Word: depositer
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...Chicago loan Lance later received a loan of $3.4 million from the First National Bank of Chicago, a month after NBG had established a correspondent relationship with a $50,000 deposit. On Jan. 6,1977, the day that Lance's loan was approved, a memo written by J.G. Migely, the lending officer of the Chicago bank, noted that Lance had been given a $4 million line of credit, that he was to become the OMB director and that "we are delighted to have this gentleman's important business." Memos about the loan also specifically stated that "no compensating...
...return for such services, the smaller bank compensates its big brother by putting an interest-free deposit in the larger bank. These deposits benefit the larger bank because it can lend out the money to its own loan customers without having to pay interest to get the funds. It is an extremely profitable business for larger banks, and competition for correspondent deposits is fierce...
Such loans can become illegal if it can be demonstrated that the amount of the deposit was too large for the correspondent services rendered, or if its size enabled the borrower to get more favorable terms for his personal loan than are normally offered to routine customers. At issue is the question of intent, but proving what goes on in the minds of borrowers and loan officers is difficult. Since 1971, the Comptroller has referred 400 cases to the Department of Justice; only a handful have been prosecuted...
...prime rate and was backed by considerable collateral. "No commitment nor discussion of any balance requirement was made between me and the bank," he insisted. Last month Lance offered similar denials concerning a $3.4 million personal loan from another bank -Chicago's First National-that received a deposit from...
Should a bank grant a personal loan to the head of another bank that makes an interest-free deposit? Said a high officer of one of Manny Hanny's competitors: "Citibank wouldn't do it. Chase Manhattan wouldn't do it. Morgan Guaranty wouldn't do it." Now Comptroller Heimann will assess whether or not anything was improper. His investigation has been expanded to include all of Lance's loans from NBG correspondent banks -four of the five loans that...