The city was still digging out from a heavy snowfall fo Feb. 7 when Bert Lance arrived in town for an important luncheon at a private corporate dining room.

Lance was in Washington as a point man for a group of investors allegedly seeking control of Financial General Bankshares Inc. (FGB), a $2.2 billion banking company based here.

But to some followers of Lance's complex financial dealings, his visit was more than another business transaction - it had a heavy overlay of symbolism. For the FGB headquarters building is located at 1701 Pennsylavania Ave., near the White House where only a few months before the former budget director was a powerful influence and where he still occasionally drops by for visits.

Lance had resigned from the administration following revelations of his financial operations in Georgia. Now on this day in February, he was looking to make a comeback through the private sector.

According to sworn testimony of an FGB executive, Lance made a strong pitch for one of the company's two top jobs during the course of the Feb. 7 luncheon - an allegation Lance later denied. With the job would come an executive suite that overlooked the White House grounds. It also would provide for Lance's return to Washington in financial - if not political - triumph.

So, much was at stake for Lance on that day. And much has happened since that Feb. 7 visit that makes it unlikely that he will be moving into Pennyslvania Avenue office.

For one thing, Lance and his associates have been sued by Financial General and by the Securities and Exchange Commission.

Two weeks ago, Lance and 10 other defendants were charged by SEC with attempting to buy FGB stock secretly in violation of federal securities laws. The terms of the settlement - under which Lance and his associates neither admit nor deny the SEC allegations - will make it extremely difficult for any takeover of FGB by Lance group.

Meanwhile, a federal judge here soon will decide whether to grant the company's request to block the Lance group from further acquisitions of FGB stock.

The fight over FGB became public after Lance's February visit. It has been costly for both sides.

A score of lawyers representing various principals in the struggle are collecting handsome fees.

Immediately after the Lance visit, FGB hired a leading New York firm specializing in takeover fights, Skadded, Arps, Slate, Meagher & Flom. The Lance group reacted by hiring another New York firm, Wachtell, lipton, Rosen & Katz.

Leading partners of these two New York firms charge their clients between $150 and $350 an hour. In addition to hiring the Watchell, Lipton firm, the Lance group also had the contunuing services of Clark Clifford and one of his partners. At one point, all three attorneys threw to London to interview Lance's foreign associates.

As in most stock fights, the FGB tale follows an intricate maze of secret meetings in hotel rooms and airports - in London, Little Rock, Atlanta, Washington and Karachi. It is also a story of how Bert Lance, in his apparent eagerness to return to Washington in style, may have lost his chance by showing his hand too early to the executives at FGB.

Indeed, according to reports from London, Lance's financial backers there did not anticipate the publicity that his involvement would generate. And it highly likely that the powerful Middle Easterners, who were drawn into the fracas on the advice of Lance and his London backers, are most uncomfortable in the current glare of publicity.

There are fewer disputes about the facts in the FGB case than there are about the motives of the participants.

Why did the Arabs choose Bert Lance to represent them? Were they, as critic allege, primarily interested in links with the White House, which they thought Lance could provide? Or were they impressed by Lance's record as a banker?

There are also related questions about their willingness to loan Lance $3.5 million. And is this the total of the "substantial personal loans," in addition to fees, which the SEC claims "were arranged" by Arab sources? Finally, were the powerful Arabs used, as is allegedly by some FGB partisans, at least as much as they perhaps tried to use Lance?

Some of these questions may never be answered. But available court documents and testimony, as well as interviews with some of the principals in the case, give a fascinating glimpse of the world of high finance.

For all of the current high-powered attention, Financial General traces its rrots to very humble beginnings in Norfolk in 1910. That year, Arthur J. Morris began making small loans to wage earners, launching consumer credit as an economic phenomenon. Incorporated as Morris Plan Corp. of America in 1925, the Morris Plan consumer banks converted to conventional banks - or merged with them - in the 1930s. In the 1940s, the company diversified into insurance, venture capital, mortgage banking and industrial operations.

