In the district as well as in its neighboring states, anybody who uses a bank should be cheered by the possibility of more competition for his business. By opening up banking across state lines -- reciprocally -- the various governments also would open up chances for consumers to find lower rates on loans, higher rates on deposits and greater availability of credit. That's been the pattern in those parts of the country where banking competition has been increased, and the sooner it can happen here, the better.

That's what should happen, but despite the local banks' eagerness to expand beyond their current limits, they want to pick and choose their own markets through a sort of financial gerrymandering that would keep out certain large financial institutions. They would do this by permitting only banks in the southeastern region of the United States to participate in the initial period of interstate banking. Translation: Keep out the big boys from New York. Impact: Limit the advantages that individual customers and small businesses could derive from full competition.

As Gov. Harry Hughes in Maryland and Deputy Mayor Curtis McClinton in the District have recognized, any area that strives to be an important financial center had best move swiftly to full interstate banking. At a D.C. Council hearing, Lucius P. Gregg, a vice president of Citicorp, noted that if the city restricts itself to a regional expansion it "will have missed a golden opportunity to establish itself as a national and international financial center. . . . Simple logic suggests that you cannot become such a center by passing legislation which sends a message to the major international banks that they are not welcome."

As for bankers' fears that large banks would swallow them up, that isn't what evidence elsewhere shows. Mr. Gregg notes that when New York state agreed in the early 1970s to allow the big New York City banks to compete throughout the state, Citibank was unable to capture more than 3 percent of the upstate market. Besides, a full interstate banking agreement would be reciprocal -- District banks could move to attract a better share of the market as well.

D.C. Council members should recognize the importance of voting for a full interstate banking agreement that would take effect as quickly as possible.