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and we did discuss the agreement and what we had done to not only try to comply with the letter, but with the spirit of it.

Mr. LAFALCE. That was in May 1976? Mr. Davis. Right. Mr. LAFALCE. There were subsequent visitations. For example, when Mr. Tarleton considered the question of terminating the agreement in September 1976, he did not deem it advisable to do so at that time and he wanted to wait at least until the October visitation.

Now, who undertook the October visitation on behalf of the Comptroller's Office?

Mr. Davis. I don't remember..

Mr. LAFALCE. Wouldn't there have been conversation in October with either Mr. Henderson or Mr. Davis, whenever there was a visitation by the Comptroller's Office? Would not that examiner have dealt with either of you two gentlemen?

Mr. HENDERSON. Once we had finished complying with the major portions of that agreement, most of the conversation in any examiner visitation was about the criticized loans and the progress we were making on them.

Mr. .LAFALCE. Let us go into some of the terms of that agreement. For example, I guess I have gone over my 5 minutes.

Chairman ST GERMAIN. Have either of you asked the Comptroller's Office about the agreement?

Mr. Davis. I had no objection to the agreement.
Chairman ST GERMAIN. It didn't bother you, did it?
Mr. Davis. It just called for sound banking practices.

Chairman ST GERMAIN. When it was rescinded, it came as a surprise to you?

Mr. HENDERSON. I was very much surprised the morning I got the letter rescinding it.

Mr. Davis. I think it might be noted our directors excerpted portions of the agreement and we made it bank policy and put it in our minutes that we would continue to do an awful lot of things in the agreement.

Chairman ST GERMAIN. The point is, you didn't feel any great need for that rescission at that time and you did not request it; it came as a surprise to all of you at the bank?

Mr. Davis. Yes, sir, we had no strong feelings one way or the other.

Chairman ST GERMAIN. Mr. Rousselot.

Mr. ROUSSELOT. Mr. Chairman, I appreciate your willingness to be here today.

Mr. Guyton, were you here this morning when we had the discussion of the agreement between the Office of the Comptroller of the Currency and the Calhoun First National Bank of Georgia?

Mr. GUYTON. Yes, I was.

Mr. ROUSSELOT. Are you at all familiar with that type of agreement when a bank is evidently-well, according to the "whereas” clauses in this agreement, it says, "Whereas, the Comptroller believes it is in the best interests of the bank to avoid other administrative proceedings in order to comply with rules and regulations” and so forth. You are familiar with those agreements?

Mr. GUYTON. I am really not, other than what I have read in a few instances in the press about agreements having been agreed to between regulatory agencies and various banks.

Mr. ROUSSELOT. I notice you have been chief operating officer for both the National Bank of Georgia and First Mississippi National Bank. You have never been asked to go into this kind of agreement as the chief operating officer of a bank?

Mr. GUYTON. No, sir.
Mr. ROUSSELOT. Would you consider it an unusual agreement?

Mr. GUYTON. Well, it has become more commonplace, I understand, over the last few years.

Mr. ROUSSELOT. As chief operating officer, you wouldn't be anxious to have one of those?

Mr. GUYTON. I would not.
Mr. ROUSSELOT. Why not?

Mr. GUYTON. I think it is somewhat of an indictment of a bank and its banking practices and policies.

Mr. ROUSSELOT. It is somewhat of a what?

Mr. GUYTON. An indictment of the practices and policies of that particular bank and it suggests more improvements that they would like that bank to make.

Mr. ROUSSELOT. It seemed very severe to me, this one that I have read, and I just wondered, as a chief operating officer of two different banks, how you would approach it if the Comptroller of the Currency came to you and asked you to sign and your bank directors to sign such an agreement. You would consider it a serious problem, is that correct?

Mr. GUYTON. Yes, I would.

Mr. ROUSSELOT. You heard the comments of the Administrator of the region today, Mr. Tarleton, that-well, Mr. Tarleton, I will come back to you since you are here. You have heard the state ment now of Mr. Guyton, that he considers that an indictment of the bank and its practices and policies. He would so consider it, as chief operating officer, and he would also consider that there were clearly correctional processes required of the bank. Inasmuch as we have now had a chance to read this agreement, I was very much taken by your statement this morning that there was quite a difference in the situation at Calhoun First National Bank between 1975 and 1976, when you took this agreement off.

