Since 1974, the number of thrifts in the United States has fallen to 1,900 from 5,000 - an enormous consolidation by any standard.

There were three tidal waves that washed more than 3,000 savings institutions away:

* The high inflation of the 1970s and the resulting inverted yield curve. Thrifts, with overwhelming concentrations of fixed-rate mortgages, saw their interest margins disappear as the liability side of the balance sheet became deregulated and cheap deposits were replaced with high-cost certificates of deposit and other instruments.

* The rapid deregulation of the Garn-St Germain Depository Institutions Act of 1982, and the lax supervision and mismanagement in its wake.

* The series of regional recessions, beginning in the Southwest in the 1980s and still affecting the Northeast and California. Severely depressed real estate values, coupled with substantial increases in unemployment, resulted in skyrocketing percentages of nonperforming loans.

What is becoming clearer is the role that government has played in all of this.

There were two dramatic shifts in the regulatory environment over the past 15 years.

A highly regulated period preceding 1978 included Regulation Q deposit-rate limits, restrictive usury laws at the state level, and significant underwriting restrictions, all of which contributed to the demise of many thrifts in the early 1980s.

From about 1979 to 1989, there was a complete reversal of government's attitude toward banking. Garn-St Germain, the elimination of Reg Q, and the lifting of virtually all other deposit rate restrictions completely undid the earlier restrictions.

These changes, coupled with sharp increases in deposit insurance coverage, laid the ground-work for the thrift problems that began to unfold in the latter part of the 1980s.

In response to the thrift debacle, Congress again reversed itself, imposing new restrictions with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the reregulation of much of what had been deregulated. This process continued with the Federal Deposit Insurance Corp. Improvement Act of 1991.

Most troublesome is the degree to which these recent laws reflect a desire by Congress to adopt detailed legislation that restricts the flexibility of regulators.

Overregulation will only serve to make the apparatus of banking unnecessarily costly.

More rules regarding disclosure of interest payments and more restrictions on interest accrual and payment methods indicate that the federal government is now intent on micromanaging banking.

Moreover, proposed capital add-ons for interest rate risk and new provisions for oversight requirements and examinations indicate that the federal government is also engaged in a futile attempt to eliminate risk.

White House Effort Needed

President Clinton has acknowledged the importance of credit availability in maintaining adequate levels of economic growth.

The administration should therefore, first seek to recalibrate the regulatory dial somewhat, and then adopt a consistent approach to banking and thrift regulation.

Regrettably, Congress still seem to be reacting to the thrift crisis. Micromanaging banks and thrifts, however, will not serve the President's key long-term objective, job creation.

The administration should, therefore, seek to moderate the regulatory zeal that seems to be driving Congress.

Mr. Pollack is president and chief executive officer of Savings Bank of Rock, land County, Spring Valley, N.Y. Mr. Petrucello is a business analyst at a major New York-based financial institution.

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