Ross C. Towne, former president of Perpetual Financial Corp., dies at 67
By Adam Bernstein,
Ross C. Towne, 67, former president of Perpetual Financial Corp., which became one of the area’s dominant financial institutions in the 1980s before its implosion in the early 1990s, died of renal failure May 29 at Virginia Hospital Center in Arlington. He was a McLean resident.
Mr. Towne worked in the audit division of the Arthur Andersen accounting firm before joining Perpetual in 1983 as its senior executive vice president and chief operating officer. He soon became a member of the bank’s board of directors and a member of its executive committee.
With the late Thomas J. Owen, Perpetual’s hard-driving chairman and chief executive officer, Mr. Towne oversaw the rapid expansion of the company, which went public in 1984. Its assets reportedly grew from $1 billion in the late 1970s to more than $6 billion in 1990.
Throughout the 1980s, Perpetual grew because of a federal rule that allowed the company to take on $144 million in liabilities to buy two failing savings and loan institutions; at the time, the government was encouraging healthy financial institutions to do just that.
The government paid Perpetual $10 million in cash and allowed the company to assume $134 million debt as an asset called “supervisory goodwill” that could be kept off the books and amortized over 40 years.
Critics of that approach argued that supervisory goodwill camouflaged a company’s true financial condition. In 1989, Congress significantly altered the practice. Suddenly, Perpetual had to pay off its supervisory goodwill in five years instead of 40.
Compounded by the downturn in the real estate market, Perpetual was soon in financial peril. Owen and Mr. Towne left the company around 1990. In 1992, the government stepped in and sold Perpetual to Crestar Financial Corp. in Richmond for $7.8 million.
After lawsuits pushed by many thrifts that had been undone by the 1989 regulations, the U.S. Supreme Court ruled in 1996 that government could not change its accounting rules midstream. “The ruling’s a vindication,” Owen, who died in 1997, said at the time. “But it’s hard to put spaghetti back in the box.”
Ross Clare Towne was a native of Clarkston, Mich., and a 1966 graduate of Michigan State University, where he also received a master’s degree in business administration in 1968. He had several certifications from the University of Pennsylvania’s Wharton School of Business.
After resigning from Perpetual, Mr. Towne formed a consulting firm that specialized in financial and operational consulting for small businesses in the Washington area. He was a co-founder, director and treasurer of what became the Business Alliance of George Mason University, a consortium of corporate partners for the university.
As a volunteer, he was a past president and director of the Leukemia and Lymphoma Society’s National Capital Area chapter, and he was a co-founder of its fundraising ball. He was a volunteer adviser to Mother Dear’s Community Center, a shelter and food kitchen for the homeless in Washington.
His marriages to Susan Jenson and Anne Connor ended in divorce.
Survivors include two daughters from his first marriage, Sara Towne of Leesburg and Betsy Towne Sonnier of Stafford; a brother; and four grandchildren.