All of these items that are stated in this agreement require a tremendous amount of reporting on the part of a bank, such as weekly reports in some cases, and documents. None of these overdraft situations turned up in any of your examinations or visitations when you had such a tight control of the bank under this agreement? Mr. TARLETON. That is right.

Mr. ROUSSELOT. None of that turned up in that time that the agreement was in effect?

Mr. TARLETON. Not only in the reporting, but in subsequent-I am laboring over a problem I might have on disclosure of information that I am not at liberty to disclose. May I consult my attorney?

Mr. ROUSSELOT. Because of what, mandates by the Justice Department or what?

Mr. TARLETON. Oh, no.

The examiner's visitation and examiner's report subsequent to the imposition of the agreement did positively state that there had been no reoccurrences of the overdraft problem.

Mr. ROUSSELOT. Even among the family?
Mr. TARLETON. That is right.

Mr. ROUSSELOT. Was this information withheld from your examiners or what?

Mr. TARLETON. I can't address myself to that, but I know the examiners did make that statement.

Mr. ROUSSELOT. The statement was made between the time this agreement was imposed and the time when you lifted it, is that correct?

Mr. TARLETON. That is exactly correct.

Mr. ROUSSELOT. Mr. Chairman, it is just incredible to me that under this agreement, with all of the mandates in it for reporting that all of this could have gone on without the knowledge of the examiners. I am now talking about between the time this agreement was imposed in December 1975 and the time Mr. Tarleton lifted the agreement on his own initiative in 1976 a few days before Mr. Lance's appointment.

Mr. TARLETON. I am not aware of any overdraft problems subsequent to the putting on of the agreement.

Mr. HENDERSON. There were none, sir.
Mr. Davis. There were none, sir.

Mr. ROUSSELOT. Well, I will just repeat what the agreement says, “the bank shall not lend money or otherwise extend credit or provide services or participate in any manner in any campaign for any political office by T. Bertram Iance or a campaign for political office by any officer, director, or any other person associated with the bank except as permitted by statute," and then it goes on, “All proposed credits, loans, or other participation in the campaign for political office by T. Bertram Lance or any other officer, director or person associated with the bank shall have prior written approval of the regional administrator. The board of directors shall within 90 days provide the bank with a new, active, capable, senior lending officer."

Was that complied with?
Mr. TARLETON. That is Mr. Davis.

Mr. ROUSSELOT. And then it goes into great detail as to all of the family, also.

Now, is Mrs. Lance still part of the family?
Mr. TARLETON. I assume so.

Mr. HENDERSON. Mr. Rousselot, there were no overdrafts after the date we signed that agreement. They were cleared out. They were gone.

Mr. Davis. There hasn't been a one. Mr. ROUSSELOT. That isn't the information we have. Mr. TARLETON. Are you talking about overdrafts at Calhoun First National Bank or other banks?

Chairman ST GERMAIN. Calhoun.

Mr. TARLETON. I am aware of no overdrafts at the Calhoun First National Bank, and would like to see evidence to that point.

08-440 - 77 - pt. 2 - 3

Mr. ROUSSELOT. There is a conflict between you and the Comptroller.

Chairman ST GERMAIN. In the Comptroller's report-and the chart was up earlier, January, February, March-in April, 4-20-76, there was an overdraft.

Mr. HENDERSON. Mr. Chairman, I beg your pardon. There were, as best I remember, and I checked into this—there were seven occasions.

Chairman ST GERMAIN. How many?

Mr. HENDERSON. Seven. One of which as best I remember was for 49 cents.

Chairman ST GERMAIN. Up to $1,428.

Mr. HENDERSON. Two of those were caused by errors by our clerical people not doing what they were supposed to do in transfers of funds. The others occurred because in a tranfer arrangement with the National Bank of Georgia they were closed on Saturday and we are open on Saturday. If that is what we are referring to-but those are the only ones to my knowledge.

Mr. ROUSSELOT. We are just looking at the Comptroller's charts. That is all we can go by. We admit the information we have received obviously isn't perfect. Mr. Bloom has stated he himself made some mistaken judgments in the statements he made to the Senate. You know, those things do occur.