In 1956 - the year Morris Plan changed its name to Financial General - Congress severely limited the activities of bank holding companies. Non-banking businesses and interstate banking were severely restricted but with a "grandfather clause" exemption for companies like FGB.

Another change in banking laws 10 years later took away that exemption and set off a decade-long legal battle with the Federal Reserve over FGB's relations with another corporate entity, International Bank. IB owned large blocks of FGB stock and absorbed several nonbanking subsidiaries when FGB was restricted exclusively to banking. The Fed contended IB's holdings made it a bank holding company, subject to Federal Reserve regulation.

The Fed insisted not only that IB sell its 22 percent of the FGB stock by 1978, but also that IB officers and subsidiaries divest themselves of additional FGB holdings that amounted to another 10 percent of the stock.

Reluctantly Gen. George Olmsted, chairman of IB, began looking for a buyer in 1976. It was not a good time to sell any banking company, and Financial General was no exception.

Bank stocks had fallen out of favor with Wall Street because bad real estate loans had cut profits. Financial General's own earnings had plummetted from $9.2 million in 1973 to $3 million in 1974 and had recovered only to $6.3 million in 1975.

One of the first potential buyers Olmsted approached was Bert Lance, who had purchased control of National Bank of Georgia from FGB in June 1975.

Hired as president of National Bank of Georgia in January 1975, Lance quickly got into hot water with FGB headquarters in Washington for making loans that exceeded his lending limit and lacked the collateral ususally required by FGB.

William J. Schuiling, who was chairman of FGB in early 1975 and is now retired, was blunt in his assessment: "Lance is not a prudent banker and he should not be judged as such in comparison with other bankers."

Unable to force Lance to observe its policies, FGB was contemplating a confrontation when Lance and two partners offered to buy FGB's 60 percent interest in the Georgia bank for $7.8 million. FGB, which ahd its own loans to pay, quickly accepted.

But Lance said "no thanks" in the fall of 1976, when Olmsted offered to sell him 22.2 percent of FGB that was held by International Bank. Lance's friend Jimmy Carter had just been elected president: Lance was planning to come to Washington, but not to be a banker.

The SEC alleges that Lance and Olmsted discussed the sale of FGB at least once after Lance became Carters director of the Office of Management and Budget, meeting for lunch a few blocks from the White House at the Metropolitan Club. The third man at their table was William G. Middendorf, the former secretary of the Navy.

The SEC contends - and Lance denies - that the three discussed how Lance might help Middendorf take over FGB. A go-go investment banker in the 1960s, Middendorf had made a reputation for knowing bank and insurance stocks, but had never run a bank.

Nor did Middendorf have a lot of money to invest. Using $1 million of his own funds to buy $80,000 shares of FGB, Middendorf recruited 28 other investors who put up another $14 million.

It was a diverse crew. There was Jackson Stephens, a publicity-shy Little Rock banker regarded as one of the richest men in America, who put in $3 million. Jorge Periera, a Swiss banker, invested another $3 million. Armand Hammer, chairman of Occidental Petroleum, put in $1 million, as did Washington attorney Eugene Metzger, New York investor Thomas Wyman and the North Carolina National Bank.

Among the smaller investors were former ambassador Joseph Farland, Alexandria developer John Safer, Wall Streeter Jeremiah Milbank, former White House aide Peter Flanigan and attorney R. Robert Linowes, now president of the MEtropolitan Washington Board of Trade.

Paying $12.50 a share, the group bought 22 percent of FGB's stock from IB. Middendorf got proxies for another 19.9 percent on stock owned by IB, Olmsted and the largest outside stock-holder, Washington land baron Eugene Casey.

With nearly 42 percent of the votes, Middendorf was easily elected chairman at FGB's annual meeting on June 17, 1977.

Within three days after he became chairman, Middendorf's group started to disintegrate.

