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Safire charged that Chicago's First National had allowed Lance to defer interest payments, an unusual privilege for borrowers. The Chicago bank refused to discuss details of the loan publicly, but one of its top executives noted pointedly last week that the bank "has never denied" that it agreed to defer some interest on Lance's loan. Such a deferral on so large a loan would be reasonable, the executive argued, and not a special favor to a high economic policymaker, because Lance controls some $8 million worth of stock and other assets (he also has "direct liabilities" of $5.4 million). "Lance is not getting a break from the First National Bank of Chicago," said one of its spokesmen, noting that the loan to Lance "is the same as we would make to anyone of his financial situation. It was a damned good loan backed up by plenty of assets and collateral." Meanwhile, Lance insisted that he was making his quarterly loan payments promptly.
A different criticism of the Chicago loan sprang from the front page of the Washington Post. The newspaper reported Lance got the credit just one month after the NBG, of which he was still president, deposited $200,000 with Chicago's First National—at no interest. The stated purpose of the deposit was for the NBG to establish a "correspondent" relationship with the Chicago bank (such correspondent accounts are commonly opened by banks that wish to extend their services to other regions). The Post noted that if the interest-free deposit could be construed as a "compensating balance" for a favorable loan to Lance, the deposit might be an illegal misapplication of the NBG funds. And the Atlanta bank's need for a new correspondent in Chicago was suspect, the Post implied, because the NBG was already a correspondent with another Chicago bank.
It was the Post's report that most deeply shook the Senate committee. Said one of Lance's staunchest defenders, Georgia Democrat Sam Nunn: "If that story is true, then this committee is the least of Bert Lance's problems. He's got problems with the Comptroller of the Currency and the Justice Department."
Modest Profit. But claims by Lance and Abboud's Chicago bank seemed to undercut at least part of the Post's story. The interest rate on his loan, Lance said, was a respectable three-quarters of a percent above the prime interest rate; affluent borrowers sometimes pay as little as one-half percent above prime. As for the no-interest deposit, that is routine for a corresponding banking relationship. "There isn't a bank in the country that has an interest-bearing correspondent bank balance," comments one banker friendly to Lance. In addition, says a spokesman for Chicago's First National, the deposit has fluctuated. Contrary to the Post's report, it began as a $50,000 deposit in January and did not increase to about $200,000 until March. The fluctuations may indicate that NBG was actively using the account for legitimate business deals that it got through its correspondent relationship with Chicago's First National. Whatever profit the big, rich Chicago bank earned from the NBG's interest-free deposit was modest, and scarcely enough to compensate for any deferral of interest on Lance's $3.4 million loan.