The regional interstate banking issue has become considerably more complex than most D.C. bankers and lawmakers had anticipated.

As in most states where legislators and bankers have addressed the issue, it is not just a means of strengthening local banks, but more a matter of economic development. Indeed, economic development is the rationale for establishing regional interstate banking pacts among states in a common geographic area.

Andrew F. Brimmer, president of the Washington economic and financial consulting firm of Brimmer & Co., advised D.C. officials to adopt a regional interstate banking bill as a measure to help strengthen local banks and, hence, the economy.

Economic development versus the question of competition has been at the center of the controversy in Maryland, where the legislature is grappling with two separate bills dealing with interstate banking.

Here, where government officials and the D.C. Bankers Association seemed to be traveling the same path to regional interstate banking, bankers are discovering that the sands are beginning to shift under their feet.

Even though a regional interstate banking bill fashioned by the DCBA and District officials was introduced in the city council with the mayor's endorsement, the administration appears to be hedging its bet. Instead of supporting the measure in its original form, Curtis McClinton, deputy mayor for economic development, surprised bankers this week by proposing a substantive change that would open the District to full interstate banking two years after the effective date of a regional interstate pact.

It is only a coincidence, say District officials, that New York's giant Citicorp also urged adoption of an amendment calling for full interstate banking in the District at the end of two years.

Unquestionably, McClinton's proposal is a setback for the DCBA, which had hoped to win passage of a bill that would closely parallel laws in states that would comprise a Southeast interstate banking region. Like Virginia, none of those states has approved a so-called "trigger" to full interstate banking because the regional pacts are intended to thwart attempts by big money-center banks to gain entry into those states.

The two-year trigger that McClinton has proposed as an amendment to the District bill "could put the District at a disadvantage," argues Michael F. Ryan, president of the DCBA.

A trigger could create "the potential for legal problems" between the District and other states that have opted to participate in the regional pact, added Maurice Cullinane, the DCBA's executive vice president.

The trigger is only one of several sticky issues that could make the banking bill a genie in the bottle for the DCBA. In January, McClinton sent a letter to the organization urging its members to be more responsive to the credit needs of District businesses and neighborhoods. McClinton also stressed the District's desire to see more women and minorities in management positions and on the boards of local banks.

Both sides acknowledged this week that there has been a "continuous dialogue" on those and other issues and that discussions will continue. You can bet your savings account that the shape of the District's interstate banking bill will be determined by those discussions. Interstate banking may be the immediate focus of the DCBA, but McClinton makes it clear that the D.C. government's priority is "expansion of capital and credit to business in the District. The priority is the expansion of the banking industry to provide jobs."

Achieving that aim could mean opening the District's borders to Citicorp and other big banks in an accelerated move to full interstate banking. "We have had our doors open to several money-center banks," McClinton acknowledged.

If that isn't specific enough, then consider the following from D.C. Council member Charlene Drew Jarvis, whose committee is holding hearings on the interstate banking bill: "If someone wanted to locate in the District of Columbia and offered to provide jobs, I certainly would not close my door to them."

Jobs. Hagerstown. Maryland. Citicorp. Deja vu.

"We believe our presence could help create mortgages, more small business loans, and more jobs," a Citicorp official told Jarvis' committee on housing and economic development this week. "Consider what we could do for the local economy if the D.C. government allowed us to open a bank here in Washington."

Without a bank here, Citicorp has financed the relocation of the Union Labor Life Insurance Co. to the District, creating more than 2,000 new jobs; provided $350 million in loans outstanding in the local real estate market; financed renovation of the Mayflower Hotel and construction of the Washington Square office and retail complex, and holds $40 million in outstanding residential mortgage and auto loans in the District.

The proposed two-year trigger, which McClinton calls "a process," would give District officials "a period to observe." He declined to say who and what will be observed but the answer should be obvious to D.C. bankers.