Magazine article American Banker

New York to Examine Fleet Loan to City Comptroller

Magazine article American Banker

New York to Examine Fleet Loan to City Comptroller

Article excerpt

The New York State Banking Department will examine a controversial loan made by a New York unit of Fleet Financial Group to the 1992 U.S. Senate campaign of City Comptroller Elizabeth Holtzman, a state government source said.

The banking department, which regulates state-chartered banks, said it wants to determine whether Fleet's Long Island bank affiliate followed "proper loan guidelines" in making the $450,000 loan to the Holtzman campaign.

The review follows the release of a New York City Department of Investigation report that suggests Fleet Financial's securities subsidiary was invited to become a co-manager of the city's bond underwriting syndicate in return for the loan.

Possible Conflict

The report details possible violations of conflict-of-interest rules by Ms. Holtzman, who is fighting a bitter primary battle to be reelected as comptroller. It did not investigate possible violations of banking laws.

However, federal regulators and private bank lawyers said the report may lead to regulatory or law enforcement action against Fleet. It detailed the relationship between Ms. Holtzman--who denies any wrongdoing--and key executives of Providence, R.I.-based Fleet Financial, the holding company for Fleet Bank and Fleet Securities.

|Undesirable' Type of Loan

"We're confident we haven't violated any laws or regulations." said Thomas Lavelle, a spokesman for Fleet.

The New York City report said Fleet's Commercial Credit Policy Manual characterizes political loans as "undesirable."

The government source indicated that the State Banking Department has undertaken an examination to see if the loan followed standard guidelines.

"It really is a question of whether the loan was improper." said the official, who asked not to be identified.

The source refused to elaborate on what enforcement action, if any, the banking department can take. …

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