Bill Steed is a gritty guy who grew up in that modest Petworth section of northwest Washington -- the son of a cabdriver and a government worker.

For 15 years Steed built his empire, a mortgage banking company that grew into the third largest in Washington and one of the top 100 in the nation, only to watch it nearly collaspse in the fall of 1979.

It was back when economic hysteria was at a peak, before people found a convenient place in the back of their minds into which they could tuck the news about the credit crunch, high interest rates and a declining economy.

And it look like Steed Mortgage might be the first to go belly up -- a sign as riveting then as the crocuses were two weeks ago when they began pushing through the winter-gray grass.

First, Riggs National Bank cut off Steed Mortgage's $8.5 million line of credit. Then Suburban Trust froze the company's cash accounts. A few days later checks for financing some 40 real estate transactions began bouncing.

In a single afternoon, Steed shut down 13 branch offices, including those in Miami and Atlanta. "We literally survived by selling typewriters from those closed offices," he said, recently when he remembered the ordeal -- during which he also laid off 100 of his 130 employes.

What allows Steed time for reflection now is the acquisition by a New York state savings and loan of 80 percent. Still president, with a three-year contract, Steed hopes to preside over the gradual rebuilding of the company he almost lost.

The intervening year and a half were a time of sleepless nights and personal pain, Steed said. But the experience also helped. "It took away a lot of fear of the future," said Steed. "We can handle most anything."

When times were bad, Steed hung on, his instincts developed by years of inspirational sayings repeated by his mother.

"Shoot for the moon and you might hit the stars."

"Winners never quit and quitters never win."

"When the going gets tough, the tough get going."

It all helped he said. So, too, did his family, the employes who stuck by him in spite of doubts about where the next check might come from and a bank lawyer who took the time to understand the operation was salvagable and who helped organize other banks to give the company breathing room.

Toughness came, he said: "We became galvanized as this thing went on."

The story of his comeback -- at least to the point where he believes he can make a comeback -- is about how business can survive or fail for intensely personal, subjective reasons.

In the case of Steed Mortgage, the business had grown too fast, it founder said. Steed had worked for B. F. Saul for several years after leaving the Army. In 1967, he started Steed with 75 percent of the stock owned by Saul. In 1972, he bought Saul out, and in a few years the company acquired approximately $400 million in real estate loan servicing, (i.e., collecting payments and using the cash flow but not owning the loans).

The company specialized in low-interest Veterans Administration and Federal Housing Administration loans. At the time the prime was galloping ahead of interest rates allowed on those loans, which meant that morgage companies had a harder time selling them to replentish their money supplies. The rates were later raised.

"We grew at the wrong time," Steed said. "We proably should have never expanded to Miami and Atlanta, but it was ego as much as anything -- jumping on a plane to go see your empire."

"My goal was to prove a kid could come out of the ghetto and build a national company," he said. Now he has revised that goal. "I don't think you can build a nationwide empire in one generation. I think once I realized that, we were better off as a company."

Most of his problem was that financial institutions panicked, he said, but he conceded that there were also real causes for the concern that started the banks shutting things down. For instance, the company had lines of credit worth $26.5 million, in contrast to a net worth of $700,000 not counting the value of the company's servicing portfolio.

When Riggs cut off credit, "there was cash flow problems," Steed said."They had every right to say, 'We want more security' or reduce the line of credit," he said. But he complains that the bank gave him no time to wind down the line of credit.

"Over the years, the company's cash position had been eroded. We had more assets than liabilities, but we were cash poor," when the crisis came, Steed said. "We had a negative cash flow."

Things happened fast after Riggs cut off Steed's credit. Suburban Trust froze the company's cash accounts and forced the immediate paring down of the company's operations.

"The worst part was not being able to get anyone to believe what I'd say," said Steed, who believed the business was salvagable. "I'd spent 15 years building the company, but for lack of someone to spend 15 hours looking at it, it was going to go down the drain."

Finally, he found someone. Mike Bridges of what was then called Union First agreed to sit down and look at the books. Then Bridges helped mobilize co-operation from the banks to allow Steed and his attorney to sort things out. Essentially the banks got together and bought the company's cash from Suburban Trust.

"I'd sleep two hours and get up and work because I couldn't sleep," said Steed. "It's such a feeling of helplessness. I couldn't control my life." Physical activity helped. Steed played basketball and ran four miles a day. "I think that helps take the panic away, but you can only run so far," he said.

"I told my wife, let's think sbout it as if we were pioneers and our house burned down. We can either cry about it or rebuild," he said. Financially he might have been better off to liquidate, he said.

A few weeks after it all began, rescue seemed to be at hand. B&C International Inc., a firm run by two-Iranian-born investors, had agreed to buy a majority interest. That deal collapsed, and Steed didn't find another investor until February this year when Buffalo Savings Bank bought 80 percent of the firm.

Last April Steed attended a conference on mergers and acquisitions in the savings and loan industry. "Two or three speakers said that it takes too long to acquire a savings and loan -- if you really need help quickly, get a mortgage banker." Steed looked at the list of those attending, realized he was the only mortgage banker there, and quickly mailed about 100 letters.

He received five replies including one from Buffalo Savings and Loan, an institution he said he believes will complement his entrepreneurial skill with solid management.

"We were really the first to go. By the time everybody else go into trouble, we were out of trouble," said Steed. The business in general has continued to suffer with other firms shutting branches, merging or going bankrupt. "We really had all our troubles out of the way when the real problems of the economy hit." Steed appears confident about the future.

Steed wasn't the only one who suffered from his troubles. Besides the workers who lost jobs, about 40 families were stranded, some already living in houses they stood to lose. Some of the deals were patched up but borrowers had to pay higher rates than anticipated.

But Steed did suffer. A particularly low point was when Steed and his wife realized the company's troubles would soon be public.

The day before the story was to appear, Steed's wife drove to St. Mary's Country, where their oldest daughter was attending college, to tell the daughter that the company's problems would soon be on page one.

"My daughter said, 'Did Dad do anything wrong?'" Steed said. Assured by her mother that he hadn't, Steed recalls, "She said, 'Then you ought to be proud that Dad built up the company big enough to be page one.'"