WASHINGTON - The House Banking Committee agreed to use a third of the money in President Clinton's $384 million community development lending bill to provide deposit insurance rebates to commercial banks that lend in low-income communities.

As a result, the House bill proposes two experiments in community development lending: financial assistance for institutions devoted to low-income communities and incentives for mainstream lenders to become involved.

The 36-14 vote came after a furious morning of lobbying by the Clinton administration against the measure, which was sponsored by Rep. Floyd Flake, D-N.Y., and Rep. Jim Leach, R-Iowa.

White House Offer

To protect funding for the community development bank legislation, the administration had offered to support increasingly large sums to fund Rep. Flake's Bank Enterprise Act. The 1991 law provides banks rebates of up to 10% of their insurance premiums if they lend to low-income communities.

The New York Democrat said he rejected each of the administration's offers because the funding was subject to the uncertainties of the appropriations process.

"Their last offer was 50 million over four years, but we would have had to find a source to fund it," said Rep. Flake. "So I couldn't agree to that. My amendment means we get a third of whatever is appropriated for the community development bank bill."

Community development banks are a priority for the Clinton White House, and Rep. Flake expressed confidence that Congress would provide money for the bill.

Industry Support

The banking industry is generally supportive of the Bank Enterprise Act.

In approving the community development lending bill, the banking committee also added a package of regulatory relief measures for banks and thrifts.

The package is similar to one passed by the Senate Banking Committee as part of its community development bank bill. Among other provisions, it frees more small institutions from annual examination requirements and reduces paperwork requirements for home equity loans.

Edward L. Yingling, chief lobbyist for the American Bankers Association, said the package represents a small, but helpful step.

"It kind of pecks away at things, and that's our goal," he said. "Now we have both the House and Senate Banking committees supporting our regulatory relief agenda and indicating in a statute to regulators that they ought to be more balanced."

Wednesday's vote appears to represent a victory for the ABA, which this year worked hard to line up cosponsors for a regulatory relief measure sponsored by Rep. Jim Bacchus, D-Fla., and Rep. Doug Bereuter, D-Neb.

Rep. Henry B. Gonzalez, D-Tex., the chairman of the banking panel, had held back on scheduling a vote, in large part because he opposed the regulatory relief measure that was sure to be offered.

However, a large majority of the House agreed to cosponsor the amendment, and Rep. Gonzalez concluded that he could not could not delay the measure any longer, according to congressional and industry sources.

Wednesday, Rep. Gonzalez praised the community development lending initiative and said the regulatory relief section of the bill, which he cosponsored, was an acceptable means of eliminating "needless paperwork for sound, well-run institutions."

Chris Lewis, a lobbyist for the Consumer Federation of America, said his organization would vigorously oppose the regulatory relief package, as well as the Flake-Leach amendment, as the bill moves to the House floor.

Mr. Lewis complained that the amendment was not available until after the committee began meeting today, depriving organizations like his own of a chance to analyze it before the vote.

In the vote on the Flake-Leach amendment, the committee's 20 Republicans held solid behind the measure and were joined by 16 of its Democrats, a number that surprised even Rep. Flake.

A number of committee Democrats voted against the measure, arguing that it provided banks with cash incentives to do the kind of Community Reinvestment Act lending they are supposed to do on their own.

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