RIGGS NATIONAL BANK, PENNSYLVANIA AVENUE BRANCH. LIBRARY OF CONGRESS PHOTO
By Elliot Carter
Riggs Bank was a Washington institution for over a hundred years. More than 20 U.S. Presidents (ranging from Lincoln to Nixon) banked at Riggs, and their headquarters across the street from the Treasury Department used to be pictured on the back of the old ten dollar bill. Riggs' spot at the center of power in Washington eventually led to some ugly business deals that resulted in its downfall in 2004.
Golden Age
The bank was founded in 1840 by George Washington Riggs and William Wilson Corcoran. Business took off four years later when Riggs was selected as the only federal depository in DC.
The bank was involved in several notable projects in the mid-nineteenth century. In 1845 they financed Samuel Morse's development of the telegraph and two years later they lent the federal government $16 million for the Mexican American War. In 1853 they supplied the funds to expand the capitol building and build the Washington Aquaduct system. Finally, in 1865 they lent $7.2 million in gold to Secretary of State Sewell to purchase Alaska from Tsar Alexander II.
Chances are, you've walked by one of the former Riggs branches. The PNC banks on Dupont Circle and in Georgetown both used to be Riggs buildings. You can still faintly make out the outline of "Riggs National Bank" under the Dupont Branch Building's brass lettering.
Backroom Business
In the 1980's the CIA came to Riggs with a covert international affairs project. Working through the Saudi royal family (who banked at Riggs), the CIA provided funds to the Nicaraguan Contra rebels and the anti-Soviet Mujahideen in Afghanistan.
Riggs also had a more sinister relationship with Chilean dictator Augusto Pinochet. Senate hearings in 2004 shed light onto the ethically troubling story.
CASHIER AT RIGGS NATIONAL BANK IN 1938. LIBRARY OF CONGRESS PHOTO
Senator Carl Levin found that "In 1994, top Riggs officials traveled to Chile and asked General Pinochet, a notorious military leader accused of involvement with death squads, corruption, arms sales and drug trafficking if he would like to open an account at Riggs Bank here in Washington, DC. Mr. Pinochet said yes."
"The bank opened an account for him personally, helped him establish two offshore shell corporations in the Bahamas called Ashburton and Althorp, and then opened more accounts in the name of those shell corporations both here and in the United Kingdom. General Pinochet eventually deposited between $4 million and $8 million in his Riggs accounts."
Riggs was ultimately hit with $45 million in money laundering fines as a result of the scandal.
Decline
Business went downhill quickly in the 2000's. The bank's leadership was spending an inordinate amount of time pursuing embassy business that was prestigious, but "break even, or less," according to PNC bank's CFO. (At one point 95% of the foreign embassies in Washington banked with Riggs).
The embassy business was high risk and had Riggs executives flying to client meetings around the world on an expensive corporate jet. The elegant Riggs buildings also became a liability, further adding to the bank's high overhead.
The scandals and debts continued to mount, and in 2004 Riggs was swallowed up by PNC Financial Services Group.
Related: Tunneling Under the Russian Embassy