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Mr. Robert Guyton
Page Two
September 12, 1977

and James H. Dickson, Jr. answered nolo contendre
to misdemeanor charges of making political contri-
butions from bank funds of $350 to the Jefferson-
Jackson Day Dinner and $300 to the Fulton County
Republican Party. Those answers were accepted by
the United States District Court, fines aggregating
$7,000 were imposed, and no further legal action is
anticipated in connection with those transactions.
Internal procedures designed to safeguard against
a re-occurrence of such uses of funds have been
instituted by the Board of Directors."

Please desèribe the internal procedures which your bank has designed to safeguard against making political contributions. Can you.assure the Subcommittee that they operated effectively during the political year 1976?

The Chairman has indicated that the Subcommittee would like to receive all responses by Friday, September 23. Thank you very much for your cooperation.

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October 6, 1977

Honorable John H. Rousselot
Subcommittee on financial Institutions
Supervision, Regulation and Insurance
of the Committee on Banking, Finance
and Urban Affairs
United States House of Representatives
Washington, D. C.


Dear Mr. Rousselot:

This is in response to your letter dated September 12, 1977. As you note in your letter, The · National Bank of Georgia offering circular dated August 16, 1976 stated that the bank had instituted internal procedures designed to avoid a recurrence of the violations of Federal Election Law which had theretofore occurred. These prior violations involved cash contributions made by bank officers out of bank funds obtained by cashing a general ledger debit. The bank adopted procedures prohibiting the use of a general ledger debit to obtain cash. In addition, the new procedures provide that expense requisitions are reviewed before payment by both an accounting clerk and the clerk's supervisor. The requisitions are further reviewed after payment by the vice president in charge of accounting and the senior vice president and comptroller.

As you may recall from my testimony before the committee, I was not affiliated with the bank during 1976. However, it is my understanding that these procedures were successful in preventing a recurrence of violations similar to those which had previously been discovered. If you have further questions regarding this matter, please let me know.




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Your testimony at the recent hearings on "Problems Revealed by the Comptroller of the Currency's Inquiry into Certain Matters Relating to T. Bertram Lance and Various Financial Institutions" is appreciated. You will recall that at the conclusion of the hearings, Chairman St Germain informed all witnesses that Members of the Subcommittee might submit additional questions for them to answer.

Accordingly, I would respectfully ask that you respond to the following question in writing for the record:

On page 262 and succeeding pages of the transcript,
you described efforts which were made by the Calhoun First
National Bank to comply with both the letter and the spirit
of its agreement with the Comptroller of the Currency.

The Comptroller's September 7 report describes an
arrangement by Mr. Lance to have checks held at the Calhoun
Bank for payment from his National Bank of Georgia account
when payment from the Calhoun account would have created
overdrafts. More than a thousand items involving more
than two million dollars were held under this arrangement
during 1976.

Do you consider this practice of holding Mr. Lance's checks to avoid the creation of overdrafts to have been consistent with the letter and spirit of the agreement?

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John E. Davis, President
Page Two
September 12, 1977

The Chairman has indicated that the Subcommittee would like to receive all responses by Friday, September 23.

Thank you very much for your cooperation.

Kind regards,

John H. Rousselot



The Calhoun First National Banks


September 19, 1977

The Honorable John H. Rousselot
U. S. House of Representatives
Subcommittee on Financial Institutions
Supervision, Regulation and Insurance
Committee on Banking, Finance and Urban Affairs
Washington, D. C. 20515

Dear Mr. Rousselot:

Our answer to your question contained within your letter of September 12, 1977, concerning whether or not we feel that the present arrangements whereby we transfer funds from the National Bank of Georgia to the appropriate account of Mr. Bert Lance adheres to the letter and spirit of our former agreement with the office of the Comptroller of the Currency is an unequivocal "yes". However, to understand our strong feelings on this matter, it might be helpful if we furnished you with a little background information on the somewhat unique manner in which we operate our corporate demand deposit accounts. The Calhoun, Georgia area along with our sister city Dalton, Georgia, which is located slightly north of us, together comprise the industrial and commercial carpet manufacturing center for the free world. The carpet business has traditionally been an industry which has a small equity capital base and it has always been necessary for them to depend upon large factoring firms such as Walter E. Heller & Company of Chicago or one of the factoring divisions of a large southeastern regional bank for the cash working capital to pay their normal every day expenses. This type of financing is extremely expensive and as could be expected the mills are very reluctant to request funds from their factor until the last possible moment. Each morning our computer center furnishes us with a list of accounts in which if a deposit is not made during the normal day's course of business an overdraft will result. Our customer service officers immediately telephone all of the various mills and report the amount of money they will need to deposit. The mills in turn contact their factors in Chicago, New York or Atlanta and the funds are wired either directly to us through

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