Lance acquittal: its impact on Carter, banking

Robert M. Press reports from Atlanta: Acquittal of President Carterhs tall, folksy former budget director Bert Lance on federal charges of bank fraud should have these effects:

1. It is expected to have little effect on the way bankers do business. Any impact from the Lance affair, banking officials say, came in 1978 when a Senate probe of Mr. Lance's complex financial dealings in Georgia spurred passage of a banking reform law.

2. It is a victory for a Southern, down-home defense team against a technically complex, letter-of-the-law prosecution by Justice Department attorneys from Washington.

Mr. Lance was accused of making large loans to family and friends without obtaining proper credit information or collateral. Prosecutors called it the classic case of "insider" loans. He was also accused of lying about his debts on two personal financial statements to obtain loans for himself.

But such accusations -- new ground for federal prosecution regarding loan credit and collateral -- depend on proving criminal intent. In the end, Bert Lance did not come across to the jury as having criminal intentions -- as unorthodox as his financial activities may have been.

After the trial, juror James Collins said intent was the key. Another juror said the jury was hung (could not agree)on a count of making a false financial statement.

The jury of six men and six women acuitted Mr. Lance April 29 of nine counts and reached no decision in the remaining three counts. US District Court Judge Charles a. Moye Jr. gave the defense until May 20 to file supporting briefs for the motion to dismiss the three remaining charges and gave the prosecution until June 10 to respond. Earlier in the three-month trial he had thrown out about half the government's case against Mr. Lance for lack of evidence.

Government attorneys, led by an organized crime expert, spent weeks showing the jury hundreds of documents tracing Mr. Lance's complex banking activities. They hammered on the point that he had not checked into the ability of borrowers to pay back loans.

Then, in a brief rebuttal, Mr. Lance took the stand and admitted paying little attention to collaterals or credit records. The "character" of the borrower is the key, he said, looking straight at the jury. Next, a locksmith and a farmer testified how Mr. Lance's loans had helped them get a start. Several jurors were seen nodding in apparent understanding.

Asked what lessons might come from the trial, one prosecuting attorney said it was that politics and banking don't mix. Much of Mr. Lance's criticized financial maneuverings occurred in relation to his unsuccessful campaign for governor of Georgia in 1974.

Whether Mr. Lance, a popular figure in the state, now feels free to run for governor again remains to be seen.

The 1978 banking reform law provides, among other things, fines of up to $1, 000 a day while loans judged improper are outstanding. Because no criminal intent proof is needed, this is an easier tool than a Lance-type prosecution, says one Atlanta banking attorney.

But the fines have seldom been imposed, and are causing few ripples in the banking world, according to an official with the American Banking Association.

Godfrey Sperling Jr. reports from Washington:

The acquittal of Bert Lance is a political plus for President Carter in that it introduces no additional liability in the midst of the 1980 presidential campaign.

Mr. Carter's ties, both personal and political, were so close to Mr. Lance that a conviction would have reflected on the President's judgment in choosing Mr. Lance as a key administration adviser.

More than that, the President's opponents would have been able to say that the Lance conviction took away one of Mr. Carter's alleged assets -- that his administration was free of major scandals.

They could have charged that a man of questionable character -- a man later convicted of criminal charges -- had advised the President on a day-to-day basis.

If Mr. Lance's acquittal on nine bank fraud charges is followed by dismissal of the other three, that possibility will be ended.

Mr. Lance resigned Sept. 21, 1977, as Mr. Carter's budget director. The President's subsequent quick move to defend his appointee when the Senate began to raise questions about Mr. Lance's banking practices -- the President saying he was "proud" of his old friend and was convinced of his innocence --now probably will no longer haunt him.

Leaders of the Carter re-election campaign had feared that even the Lance trial itself, which was long and drawn out, would be a big political liability for the President.

But this did not occur. Some observers here believe it was because the public focus was so much on foreign affairs -- particularly on the hostages in Iran -- that the Lance trial and its possible implications had little or no negative fallout on the President or his campaign.

Political observers here agree that a Lance conviction would have damaged the President badly.

"It would have taken away one of Carter's strengths," one observer said April 30, "raising questions about how upstanding he really is.

"People -- and his political opponents --would be saying, 'How can Carter be as honest as he seems to be, and says he is, if he has close friends and associates like Bert Lance.'"

But the President's "Bert Lance problem," as it was called by some of Mr. Carter's critics, now seems to have disappeared.

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