District officials would disagree, but the new interstate banking measure tentatively approved this week by the City Council is a bill that favors banks and investors more than it does the average District resident.

To call the measure a victory for economic development is to indulge in pie-in-the-sky logic. In the absence of strong and persuasive incentives from District officials, economic development will proceed only where and when real estate developers and other nonbanking interests think it should.

To say that the measure will be instrumental in radically transforming depressed neighborhoods is to delude those who desperately seek the revitalization of their communities.

At the risk of emphasizing the obvious, it should be noted that banks don't own retail stores, develop residential projects, or create industries that employ large numbers of hard-core unemployed.

The best intentions of bankers to make mortgage loans in low- and moderate-income communities, or to make other types of investments, won't make a difference as long as other segments of the business community refuse to take risks outside of downtown Washington where economic development thrives.

Maurice Cullinane, the executive vice president of the D.C. Bankers Association (DCBA) may have overstated the significance of the new banking measure this week when he noted, "Everybody gets something."

Cullinane was referring, of course, to the widely anticipated compromise between local bankers and the D.C. City Council that produced a substitute bill that would permit early entry into the District by banks from outside the region.

"The money-center banks wanted a way to get in here, and they got it," Cullinane noted. "The city gets what it wanted: a chance to share in the economic boom, and the D.C. bankers got what they asked for."

The money-center banks, such as New York's Citicorp, indeed got what they wanted, though the price may be a bit steep. Nonregional banks would be permitted to operate banking offices in the District only if they buy D.C. banks and only if they agree to abide by stringent rules requiring them to invest fixed percentages of their assets. Failure to comply could result in the out-of-town institutions being forced to divest their D.C. bank.

Tough and binding investment requirements aside, nonregional banks now have a way to achieve their aim of taking deposits in the District. That, after all, is what the big controversy is all about. Most major money-center banks already have corporate lending offices here. Local bankers learned to live with that a long time ago. Their objection to national interstate banking stemmed from a concern that bigger banks would come in and grab the lion's share of their consumer deposits.

Local bankers undoubtedly got what they wanted after realistically assessing the mood at the District building. They were, as Cullinane recalled, "prepared to go to the mat" to prevent nonregional holding companies from being able to establish new banks in the District. The DCBA won that point in the compromise. The DCBA wanted more teeth in a provision that spells out the penalities that would be levied against nonregional banks for failing to meet their commitments to the city. Finally, the DCBA won a commitment from the council to delay entry by nonregional banks until at least three months after passage of the new bill. Given the legislative process and the time that it may take to negotiate and complete a merger deal, the first money-center bank probably won't be in the District for another eight to 12 months.

Thus, the substitute bill (regional banks would still be permitted to acquire D.C. banks with fewer constraints) is "not as onerous as it might have been," according to Michael F. Ryan, president of the DCBA.

Ryan added: "We accept it as being a compromise bill. We will just have to recognize the fact that there will be new players in the market. We also recognize the city's right and its role in establishing a banking commission. That's a home rule provision."

Now, it's the investors' turn. Those with stock in five D.C. banks have either collected, or soon will pocket, hefty returns on their investment, as a result of the huge premiums that Virginia banks have been willing to pay to get into the District.

The big questions now obviously are: "Which D.C. banks will be sought by banking giants from outside the region," and "How much would the suitors be willing to pay for the right to collect deposits in the District?" With regional banks having agreed to pay almost three times the book value of some local institutions, it's not difficult to guess where the next round of bidding will begin.