Mr. Cleveland, if I could, section G of the Comptroller's report, this discusses the investment management agreement between the National Bank of Georgia and the Central States, Southeast and Southwest Areas Pension Fund-the Teamsters fund.

On March 31, 1976, the National Bank of Georgia signed an agreement to manage $17,500,000 for the Teamsters' pension fund. Under the agreement, the National Bank of Georgia received fees only for the management of the account. The assets of the fund were to be held by American National Bank and Trust Company of Chicago, Ill.

Then another fact.

On March 26, 1976, there was a special National Bank of Georgia memorandum from Raymond H. Sapp, vice president and trust officer, National Bank of Georgia, to Mr. Davis, chairman of the trust subcommittee, states, and I will quote:

One, the opportunity for our trust department to manage this size account is certainly a rare occasion. This size account is very difficult to obtain, and it appears that this account was simply given to us as a result of the influence of Mr. Lance and Mr. Cleveland. I do not think we can afford to pass up the opportunity.

Two, there are certain risks that may come with the account, but we are in business to accept responsibilities and risks. I do not feel that we can afford to turn down the account provided we are charging a reasonable fee for our services.

I assume that would be a better fee than Mr. Lance was charged.

Now, the questions are, Why do you suppose the National Bank of Georgia was selected by the Teamsters to manage part of the Central States account? Does anybody want to attempt that?

Mr. CLEVELAND. Yes, I will attempt it. That Teamsters' pension fund account is my account. I solicited it. I went to Chicago to get it. It is not an account to be ashamed of.

Mr. ROUSSELOT. I didn't say there was anything to be ashamed of.

Mr. CLEVELAND. I didn't say you did say that. That account is from the working people that are members of the Teamsters' fund. It was handled on a professional, first-class, conservative basis. It was done on bid basis. The trustees awarded those accounts to the banks they thought were well qualified to handle it in geographical areas.

Mr. ROUSSELOT. We understand some banks on the original list declined to manage the Central States assets under the conditions upon which the fund insisted; namely, that they serve as manager only, and not as custodian. Can you explain why?

Mr. CLEVELAND. Yes, sir, I certainly can. That is a matter of pure ego. I was mad as hell about it. I didn't want another bank managing funds that we had the responsibility for managing. I wanted them in our possession, in our vault, under our control. I almost declined the account because we could not get them to agree to do that.

On the other hand, there was every evidence that the bank in Chicago which did handle it had a strong reputation in the management and as custodian of funds of this nature and I was finally persuaded to leave the funds with them.

Mr. ROUSSELOT. Have the officials of the Teamsters' Union or Teamsters' pension fund received any loans from the National Bank of Georgia since December 23, 1975?

Mr. CLEVELAND. Not to my knowledge, none whatsoever.
Mr. ROUSSELOT. Would anyone else care to comment on that?
Mr. LEACH. Would the gentleman yield.
Mr. ROUSSELOT. Yes, I would be glad to yield.

Mr. LEACH. Has the Teamsters' pension fund loaned any money to any officers or directors of the National Bank?

Mr. CLEVELAND. No, sir, they have not.
Mr. LEACH. Thank you.

Chairman ST GERMAIN. I was going to observe-I wouldn't be too eager to answer that question because it seems to me some of your officers in the past have not disclosed to the board of directors their loans that they have taken out in contravention of the requirements.

Mr. CLEVELAND. That may be true in one or two instances. But for the most part I can assure you the officers of the National Bank of Georgia did consistently report their loans to the board of directors.

Mr. ROUSSELOT. OK. Did any one receive finders fees from the board of directors?

Mr. CLEVELAND. No, sir, not to my knowledge. Certainly nobody connected with the bank did.

Mr. ROUSSELOT. Thank you, Mr. Chairman.
Chairman ST GERMAIN. Mr. Derrick?
Mr. DERRICK. Thank you, Mr. Chairman.

I know how bad these gentlemen want to get back to Georgia; I can understand that.

Chairman ST GERMAIN. As a matter of fact, I don't think they even wanted to come here.

Mr. DERRICK. I am sure there are probably at least a million places they can think of in the next 5 minutes they would rather be, the first one being Calhoun, Ga.

I want to ask the gentlemen with the National Bank of Georgia first a couple of questions—a question.

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