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September 19, 1977
the Atlanta Federal Reserve Bank or credited to one of our correspondent accounts in Atlanta. As soon as this notification is received by the Calhoun First National Bank the customer is credited with the proceeds. While it sounds quite complex we have been doing this for so many years that it is a relatively routine matter and from the time we contact a manufacturing facility it is usually only a couple of hours before the funds are actually credited to their account. Due to the volume of checks written and the amount of funds which clear through Mr. Lance's various personal accounts during any given calendar year we basically operate his individual accounts in exactly the same manner as we would a corporate checking account. In other words, we are only extending to him the same courtesy we do our other customers and rather than his funds coming from a factor, they are simply immediately transferred to our credit by the National Bank of Georgia. I certainly hope that this information will help clear up your question, and if we may be of any further service do not hesitate to let me know.
John E. Davis, Jr.
As you know, on September 7, the Comptroller of the Currency issued Volume 3 -- Supplemental Report "Inquiry into Certain Matters Relating to T. Bertram Lance and Various Financial Institutions," a major section of which referred to various transactions with your bank. The document raises several additional questions which we would like answered in connection with this Subcommittee's continuing oversight and legislative responsibilities. .
In the September 7 report regarding the relations of Fulton National Bank and Mr. Lance's Calhoun First National Bank, the Comptroller concludes:
"The Fulton-Calhoun transaction show a pattern of loans to
Would you please provide the Subcommittee with your bank's written loan policies for the periods mentioned in the report, that is from 1963 to 1977?
2. Were the loans to Mr. Lance, Mrs. Lance, Lancelot Company, and the several directors of the Calhoun First National Bank, made between 1963 and 1977, ever criticized by national bank examiners at your bank? Please provide the Subcommittee with specific details about any ratings national bank examiners might have applied to these loans.
3. Did the Fulton National Bank write off any of these loans as
Mr. Gordon Jones
September 20, 1977
4. The Comptroller's report, in referring to your bank's expectations for a compensating balance, states:
"Notwithstanding Fulton's possible expectations, available
Were the correspondent bank relationships of your bank examined by national bank examiners during this period? Were the correspondent accounts of your bank criticized by bank examiners?
5. Please provide the Subcommittee with copies of your annual reports for the years 1970 to 1977.
6. Please provide the Subcommittee with copies of the written policies at your bank regarding the separation of departments, i.e., how is Information shared among your lending officers, your trust department, your correspondent bank department, and your real estate department?
7. In discussing a conversation with Mr. Lance, your officer J. L. Phillips noted for the record on December 31, 1974:
"He had offered 57 acres of land worth, he said, minimum of
Please provide the Subc comittee with your bank's written policies regarding recordation of deeds taken as collateral.
8. The Comptroller's records reflect that on May 14, 1975, the Fulton National Bank transferred loans of the following people to the National Bank of Georgia: Mr. James B. Langford; Mr. Bill Mathews; and Mr. R. Merrill Dobbs.
Why were the loans transferred and at whose initiative?
9. Please provide the Subcommittee with a copy of your bank's internal regulations regarding the deposits required in a correspondent account in order to justify dollars spent in providing services.
Because of ongoing legislative hearings, your earliest response will be appreciated.
Mr. Gordon Jones has requested that I respond to your letter of September 20, 1977, seeking certain information in connection with your subcommittee's contiming oversight and legislative responsibilities.
While we wish to cooperate with your subcommittee, it is against the policy of this Bank to voluntarily disclose to third parties information with respect to transactions of the Bank's customers without the consent of such customers. Our policy in this regard applies equally to former customers, such as those which are the subject of your inquiry, as it does to our current customers. As I am sure you recognize, all bankers receive numerous inquiries from various governmental entities seeking to investigate the activities of their customers. While we are sympathetic to the difficulties which may be encountered in obtaining information through legal process, we take the position, and that position is concurred in by our counsel, that our customers are entitled to privacy in their business and personal financial dealings and that their confidences expressed to us should remain inviolate absent legal compulsion.
The Comptroller of the Currency has the legal authority to examine and make copies of our records and, in general, to insist upon our cooperation in providing information for purposes of evaluating our banking practices. of necessity, we must then disclose to the Comptroller the confidences of our customers. The information referred to in your letter was obtained by the Comptroller in connection with such an investigation. We played no part in disclosing the information obtained by the Comptroller to the public. We cannot, consistent with our policy relating to the confidentiality of our customers' affairs, supplement and explain data released by third parties without appropriate legal process.
Though we must respectfully refuse to voluntarily provide any information regarding the Bank's customers, we are more than willing to cooperate with your
THE FULTON NATIONAL BANK
The Honorable Fernand J. St Germain
October 3, 1977
subcommittee in providing information regarding Fulton National's internal operations and procedures. Accordingly, we are enclosing the following documents covered by your request:
Relevant sections of Fulton National Bank's
II. Copies of the annual reports of Fulton National
Corporation for the years 1970-1976 (There is no
Responding to paragraph 6 of your letter of inquiry, Fulton National Bank has
The seventh paragraph of your letter requests information on the Bank's written policies with respect to recordation of security deeds. Fulton National has no written policy dealing specifically with that limited subject. However, Fulton National's Loan Manual does provide instructions to lending officers with respect to perfection of security interests in any collateral taken, and it is assumed in those instructions that Fulton National's security interests in such collateral will be perfected. It is our understanding that to perfect a security interest in land in Georgia, a security deed must be recorded.
Finally, paragraph 9 of your letter requests information regarding Fulton
*-Annual reports available at Subcommittee.