Ten years after winning home rule, the District still lacks the authority or the governmental structure to implement a wide range of economic development policy decisions.

Numerous examples over the past decade have shown that economic development in the District is limited considerably by vestiges of the pre-home rule era. The so-called federal interest -- real or imagined -- is often used to thwart local government decisions involving land use, architectural design and building height.

It's possible, however, that the District may have been guilty of defaulting on its responsibility for certain activities relating to other aspects of economic development. That appears to be the case in bank supervision, for example.

Of 54 states and territories, the District is the only one that does not have an agency to supervise banks and other financial institutions. That bit of trivia may seem irrelevant after all these years, but it certainly is vital to discussions of interstate banking and a possible role for the District as a financial center.

Having reached a similar conclusion, Curtis McClinton, the District's deputy mayor for economic development, commissioned a study last year on bank supervision at the state level. Not surprisingly, Brimmer & Co., a leading economic and financial consulting firm, has recommended that the D.C. government adopt legislation establishing a banking department to supervise financial institutions in the city.

Provisions of the law establishing the agency should apply to national banks, federally chartered savings and loan associations, federal savings banks and federal credit unions -- except where federally chartered institutions are "explicitly governed" by federal laws and regulations, said Brimmer & Co.

Although the new agency would be established primarily to implement a proposed D.C. Regional Interstate Banking Act, it would also have authority to charter commercial banks and other financial institutions in the District.

Brimmer bases his recommendation on the Douglas Amendment to the Bank Holding Company Act, which permits bank holding companies to acquire other bank holding companies and banks across state lines only if the states involved have adopted legislation authorizing such acquisitions. If the District decides to participate in a regional interstate banking pact, "some agency would have to administer the law," Brimmer observed.

Supervision of commercial banks and other financial institutions in the District is conducted currently by various federal agencies because all but one of the city's 19 commercial banks, seven savings and loan associations and 127 credit unions have federal charters. Thus, the need for a supervisory system at the local level was considered unnecessary.

Circumstances have changed, however, because " . . . the role that financial institutions can play as instruments of economic development is much more fully appreciated," Brimmer & Co. noted in its report to McClinton.

As a result, Brimmer continued, "The desirability of local bank supervision is not being defined as the need to ensure the safety and soundness of depository institutions, but as a means to encourage the expansion of the financial services industry. The latter, in turn, is seen increasingly as a vehicle to create new jobs within the District."

Actually, bank supervisory authority in the District should parallel that of the federal government, Brimmer notes in the report. Indeed, local supervision should not attempt to supplant the authority of federal agencies, he added.

Brimmer's recommendation goes beyond the supervision of commercial banks, however. The new department, which would be headed by a superintendent of banking and financial institutions, should be vested with the authority to monitor the performances of various nonbank institutions that offer financial services in the District, Brimmer said. Insurance companies, finance companies and other consumer lenders and securities firms, for example, would come under the agency's supervision.

The degree of surveillance will vary but, in establishing the framework for local bank supervision, Brimmer notes, the District should attempt to create an environment in which the financial services industry can expand.

Brimmer and his clients agree on that much, at least. The District's priority in writing any new banking legislation, says McClinton, is "expansion of the banking industry to provide jobs." Moreover, it's to ensure "expansion of capital and credit to business in the District."

An amendment to the D.C. regional interstate banking bill, creating a department of banking and financial institutions, should help the city accomplish those objectives.