It took the collapse of a bogus bank and possibly the unfortunate loss of millions of dollars in deposits to draw public attention to serious deficiencies in the District's regulation of business.

This time it was an unlicensed business that was allowed to operate as a bank that's created public alarm and anguish among poor unsuspecting depositors, mostly immigrants from Latin America. Next time it could be some other consumer group that falls victim to a business that manages to avoid regulatory enforcement.

The bankruptcy of one phony bank and questions about others obviously are causes for immediate concern among city officials.

For the long term, however, the inept handling of the company in question -- Latin Investment Corp. -- is a regulatory disaster that underscores the need for drastic changes in the way businesses are regulated in the District.

There is ample reason to believe that the banking activities in question may only be the tip of the iceberg in the operation of unlicensed businesses in the District. If the operator of a non-bank could run his business as a bank and not worry about regulations or enforcement, it's a good bet that other unlicensed businesses are thriving in the District's shadow economy.

Not only is the city losing money as a result but also consumers are being ripped off by slick entrepreneurs who manage to escape detection or enforcement by regulatory bodies. That, in the long run, ought to be of greater concern to city officials.

The regulatory snafu that has come to light recently revolves around a company that managed somehow to operate as an unchartered, uninsured bank for several years with the knowledge of not one, but several government agencies.

It's bad enough that this bogus bank, Latin Investment Corp., was allowed to do business after being told by the D.C. Office of Banking and Financial Institutions that it needed a charter. What makes matters worse is the collective negligence and ineptitude exhibited along the way by several agencies. This case may have set a record for bureaucratic bungling and buck-passing -- from federal agencies to the D.C. government and back.

More than two years ago, we're told, the Securities and Exchange Commission became aware of Latin Investment and concluded that the company may have been violating securities or banking laws.

The SEC shared its concerns with the D.C. banking office and the Comptroller of the Currency, which regulates national banks, according to published reports.

Hamstrung by the lack of enforcement powers and uncertain of its authority to shut down Latin Investment, the District's banking office turned over the matter to the D.C. Corporation Counsel, who in turn passed it on to the U.S. Attorney, who turned it over to the IRS for investigation. Now, belatedly, the SEC has decided to act by initiating a formal investigation -- nearly three years after it suspected there were irregularities at Latin Investment.

If Latin Investment hadn't been forced to close its doors two weeks ago, amid rumors of financial difficulty, it might still have been collecting deposits and making loans at who knows what rates of interest. Nobody seems to know, in fact, what the savings rates were, or the lending rates, or the exact amount of deposits that were taken in by Latin Investment.

Nobody knows if Latin Investment was a bank, a credit union, an investment club, a latter-day version of the old ethnic neighborhood savings and loan, or a loan-sharking operation.

Clearly, the city's office of bank supervision erred in not blowing the whistle louder when it learned of Latin Investment's activities.

From its inception, however, that office has been an agency without power or purpose. It has been largely ignored by the executive branch and whipsawed by its legislative oversight committee. Through it all, the office has never been given the regulatory authority to deal with legitimate banks, let alone some ad hoc collector of deposits from unsuspecting and uninformed immigrants.

Surely, however, someone in the corporation counsel's office or the D.C. Office of Consumer and Regulatory Affairs must have been more certain of their authority.

Surely, one or both of those offices had the clout, if not the authority, to force Fernando Leonzo, Latin Investment's president, to comply with applicable laws or face the consequences.

This buck-passing fiasco was, nonetheless, a joint venture between D.C. and federal agencies.

Now that the SEC has begun an investigation and the matter has been fully exposed to public scrutiny, we can assume that it will be resolved at some point.

In the meantime, no one knows how many more Latin Investment-type companies there are, thumbing their noses at licensing and regulatory agencies in the District. A candid acknowledgment by an official in the District's banking office last week is unsettling to say the least.

After noting that his office is unaware of other businesses that may be accepting deposits without permission, the official admitted, "There could be more of those out there."

What other conclusion could he have reached?

City officials who share that concern should look beyond questionable banking activities, however. It's in the District's interest that officials examine more closely the negative effects of the shadow economy. Even as depositors worried about their savings in Latin Investment, many were being removed from their apartment building, which was found to have serious code violations.

There's no telling how many absentee landlords there are who pay little taxes, and ignore housing code violations, while ripping off disadvantaged tenants.

How many unlicensed and unsafe cabs are there cruising the city's streets? How many unlicensed child-care centers are there? How many street vendors operate without licenses? How many landlords are allowed to collect rent from tenants living in units that fail to meet the city's housing code?

The answers to those questions probably add up to millions of dollars in lost revenue to the District and thousands of persons who have been made victims of fast-buck artists and incompetence in government.