Meeting at the Watergate Hotel on June 20, what the SEC dubbed "the Southern faction" began to press Middendorf about promises he allegedly had made to secure their support. (The promises should have been made public, the SEC said later in a complaint charging Middendorf with violating the agency's reporting rules.)

Stephens, Periera, Wyman, Farland, and a representative of Hammer and North Carolina National Bank were the dissidents. For starters, they wanted a professional banker to run the company, suggesting G. J. (Bud) Manderfield, president of FGB's subsidiary American Bank of Maryland! They also wanted Wyman to be named vice chairman of the board in another effort to bolster management.

Stephens wanted to collect on a promise that a computer company he controlled (Systematics Inc.) would get a shot at FGB's data processing business, the SeC said. Who would be FGB's lawyers was another issue; Metzger and Linowes both had some of the legal business.

Finally there was the question of how FGB would run its banks. Although it owned up to 93 percent of the stock in the subsidiaries, FGB traditionally had been a passive parent. The minority stockholders held majorities on virtually all the individual bank boards, and FGB representatives rarely challenged local autonomy.

Metzger for one reportedly wanted that to change. Pressing not only for central control but for central ownership, Metzger at one point formulated a plan to freeze out the minority stockholders and turn FGB into a private company.

In a letter to a North Carolina National Bank officer that has come bank to haunt his lawyers, Metzger suggested a foreign bank might pay as much as $25 a share to insiders who controlled at least one-quarter of FGB. Then a public tender offer could be made at $14 a share for the outside stockholders. Stephens estimated that would bring in another 40 percent of the shares.

If 66 2/3 percent of the stock could be obtained through that ploy, Metzger suggested, the company could "go private" and buy out the remaining shareholders at book value, perhaps $15 a share.

Metzger punctuated his scenario by declaring: "Have gun, will travel."

The first member of Middendorf's group to bail out was Farland, who had borrowed $500,000 on his Merrill, Lynch margin account to buy 40,000 shares. Expressing personal loyalty but professional differences, Farland in July confronted Middendorf. Middendorf bought Farland's stock, borrowing money from a Financial General bank to do so. (That transaction should have been publicy reported, the SEC said later.)

An uneasy truce prevailed at FGB for the next three months. The management began consolidation operations, announcing that three Northern Virginia banks - Arlington Trust, Clarendon Bank and Alexandria National - would be merged into a new First American Bank.

The company said it was to be the first step toward combining all the Virginia, Maryland and D.C. banks under a common name, with joint services. Under federal banking laws, the could nto all be merged, but effectively they could market their services as one "family of banks" throughout the District of Columbia and its suburbs.

Business as usual ended Nov. 25, 1977, when the Federal Reserve issued with International Bank over its FGB holdings. The Fed gave IB and its subsidiaries 90 days to sell all their FGB stock and ordered Olmsted and other executives to end all interlocking jobs by Jan 31, 1978.

Middendorf had options to buy much of the stock IB had been ordered to sell, but he lacked the cash to exercise those options. With the largest investors in his group openly critical of him, Middendorf could not call on them for help.

Stephens, however, had a possible buyer. Apparently pursuing the scenario raised in Metzger's "have gun, will travel" letter, Stephens allegedly mentioned the FGB stock to representatives of Bank of Creidt and Commerce International (BCCI), a Luxembourg-organized, London-based bank headed by Agha Hasan Abedi, a Pakistani money man representing Arab oil interest.

Stephens already was helping in the sale of one bank - National Bank of Georgia - to a client of BCCI. Two years earlier, Stephens had met Bert Lance and they became fast friends. Their common interests, one acquaintance said, were Jimmy Carter - a Naval Academy classmate of Stephens - banking, money, religion - both Southern Baptists - and Democratic politics.

A BCCI executive said the Arabs weren't interested in FGB, but the subject came up again on Nov. 26 when Stpehens and Lance met Abedi in Atlanta for more talks about National Bank of Georgia.

