Tucked in the folds of the federal umbrella, there is a tiny organization with credentials that read like a Republican free-marketeer's dream.

It's in business to help people help themselves. It's anti-inflationary. It's preparing to shift itself out of government control and into the free-market hands of the private sector. It's designed in the long run to cost the federal government nothing.

And President Reagan wants to kill it.

The National Consumer Cooperative Bank opened its doors only a year ago, but the Reagan administration has put it on its budget-cutting hit list -- even though closing it down prematurely actually could cost the government millions of dollars.

The fate of the bank will be decided by Congress, where it has friends in high places in the House but powerful opponents in the Senate.

The NCCB was to get started with a promised stake of $300 million over five years in federal seed money to lend to credit-hungry consumer cooperatives. The bank (officially called a "mixed-ownership government instrumentality") is supposed to rely on federal money only through fiscal 1983, when it is to go private with the member cooperatives and other investors owning and operating it. All of the up-front federal funding is to be paid back, with interest, over the duration of the bank's initial loans -- a process that could take between 25 and 40 years, according to bank officials.

But the administration argues that it doesn't believe anyone will invest in the bank when it attempts to convert to private status and that it will continue to be a drain on the federal budget.

"It's not really a viable organization," says Annelise Anderson, Office of Management and Budget associate director for economics and government. "The problem is that nobody would buy it."

But over at the NCCB, President Carol Greenwald says she has word from Wall Street that this is not so. Greenwald said that in January, before the recession message, she approached five leading Wall Street investment firms and every one of them was willing to underwrite a bond issue for the bank. They all agreed the bank's loan portfolio was creditworthy, she said. But because of the president's message announcing plans to halt funding for the NCCB, the Wall Street firms put all plans on hold, she said.

Greenwald's view is backed up by Roger Altman, former assistant Treasury secretary of domestic finance in the Carter administration and now managing director of Lehman Brothers Kuhn Loeb Inc., one of the New York securities brokers the NCCB has talked with. "Our judgment is that taking the bank private is a viable stragegy, and we hope to work with the bank to implement it," Altman said.

The administration contends that if the borrowing cooperatives were creditworthy, they could get loans at commercial banks; and if the co-ops are a bad risk, the government shouldn't be funding them.

But supporters of the program say the consumer cooperative bank is needed because commercial banks are not used to working with cooperative businesses, which are nonprofit ventures, and therefore won't lend to them.

"[Commercial banks] just do not understand what cooperatives are," says NCCB President Greenwald. "There is a gap in market knowledge," she says, adding that in the past there haven't been enough cooperatives in the country to make it worthwhile for banks to learn about them.

Cooperatives are nonprofit, consumer-owned organizations run by their members on a one-person, one-vote basis. They are supposed to cut costs to members and can provide a wide range of goods and services, including food, housing, health care, furniture, day-care for children and auto repair.

There are about 15 co-ops in the Washington area receiving NCCB loans -- from a fledging bakery in Southeast to low-income tenant groups buying their apartments to a 40-year-old established chain with 22 outlets, including the Scan furniture stores. Talks with members of some of these cooperatives show they believe commercial banks cannot, or will not, fill their needs.

Gwen Glesmann pauses after putting a pan of Dingwall's Delectable Old Country Datebars into the oven at the Women's Community Bakery on Seventh Street SE, as she ponders what the end of the NCCB would mean for this five-year-old cooperative.

The bakery has grown from three women members to 12, and Glesmann estimates annual sales to Washington-area retail outlets at a quarter of a million dollars. It is located in a lower-income area that is beginning to change but still has a way to go. To get inside on a Sunday morning a visitor has to step around "Charlie," a local direlict who is fond of bedding down at the bakery's back door.

Glesmann seems unconcerned about Charlie's presence there, but is worried that Reagan may succeed in putting more stumbling blocks at that door -- or even in closing it.

"It could be really disastrous," Glesmann says about the possible end of the NCCB. "We're working really hard to try to set up an alternative system, and [the cooperative bank] is working with us to help achieve our goals. . . Other banks aren't very supportive of what we are trying to do."

The NCCB loan enabled the bakery to perform a small-scale mechanization -- buying a loafing machine and a truck (they use the vehicle's side panel to proclaim part of their philosophy: ". . . Common woman is as common as a common loaf of bread. . . and will rise!"). Glesmann says the bakery was able to improve productivity and give the members a small raise in their hourly wage.

Before going to the NCCB for its $32,000 loan, the bakery had tried to get a loan from other banks but had been turned down, she said. By that time, the co-op members had become accustomed to having to scrape for funds: When the members wanted to move their current location, for example, they went to the community and solicited $6,000 in small personal loans at 10 percent interest, she added.

Even the largest and most established of the bank's customers say that the end of the bank would make it more difficult for them to grow.

The Greenbelt Cooperative has about 17,000 member-owners and about 22 outlets with annual sales of close to $55 million a year, according to the cooperative. The 40-year-old co-op runs 10 area Scan furniture stores, six service stations and six food markets. It is the largest co-op in the eastern United States and was among the first to get an NCCB loan.

