Passage of the District's regional interstate banking bill is all but assured, but that hasn't deterred a small coalition of community organizations from attempting to short-circuit the process.

Opposition to the bill is said to stem from a deep concern about the credit needs of minorities and low-income residents of the city. It's unlikely, however, that using the bill to bargain for social changes will make much difference in the ability of certain people to borrow funds or repay loans.

The organizations seemed convinced, nevertheless, that the City Council should impose stringent conditions on local banks as well as on those who wish to enter the District. In other words, acquisitions or mergers should not be approved, leaders of the organizations contend, unless banks agree to certain conditions calling for broader extension of credit and investment in the city.

The bill that the council has approved on first reading is viewed by city officials as an economic development measure. Quite the opposite, it will have a negative impact on economic development, at least in certain neighborhoods, say the groups opposing the bill.

The bill "threatens to unleash new disinvestment forces in the District, restricting access to credit and deposit services for many parts of the city which are already underserved by local lenders," say leaders of the organizations, who view interstate banking as a "two-edged sword."

Without adequate safeguards, interstate banking also could "siphon off" much-needed funds from the District, complain leaders of the Coalition of Economic Development Organizations, the Center for Community Change and the Metropolitan Washington Planning and Housing Association. What's more, the merger or acquisition of local banks with out-of-state banks "could deemphasize even further their commitment to the city's low- and moderate-income and economically distressed neighborhoods," according to the organizations.

Not surprisingly, opponents of the banking bill trotted out a finding in a recent study by the Metropolitan Washington Planning and Housing Association that claims the existence of a "continuing and pervasive pattern of discrimination in residential lending" in Washington. Credit needs of small and minority businesses long have been underserved by many local lenders as well, according to leaders of groups that oppose the bill in its present form.

In a recent letter to City Council members, opponents of the banking bill proposed that applications for mergers or acquisitions be approved only if the banks involved agree to provide basic banking services to low- and moderate-income customers and agree to help finance low-income housing and the city's Economic Development Finance Corp.

Besides advancing some erroneous assumptions about the likely effect of the regional interstate banking bill, the coalition fails to take into account several factors that make its opposition a questionable exercise.

The coalition's call for banks to help capitalize the Economic Development Finance Corp., for example, ignores the fact that the D.C. Bankers Association already has publicly stated its commitment to help finance the profit-making arm of the EDFC that was established as a quasi-public, nonprofit organization last year to stimulate economic development in District neighborhoods.

The Neighborhood Economic Development Corp., a proposed profit-making arm of the EDFC, would invest in commercial and industrial projects, real estate ventures and small businesses in the District. The NEDC also would make equity investments in eligible businesses by acquiring preferred or common stock or partnership interests in those businesses. Planned as a partnership between the District's public and private sectors, the NEDC has received strong endorsement from the bankers association. In fact, a committee of the bankers association has been working closely with Councilmember Charlene Drew Jarvis in formulating plans for the NEDC.

In the meantime, there is no evidence to support the notion that the District's regional interstate banking bill threatens to unleash new disinvestment forces in the city. If anything, the bill is likely to help the city's economy. Already, two large Virginia bank companies have agreed to acquire smaller D.C. banks, developments that are certain to make more assets, deposits and services available to District residents.

Other merger agreements involving D.C. banks are likely to be signed, based on the assumption that the District regional interstate banking bill will be approved. A bill saddled with what might be interpreted as hindrances could work to the detriment of the entire local economy.

Neither Maryland, nor Virginia, nor any other state in the so-called Southeast banking region has seen fit to adopt language intended to exact promises from banks to increase their investments in various communities. The D.C. government and local residents already have a remedy for credit and investment problems. It's called the Community Reinvestment Act.