The real challenge for banks in the District, according to the chairman of The National Bank of Washington, is to capitalize on the growth of the regional marketplace.

Regional economic growth offers bankers the opportunity to build strong institutions that can compete anywhere, continued Luther H. Hodges Jr., in an address last week to the D.C. Institute of Certified Public Accountants. That is possible, Hodges added, because much of the region's growth will be in the "knowledge industries" that will "spark the future U.S. economy."

Hodges cited a recent study by Fantus Co., a leading economic and site location consultant, which shows that the Baltimore-Washington region ranks second only to Dallas-Fort Worth among the 25 most likely places for investment-value growth over the next five to 10 years.

That's not surprising, considering what is generally known about the economy in the Washington-Baltimore common market. Economic consultants, site relocation specialists, census data and regional economic development agencies have given investors a fairly persuasive dossier on the area's economy and its growth potential.

As Hodges noted, the region is home to 5.6 million persons and about two million households, making it the fifth most populous consolidated area in the United States. Only New York, Los Angeles, Chicago and Philadelphia are larger.

It is the fifth-largest consumer market in the country with $32 billion in retail sales, leads the nation in median household effective buying income, and has a per capita income that is 20 percent higher than the national average. Moreover, said Hodges, the region's economy has one of the largest concentrations of young people, with half of its workers under age 35, while almost two-thirds of the work force falls within the professional-administrative category.

It doesn't take financial wizardry or even a certificate from a minor correspondence business school to understand the attraction the region has for investors, whether they are in retail, real estate or banking.

Hodges is right about capitalizing on the growth of the regional marketplace. But that's only one challenge facing D.C. bankers.

The larger challenge, for now at least, is proving that they aren't blindly conservative toward change, parochial, protectionist, indifferent to the economic needs of the city or racist, as some D.C. officials have implied.

Meeting the challenge will require political sophistication, a different view of the marketplace, public confidence, education of the public at large and, as crass as it might seem, $100 million.

That, in a nutshell, is the immediate challenge. It has come down to that. Banking in the District is subject to a bidding game. Promise to commit $100 million in loans and win the good banking award. This is a big stakes game. No penny ante stuff here. Place your bids. The District's for sale.

Citicorp has started the bidding with a promise to make $100 million of mortgage and business loans in exchange for banking privileges in the nation's capital. There is money to be made in the marketplace that Hodges so accurately described, and Citicorp isn't about to stand by idly and wait for Congress to change federal laws that prohibit national banking across state lines.

Nor is it willing to let a nuisance like regional interstate banking agreements among certain states -- a legal concept upheld by the Supreme Court -- stand in the way of getting around the rules that apply to national interstate banking. There are easier ways: Promise the governor of Maryland jobs and, Voila! Promise the mayor of D.C. $100 million in loans, and . . . .

The City Council has approved a regional interstate banking bill (a veto by the mayor is a strong possibility) and so have 17 or more states. North Carolina is one of those states, and its big bank companies have gone on an acquisition binge, making them the largest in the Southeast. Analysts say they will be formidable competitors even if big money-center banks, such as Citicorp's Citibank, make inroads into the South.

There is more here than meets the eye. Nobody has yet explained why there needs to be a Citicorp bank in the District. It legally can and does make millions of dollars worth of loans in the city. Legally, it can't accept deposits, but nobody seems to want to focus on that as the real motive for wanting a bank here.

Nor has anyone been willing to say that low-income families in Anacostia or struggling small-business operators along H Street NE won't automatically qualify for loans from the $100 million pool.

Implicit in the criticism of D.C. banks is that they refuse to make loans in outlying areas of the city. If local banks have arbitrarily refused to lend to qualified residents and businesses in those communities, then the mayor and the council are remiss for not filing formal complaints alleging redlining.

The quickest way for D.C. banks to expose the naivete and the hidden agenda in this economic charade and accept the challenge before them is to match Citicorp's $100 million promise, if that's what it takes.