Abedi began to sound interested, and Stephens reportedly offered to sell a block of 4.9 percent of FGB and recommended Abedi meet Metzger to pursue the matter.

On Nov. 28, Abedi and Metzger met in a hotel here. Abedi authorized Metzger to purchase 115,000 shares of FGB stock that were being offered by Financial International Corp. (FIC), one of the IB subsidiaries that had been ordered to sell its FGB stock. Abedi had his London office transfer $1.35 million to Washington to finance the acquisition.

At another meeting on Nov. 29, Abedi asked about other large blocks of FGB stock, setting in motion an acquisition drive by Lance, Stephens and Metzger, according to the SEC complaint.

Their first bid - for the 115,000 shares held by Financial International Corp - came to naught. Although Lance discussed the sale with Olmsted and Metzger met with the FIC board, the offer of $12.50 a share was rejected. So Stephens Inc. was authorized by Abedi to use the $1.35 million to buy FGB shares on the open market, purchasing in small amounts so as not to drive up the price.

The rejection of the Metzger offer for FIC's holdings proved to be a critical decision. Eventually the shares were sold to associates of Middendorf, including B. Francis Saul II, the Washington real estate man.

Saul, who then owned about 6 percent of FGB, was one of several major stockholders who were approached by Metzger in early December. MEtzger offered $12.50 a share - $2.40 more than a stock was trading for - but Saul told him no! Apparently at Middendorf's urging, Saul instead purchased several major blocks of stock through companies he controlled. He was elected chairman of the board in mid-January, taking that title from Middendorf.

"Saul walked in with a shotgun, and Middendorf rolled over and played dead," complained Casey, whose own holdings were nearly as large as Saul's.

Although Casey obviously had not love for Saul, and not much confidence in Middendorf, he refused to sell his stock to Lance and Metzger. He began to make purchases on his own on the open market.

The first major block of FGB stock purchased by the Lance group was 263,000 shares owned personaly by Olmsted and several associates. After rejecting Lance's $12.50-share offer for the stock, Olmsted delivered the personal holdings for $15 a share, the highest price paid for any of the stock. (The SEC later decreed that all sellers were entitled to that price, forcing the buyers to contribute $1 million to a pool to pay those who sold for less.)

In December, as word spread that Metzger and Lance were buying FGB stock, sellers appeared. Wyman and his brother and Periera all sold their holdings to the Lance group.

Metzger, Lance and Stephens apparently told none of the sellers who they were buying the stock for, though there were rumors of Arab money.

As it turned out, the actual purchasers were clients of BCCI:

Sheikh Kamal Adham, the Turkish-born former head of Saudi Arabis's intelligence agency, and brother-in-law of the late King Faisal.

b Faisal al Fulaig, former chairman of Kuwait Airlines, a prominent Kuwaiti merchant who is close to the Royal Family of Kuwait.

Sheikh Sultan bin Zaid al Nahyan, crown prince of Abu Dhabi, and his four-year-old brother, Muhammed al Nahyan, who was represented by Abdullah Darwaish, the family financial adviser. Sheikh Sultan and young Muhammed are sons of the hereditary ruler of Abu Dhabi, who also is president of the United Arab Emerites, a group of oil-rich Persian Gulf mini-states.

BCCI allegedly funneled the Arab stock into blocks amounting to about 4.9 percent of outstanding FGB shares, seeking to escape an SEC rule requiring public reports on purchases of 5 percent or more.

All this was prior to the Fab. 7 meeting in show-bound Washington between Lance and FGB principals. The meeting had been called by Armand Hammer, who is chairman of Occidental Petroleum Corp. and a member of the board of FGB. Hammer apparently planned to play peacemaker, but the 77-year-old industrialist's private jet was grounded by bad weather and the meeting had to go on without him.

