It seems Henrique de Campos Meirelles, in stepping down as FleetBoston Financial's ( FBF) president for global banking to run for congress in Brazil, may be giving up a bit more than the $2 million in salary and bonuses he received last year from the nation's seventh-largest bank.

He now may have to speed up the repayment of a $4.5 million no-interest loan he got from Fleet two years ago to finance his relocation from Massachusetts to a home he bought in New York.

If he had remained at Fleet, Meirelles, the third-most powerful executive at the bank, probably wouldn't have had to make any payments on the loan until 2011. In fact, Fleet's most recent proxy statement says that as of Dec. 31, 2001, the full amount of the loan was still outstanding.

But Meirelles' decision to leave Fleet apparently alters the conditions of that deal. And it completes an episode of the kind of corporate self-dealing that some say has helped undermine investor confidence.

Let Me Call You Sweetheart

The proxy statement says if Meirelles leaves the bank for a "good reason," he has one year from the date of his departure to repay the balance of the loan. Presumably, Meirelles' resignation to run for congress in Brazil -- where Fleet has made some $9 billion in loans -- constitutes a "good reason" under the agreement. If not, however, the proxy statement says Fleet could force Meirelles to repay the entire loan in 90 days.

Allison Gibbs, a Fleet spokesman, declined to comment, except to say the loan was legal and proper. Meirelles, who oversaw Fleet's Latin American operation -- including its troubled Argentine loan portfolio -- could not be reached for comment.

While the loan was legal when it was arranged in 2000, it appears that Meirelles would not be able to negotiate such a deal today. That's because the new federal accounting and corporate reform law prohibits companies from making loans to executives that aren't similarly available to the general public.

Securities experts say a multiyear, no-interest loan is just the sort of corporate perk the new law is meant to forbid. Yet some say that in outlawing most types of corporate loans, lawmakers may have gone too far and simply created a new problem for shareholders.

Instead of the loans, corporations now may be tempted to give new executives huge signing bonuses for accepting a job. Or a company may give an executive a big relocation package. And in those instances, a corporation would never get any money back, as it would have with a loan -- even one that doesn't charge interest.

Changing Channels

"Clearly this provision was driven by reports of these kind of loans being abused by people," says George Langevoort, a securities professor at Georgetown University School of Law. "But the irony is that, if in recruiting new executives you now just give them money, or a signing bonus, shareholders are not necessarily in a better position."

Langevoort says a better solution than an outright ban on corporate loans would have involved placing strict limits on the dollar amount of such transactions and restrictions on how these loans could be used.

And it's important to note that the ban on corporate loans won't have an impact on other types of potentially questionable deals that banks sometimes engage in with corporate insiders. To find these deals, simply turn to the section of a bank's proxy statements that's usually titled "Certain Transactions."

A common type of deal between a bank and a corporate insider involves the signing of leases for bank branches and offices.

A Fleet subsidiary, for instance, leases office space from a real estate management company owned by Michael Picotte, a Fleet board member. The annual rent is $119,453.

Now that's not a lot of money. But some lease deals aren't insignificant either. Bank of America ( BAC), in its proxy statement, reveals that it paid $2.8 million in rent to Highwoods Properties ( HIW), a real estate investment trust led by O. Temple Sloan, one of Bank of America's directors and a member of the bank's compensation committee. The nation's third-largest bank also paid $825,000 to lease office space from a company owned by Virgil Williams, another member of the bank's board of directors.

Bank of America spokeswoman Eloise Hale declined to comment but pointed to the proxy statement, which states that these transactions were conducted "on terms no more or less favorable than those prevailing at the time for comparable transactions with unaffiliated parties."

Lend Lease

Smaller banks also partake in these lease deals with insiders. New Jersey's Commerce Bank ( CBH), one of the fastest-growing regional banks in the country, leases land for some 20 branches from a variety of limited partnerships in which Commerce's chairman, Vernon Hill, has a financial interest. The bank paid $1.3 million in rent on deals, according to its proxy statement.

C. Edward Jones, a Commerce Bank spokesman, defends the lease deals as being entirely proper and vetted by bank regulators over the years. But the bank has decided to reassess those leases, as well as other deals it's negotiated with corporate insiders. A recent column by RealMoney writer Arne Alsin drew attention to those transactions. ( RealMoney is the subscription sister site of TheStreet.com.)

Alsin said the insider deals "aren't characteristic of a management team that carefully husbands shareholder capital." After the column appeared, Commerce, which has been one of the top-performing bank stocks this year, dropped 9%.

"They are not uncommon and they've been blessed by the bank examiners," Jones says of the lease deals. "But we are going to adjust. We're in the process of addressing all of these related-party transactions or trying to unwind or change as many as possible."

Whatever the reason behind the change in attitude at Commerce Bank, it's refreshing to see.

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