The chairman and a senior minority member of the House Banking Committee have asked the comptroller of the currency to place a moratorium on approval of new applications for District-chartered banks, citing what they described as loopholes in the new D.C. interstate banking law.

In a letter to Comptroller Robert L. Clarke, House Banking Committee Chairman Fernand J. St Germain (D-R.I.) and Rep. Stewart B. McKinney (R-Conn.) expressed deep concern about "several potential loopholes" in the law, which takes effect next month. It's possible under the city's new law for an out-of-state bank holding company to acquire a D.C. bank and conduct insurance business activities in all states covered by the measure, the congressmen said in the letter.

The moratorium also would not apply to applications for new District banks with federal charters or to interstate mergers involving existing federally chartered banks, a member of the Banking Committee's staff emphasized.

Only one District bank -- Industrial Bank of Washington -- currently operates as a locally chartered bank.

The request provoked sharp differences of opinion yesterday between the Banking Committee and the D.C. City Council, which denied the existence of a loophole.

"I do not think that there are loopholes contained in the D.C. Interstate Banking Act," said Council Member Charlene Drew Jarvis, chairman of the committee that drafted the banking bill. "It is a difference in philosophy, a difference in congressional view of what a bank ought to be."

The new D.C. interstate banking law permits banking organizations from anywhere in the country to acquire a District bank holding company, providing the new entrant agrees to abide by strict investment requirements under the law. At the same time, a reciprocal provision would permit D.C. banks to acquire banks in 11 states, most of them in the Southeast, provided banks from those states are extended similar privileges by the District.

Members of the Banking Committee are concerned that some big out-of-state banking firm will obtain a D.C. charter and operate an insurance business across state lines under the reciprocal provision of the banking bill.

"We're not attributing bad faith to" D.C. officials by citing the presence of loopholes in the interstate banking law, a member of the Banking Committee's staff said. "But when you add on this interstate feature, it has implications for national interstate banking."

Federally chartered banks are prohibited from operating branch offices across state lines, unless the states involved approve. At the same time, the Bank Holding Company Act of 1956 permits only limited insurance activities for federally chartered banks. Currently, those banks are limited to providing credit-related insurance, and they may enter into joint ventures with insurance companies, permitting them to lease space in bank lobbies. But a bank may realize a profit only from the lease and not from the insurance business.

The Federal Reserve Board, which regulates national bank holding companies, recently denied an application from Citicorp of New York to buy a state-chartered bank in South Dakota that has considerable insurance powers.

Insurance activities in which locally chartered banks may engage under the D.C. Code are much broader than those permitted under federal law.

The D.C. Code and the interstate banking law must be considered "as one" because part of the code was amended to accommodate at least one provision of the new law, a member of the Banking Committee staff contended. The two "interact as one," he argued.

According to St Germain and McKinney, the D.C. code permits "any general-purpose corporation" organized in the District to operate a bank, if that organization receives approval from the comptroller.

"This means that an insurance company organized under D.C. law could also engage in banking if the banking activity is approved by your office," St Germain and McKinney held in their letter.

A spokeswoman for the Comptroller's Office said Clarke was out of the city yesterday and could not be reached for comment on the letter, a copy of which was obtained by The Washington Post. The letter from St Germain and McKinney was received only yesterday and staff members have not had time to study it, the spokeswoman added.

Meanwhile, Jarvis, who has seen the letter, contended that there was "no failure or oversight" by her committee, but "differences in philosophy between the D.C. Council and the Congress, which wrote the 1901 statute which we are amending, and the 1986 Congress."

According to Jarvis, the council made no changes in the definition of a bank in the code, but -- under the Home Rule Charter -- created the Office of Superintendent of Banking in the District, with authority to charter local banks.

Jarvis said the council would be willing to "entertain any discussion" of the matter, but she criticized the Banking Committee for "asking the comptroller to "impair local banks from doing business."