As Riggs National Bank has symbolized money and power in Washington, what happened to the bank in the past few months symbolized a major shaking of the ground under Washington business.
In many ways the fight between Riggs management and millionaire Joe L. Allbritton, who ended up with control of the bank, was what one lawyer called it -- a fight between rich people with no clear public interest on one side or the other.
But it was also a watershed.
"We're seeing a redistribution of not only wealth but also control of the business and economic aspects of the city," said investment firm president Julia Walsh, a long-time observer of the city's business. "We're seeing a very big redistribution, and nobody is as powerful" as the city's business leaders once were, she said.
Once there were two or three big names in banking, Walsh said, "maybe they didn't, but you had the feeling they controlled everything. They seemed really to be king makers," she said.
What Washington has been, in many ways, is a small southern town -- a big Richmond. Rich and powerful white men, their sons and grandsons took care of the town's business in a town in which family ties and institutional loyalty were powerful forces. Now, as bankers and others in Washington are fond of saying, the city is becoming a financial center. Money and money are powerful forces.
When control of Riggs was still in the balance, the bank's lawyers talked about shareholders as people who cared about the institution in which they invested and its future. Allbritton's lawyers and his expert witness talked about investors with only one interest -- money.
The test of whose vision of reality was accurate was the way Riggs shareholders responded to Allbritton's offer. They went for the money.
The shares came rolling in from shareholders ready to sell at the premium Allbritton offered -- $67.50 for stock that had been trading at $50 a week before the tender offer. Riggs' management entreated shareholders not to sell, to no avail. Neither were shareholders deterred by the legal wrangle over Allbritton's takeover attempt.
"They weren't concerned with who was where," observed Walsh. "They were more concerned about their investment than the institutional politics. A few years ago investors tended to be more sentimental," she said.
Riggs directors, as more than one person observed during the takeover fight, read like a who's who of Washington business with second and third generations of some business families among them. Allbritton's spokesmen are careful to portray him as a Washingtonian. He makes his principal home here, they said. But he is a recent arrival who sprung on the scene in a big way in 1975 with his purchase of the Washington Star. Most of his adult life he called Texas home.
One irony in the Riggs fight was that the brokerage firm that helped pave the way for Allbritton's takeover was Folger Nolan Fleming Douglas. The Fleming of the firm is descended from Robert V. Fleming, president of Riggs in the l920s and later chairman of the city's pre-eminent bank and one of the two or three big names in banking Walsh was talking about.
What underlies the shift in Washington business is a dispersion of control and dilution of institutional loyalty. Some of that has evolved as institutions became larger.
"It's not only dispersion of loyalty to Riggs but a dispersion of bank loyalty in general," said Walsh. In the past several years the number of major banks has grown, and out-of-town banks have become more involved in the city's business.
Big banks have swallowed up smaller institutions, taking on shareholders through those transactions whose original loyalty was to the disappeared institution. For instance, Riggs shareholders include former shareholders of Lincoln Bank which merged into Riggs in 1958.
Stock has been handed down and handed down to the point that 60 people may now control what was once a huge block of stock controlled by a single person. Younger shareholders may have different agendas than their parents and grandparents. "The lines of loyalty have become kind of fuzzy," Walsh said. g
Washington won't change overnight, but change is coming. In the past year other banks have changed hands as well with Financial General Bankshares currently the target of a takeover by Middle Eastern investors, several small banks having undergone ownership changes and many suburban banks merged into statewide Maryland and Virginia bank-holding companies which are eyeing the city's banks.
In a move seen as shoring up American Security Corp. against a possible takeover attempt, a long-time director A. James Clark of the Hyman Construction Co. recently increased his holdings.
Will the change be good or bad for Washington?
"There's something kind of comfortable and nice about knowing an institution has been in the same local hands forever," said Walsh. "That's more comfortable. The other is more threatening." Old-line Washington business had its virtues, she said. It was inbred but not exclusionary.
On the other hand, the new money, the opening up of Washington business, the transition from small town to big time, promises growth and excitement. It also promises tremendous opportunities for local businesses that take advantage of the changes, said Walsh.