, Bloom did believe Lance was well qualified for the OMB directorship. "I think Mr. Lance was one of the most popular men among bankers that I've ever seen."
At times Bloom seemed to contradict himself. At one point he said he couldn't get the records of Lance's affairs over a weekend last January because they were in a record center "in St. Louis." Earlier he testified that he kept all those records in a locked safe in the closet of his office bathroom in Washington.
At another point Bloom said he wrote his letter n Lance mostly from public documents, partly because "I didn't know the man." But earlier he acknowledged that he had privately lunched with Lance a week before he wrote the letter.And his telephone log showed that Bloom telephoned Lance, apparently to read him the letter, the day before he sent it to the Senate.
In other developments yesterday, Lance's wife, LaBelle, told the Associated Press that hse did not believe rumors that her husband woudl resign this week, though she would not rule that out entirely.
In Odessa, Mo., Billy Carter, the President's brother said, "Bert told me he won't resign."
"He may be fired," Billy Carter said, "but he won't resign."
Lance is "the best man in Washington ," Billy added. "If I had to take my choice between Bert and Jimmy I'd have a helluva choice."