At the luncheon, held at Occidental International International Corp's Washington office, were Lance, his son, David, Occidental executive William McSweeny, Saul and Middendorf. Among his several declarations, Lance is reported to have said investors related to BCCI had bought 20 percent of the FGB stock and that BCCI wanted eventual control.

Lance also allegedly claimed that his group had a pledge of support from Casey, who by then owned 12 percent of FGB. One FGB partisan described Lance as being self-assured at the meeting and that "Lance told them in so many words that his group was in control so they might as well turn over the keys to the company."

Saul, in a sworn statement given later to the SEC, said Lance had taken him aside and declared that he wanted either his job or Middendorf's - a claim later denied by Lance.

On Thursday, Feb. 9, FGB put out a press release based on Lances's statements during the Feb. 7 meeting, but not naming Lance as the source. The release said the FGB was the subject of a takeover attempt.

The next day, Lance called Saul to say he had been misunderstood. The purchases of FGB stock had been made, in fact, by a group of individuals, not by a group under the direction of BBCI, he said.

Right after the Feb. 7 meeting, the FGB executives called the SEC to report Lance's takeover remarks. Clearly FGB figured that it could get the commission on its side by reporting what its attorneys viewed as a violation of the federal securities laws.

The FGB attorney was immediately switched to the SEC's enforcement division located on the 4th floor of the North Capitol Street headquarters. There, several attorneys had been working on little else but Bert Lance's Georgia finances since he resigned from government some six months earlier. Suddenly they learned from the telephone caller of Lance's alleged involvement in the FGB takeover bid.

On Sunday, Feb. 12, The Washington Post reported that Lance was employed by a group allegedly trying to take over FGB. But then on Monday, The New York Times quoted Metzger to the effect that Lance did not play a role in the affair.

"To the best of my knowledge," Metzger is quoted as saying, "Bert Lance has not acquired any of the stock and has not been a principal in the negotiations to acquire the stocks I have purchased."

A few weeks later, when the SEC filed its suit naming Metzger among the defendants, the commission charged that his printed claim was another effort to hide the true purpose of the Lance group.

On Feb. 17, FGB filed suit against Lance, BCCI, Abedi, Metzger, Stephens, Stephens Inc., and other unnamed defendants, who later would be revealed to be Arabs. The suit charged that the Lance group "conspired secretly to acquire control" of the company in violation of federal securites laws and those of Virginia where FGB is incorporated.

FGB's attorneys, lead by Edwin McAmis, a partner in Skadden, Arpa, Slate, Meagher & Flom, began a legal marathon to head off ruther FGB acquisitions by the Lance group.

On March 18, the SEC filed its suit naming Lance, the Arabs, Abedi, Metzger, Stephens and Stephens Inc. The suit also named Middendorf, who it said failed to file necessary documents with the SEC in the course of trying to maintain control of FGB.

All the defendants settled the SEC suit, though they neither admitted nor denied the allegations. The foreign buyers agreed to make a tender for all the shares of FGB within a year, paying at least $15 a share.

But before that can happen, Abedi's bank and the four Arab investors must lay open their finances to the Federal Reserve, which has to pass ont hem before they can buy the bank holding company. Judging by the lack of disclosure in BCCI's in 1976 annual report, it seems unlikely that the foreigners will agree to the disclosure demanded under U.S. banking laws.

On the other hand, an individual can buy a bank without Fed approval. So if one of the wealthy Arabs decided to buy controlling interest in FGB, there probably is little that the FGB management can do to block him.

In the next few days, U.S. District Court Judge Oliver Gasch is expected to rule on a motion by FGB to put another obstruction in the path of the Lance group. Pending a trial, FGB has asked the judge to prohibit the Lance group from buying more stock or voting the stock it already holds. The reason, of course, is that if the group can vote, it probably will try to put Middendorf and Saul out of their FGB offices.

Whether Bert Lance then will find himself in that executive FGB office on Pennsylvania Avenue is another unresolved question.