In proposing a regional interstate merger bill for savings and loan institutions, D.C. Council member Charlene Drew Jarvis (D-Ward 4) theoretically is attempting to establish for S&Ls what is known as a "level playing field."

The problem, however, is that there aren't many players left in the District's S&L industry to compete with commercial banks on any kind of field. So it's doubtful that this or any other bill will make a difference.

Two-thirds of the thrifts that were in the District 10 years ago have been wiped out by severe industrywide earnings problems and mergers. Only six remain in the District, and the largest of those, Columbia First Federal, has applied for a change in its charter and is expected to move its headquarters and operations center to Rosslyn.

Jarvis' bill appeals to local S&L industry officials, nonetheless, because it would correct a legislative oversight in the District by authorizing interstate mergers between D.C. thrifts and others. It's doubtful, however, that the bill will accomplish much more, at least not while the nation's thrift industry continues to wrestle with problems that have dogged it for nearly a decade.

Approval of Jarvis' bill simply would give the District a savings and loan interstate merger law that's compatible with others in a 15-state southeastern region.

Several of those states, Virginia and Maryland among them, already have laws permitting S&L mergers across state lines. Those statutes are similar to reciprocal interstate banking laws in effect in the region. Thus, under Jarvis' bill, out-of-state thrifts could acquire S&Ls in the District as long as their home states grant the same right to the six D.C. institutions -- all of which are federally chartered thrifts.

Federally chartered thrifts are prohibited from crossing state lines to merge except when authorized by federal regulators to buy troubled S&Ls. Those regulations were recently amended, however, to allow federal thrifts to cross state lines where state-chartered institutions have that right.

In introducing her bill last week, Jarvis said it "will achieve for the District similar authority with respect to thrifts and their holding companies what the interstate banking act achieved for the city with respect to commercial banks."

That much is true in terms of what the bill would accomplish for the D.C. government: It would give the city authority to enforce community investment requirements that it would establish as conditions for the right for an outside S&L to merge with a thrift based in the District.

Jarvis, who chairs the council's committee on Housing and Economic Development, believes passage of her bill also will create interest in chartering new thrifts in the District.

Establishing a private insurance system for those thrifts is out of the question, given the debacle in Maryland's thrift industry three years ago. And with the insurance fund for federally insured S&Ls under strain, federal approval for newly created thrifts is certain to be tougher.

Meanwhile, even if there is interest in acquiring existing D.C. thrifts, there aren't enough thrifts here to make the benefits to the city as immeasurable as Jarvis suggests.

Even if all of them were acquired by outsiders, the pool of thrift deposits and investment dollars won't increase that much.

Nor is it likely that the remaining six D.C. thrifts will be active buyers of S&Ls beyond Maryland and Virginia.

As federally chartered thrifts, they already have special authority to set up branches in one of those states, but not in both. Only Columbia First has applied for such approval.

Ten years ago, there were 16 thrifts in the District. They controlled more than half of the deposits in the area. Now the remaining S&Ls control less than 20 percent of the deposits in the local market. Net income, after taxes, for those 16 institutions totaled more than $31 million in 1978. And as the number of thrifts in the District fell from 16 to six between 1980 and 1985, the taxes paid by those institutions exceeded their net income in each of those years.

Aside from Columbia First, what's left then are four relatively small institutions -- Washington Federal Savings and Loan, OBA Federal Savings and Loan, Independence Federal Savings Bank and Home Federal Savings and Loan -- which have stuck to a rigidly independent course. Only two of them are likely to agree to be taken over.

The other D.C.-based thrift is Citicorp Savings, which took over ailing National Permanent Federal last year.

Citicorp Savings' presence in the District might also present a problem. Southeastern lawmakers eagerly embraced the regional interstate banking concept because they feared that New York's Citicorp, the parent of Citicorp Savings, would gain a foothold in their states.

It's possible that they may have the same fears about Citicorp Savings moving into their states from a base in the District.

Jarvis' bill may increase opportunities for a few thrifts, but it remains to be seen just how effective it will be as an economic development tool.

Beginning today, Rudolph A. Pyatt Jr.'s column will run every week in Washington Business and every Thursday in the Business section.