The end of the bank "would put a real hardship on us for our expansion plans," said Greenbelt Co-operative President Robert Satake. Without NCCB aid, the co-op would have to curtail plans for two new Scan stores (one in Greenbelt and one in Georgetown), for remodeling older food stores and for new service-station equipment, he said.

Although Satake says the cooperative's large size and record of dependability would enable it to get loans from private banks, he says these loans would have to be on unfavorable terms that his organization would not want to accept. Most cooperatives wouldn't even be fortunate enough to have a choice, however, he believes, explaining: "Most banks don't understand cooperatives."

But the chairman of the American Bankers Association's Commercial Lending Division says he and his colleagues do understand.

"We've been lending to cooperatives for years," says M. Bock Weir, who is also chairman of AmeriTrust Co. of Cleveland. "I don't know of any creditworthy co-ops that can't get loans."

Weir acknowledges, however, that the commercial bank loans now are going to experienced cooperatives and that the chances of brand-new cooperatives getting a bank loan are "kind of remote."

So far the bank has approved $100 million in loans to 94 cooperatives across the country. Most of this is at unsubsidized rates and can go only to co-ops that are creditworthy. A smaller self-help part of the program, which includes such low-budget ventures as the women's bakery, provides loans at subsidized rates designed to help low-income and high-risk cooperatives get started.

About 73 percent of the loans currently are committed to housing, most of these involving tenant efforts to avoid being displaced when their rental apartments are being converted to condominiums. In Washington, these include the Towne Center Cooperative, which has received $11 million to buy and renovate its apartments; Benning Heights with a $3 million loan and several smaller loans to other housing cooperatives.

Under the bank's charter, the percent of loans going to housing must drop to 30 percent by 1983, because the bank's originators didn't want it to become just another federal housing program.

The Reagan administration has given a number of reasons for its proposal to end the NCCB by October: that it is not needed, that it costs the government money, that its functions are more efficiently handled locally, and that it cannot work the way it was intended to.

The president's March budget document called it a "desirable but unnecessary program," and a statement by Treasury Deputy Secretary R. T. McNamar proposing the dissolution of the bank called it "an inventive idea." But McNamar continued that well-run cooperatives could go to the private markets for financing and that "the use of budgetary resources to subsidize inefficient cooperatives should be discontinued.

Reagan officials estimate that by doing away with the NCCB they will save $259 million for fiscal years 1981 and 1982.

But NCCB supporters say the bank in the long run will cost the federal government nothing and that, in fact, closing it down could cost the government as much as $22 million. This loss would result from having to discount the bank's loan portfolio when it is sold, added defaults from co-ops that go under after losing NCCB support, and stockholder and contractor claims.

The Treasury Department uses appropriations to buy stock in the NCCB, and the bank then uses the money to make loans. When co-ops get loans, they have to buy stock in the NCCB and thus become part owners of the bank. In that way, gradually the cooperatives were to take over control of the bank. After five years, the bank was to be on its own.

But OMB's Anderson argues that because the bank is operated federally rather than locally and serves small cooperatives, its servicing costs are too high to make it work.

And the Treasury Department's director of the Office of Capital Markets, Gordon Eastburn, says that if the bank were able to go private in fiscal 1983 there should be no reason it could not do so now.

The NCCB's Greenwald counters, however, that the bank needs more capitalization before it can interest the private markets in backing it. If federal funding is cut off before the bank receives its authorized $300 million, it would be difficult if not impossible to find private backing, she says. But with the funds there is no question that the bank can go private, if not by 1983 then by the bank's fifth year as originally intended, she adds.

That argument is backed by a precedent. The co-op bank was modeled after the Farm Credit System, which gives loans to farm cooperatives. After getting its initial capital from the federal government, it sucessfully went private. It also proved to commercial banks that its co-op customers were reliable borrowers, another goal of the NCCB, according to former Farm Credit Administration Governor Ed Jaenke.

A group called the Friends of the Cooperative Bank has formed, led by the Cooperative League, and has hired Jaenke's firm -- E. A. Jaenke and Associates, the lobbyists who drew up the original legislation creating the bank -- to try to save it.

The NCCB won a preliminary round last week when the comptroller general ruled that the administration could not unilaterally freeze the bank's funds -- that only Congress could cut them back.

So far Congress appears divided over what to do about Reagan's proposals to cut off its funds and revoke its charter.

The Democratic-controlled House Budget Committee has kept funding in its budget for the bank, but the Republican-controlled Senate Budget Committee has eliminated all funding for the bank.

Sen. Jake Garn, chairman of the Senate Banking Committee, has introduced the administration's legislation to revoke the bank's charter.His counter-part in the House, Banking Committee Chairman Fernand St Germain, has vowed to save it.

But even those who would like to see the NCCB die a legislative death can agree that the five-year-old bank has not lived in vain. Says the American Bankers Association's Weir: "[The cooperative bank] has not been all bad. It's made us to get off our duffs."