A House banking subcommittee yesterday approved legislation calling for broad reform of federal regulation over financial institutions.

By a 12-3 vote, the financial institutions subcommittee passed the so-called Safe Banking Act, which would crimp borrowing by bank insiders and add some teeth to banking regulations, among other things.

Chairman Fenand J. St. Germain (D-R.I.), who is author of the legislation, called it a "major victory for the consumer and a giant step forward in assuring a safe, sound and responsive banking system nationwide."

The legislation now goes to the full House Banking Committee for consideration. The Senate passed somewhat similar legislation last year by a unanimous voice vote.

The major provisions of the House bill:

Make it easier for authorities to remove a bank official who jeopardizes the safety and soundness of the bank.

Limit loans by bank insiders (officers, directors, stockholders) to 10 percent of capital accounts.

Prohibit overdrafts by bank insiders.

Prohibit the exchange of directors among depository institutions - banks, savings and loan associations, credit unions, and mutual savings banks.

Prohibit key personnel of the three bank regulating agencies from taking jobs in the financial community for two years after leaving government service.

Provide for notice to the proper regulator before a bank changes hands.

Limit access to private bank records by federal agencies.

Prohibit one bank from giving special treatment on loans to insiders of another bank where a correspondent relationship exists between the two banks.

Upgrade the National Credit Union Administration, which supervises credit unions.

Provide federal charters of mutual savings banks.