Nation: The Carters’ peanut Money

Lance’s loans examined

After a federal grand jury in Atlanta questioned Billy Carter last fall about Banker Bert Lance’s tangled financial dealings, the President’s brother announced blithely that on several occasions he had taken the Fifth Amendment. The statement inflamed suspicions that Brother Billy might be covering up some unsavory—or even illegal—money dealings between Lance, who resigned as Director of the Office of Management and Budget in the fall of 1977 because of his questionable banking practices, and the Carter presidential campaign.

Last week two outside directors of Atlanta’s National Bank of Georgia, which was once headed by Lance, issued a 131-page accounting snowing that the bank had loaned the Carters almost $7 million. But the directors reported: “We have seen no evidence that the proceeds of these loans were, at least to the knowledge of anyone at N.B.G., used outside the Carter peanut business.”

The report did, however, detail a sometimes sloppy relationship between Lance’s bank and the Carter enterprise in Plains. Loans to build a new warehouse and to construct a peanut sheller at one time totaled about $1 million. On two occasions, the bank reduced the interest rates on these loans, eventually to a rate of 1½ percentage points above the prime rate. At the time of the last rate reduction on the construction loan, the prime rate, which banks charge their most credit-worthy customers, was 7%. Said Lance: “There were good and sufficient banking reasons for those decisions, and any implication or statement that they were not in that regard would be a misstatement.”

But there was a second set of loans that even the N.B.G. directors acknowledged had been “poorly managed.” Two lines of credit were opened by the Carters in 1975 and 1976 to finance the purchase and storage of peanuts pending their resale. By the time Jimmy was elected President, at least $3.6 million was outstanding on the loan. The family business was supposed to keep on hand a fixed amount of peanuts or, if they had been sold, to pay the proceeds to the bank.

However, the Carter family business had been receiving from customers checks that had been drawn on insufficient funds and thus could not be cashed. At one point, the value of the collateral had fallen to $357,000, while the loan balance totaled $833,000. In June 1977, the bank asked Billy to stop using that account.

The White House last week moved quickly to dissociate the President from Brother Billy’s banking. Since Jimmy Carter took office, his 62% share of the family business has been in a blind trust managed by Atlanta Attorney Charles Kirbo. When Kirbo discovered the relaxed management, he quickly moved to straighten out the mess.

Despite the N.B.G. directors’ report, Lance is still not in the clear. Left unresolved by the bank report is the grand-jury investigation into his banking practices. Some result of that probe is expected in six to eight weeks.