Senate Banking Committee chairman Jake Garn (R-Utah), declaring that piecemeal approaches won't work, introduced legislation yesterday that would significantly deregulate the nation's financial services industries.

At the same time, Garn introduced another measure that would merge the Federal Savings and Loan Insurance Corp. and the National Credit Union Share Insurance Fund into the Federal Deposit Insurance Corp.

The measure to reshape the depository institutions -- called the Financial Institutions Restructuring and Services Act of 1981 -- incorporates several provisions of bills that had been previously introduced by other members of the banking committee. It also incorporates a bill that Federal Home Loan Bank Board Chairman Richard T. Pratt proposed Monday to restructure the savings and loan industry.

Garn introduced Pratt's bill Monday at the request of the bank board chairman. That measure has the support of the administration. However, the administration has not made its position clear on a comprehensive bill to restructure financial services industries.

Garn emphasized at a briefing yesterday that he doesn't endorse all of the provisions in his bill. But he said it's important to "start a dialogue" that will enable him to present a comprehensive bill to the Senate this year.

Garn's approach contrasts sharply to that of Rep. Fernand St Germain (D-R.I.), his counterpart on the House Banking Committee. St Germain advocates a two-tiered approach in dealing with the problems of financial institutions.

The first phase of St Germain's approach is already underway as the financial institutions subcommittee prepares to approve an emergency bill that would allow the regulatory bodies more flexibility in dealing with failing banks and savings and loan associations.

St Germain's committee has ruled out a comprehensive approach that would parallel Garn's.

Asked about the different strategies yesterday, Garn replied: "Well, that's their choice if they want to stick their heads in the sand and not address the (larger) problem."

Garn said he expects to begin hearings on his bill Oct. 19, when Treasury Secretary Donald Regan will be the leadoff witness.

The Restructuring and Services bill would authorize financial institutions to expand their powers considerably.

Like the Pratt bill, it would allow thrift institutions to make commercial loans. At the same time, it would allow credit unions to offer a broader range of real estate loans.

Banks, S&Ls and credit unions would be authorized to operate, manage and sell interests in mutual funds, and banks would be permitted to deal in and underwrite municipal revenue bonds.

Another provision would preempt state usury ceilings on consumer loans. It does include, however, a provision for a three-year period for state override.

Also, the bill would ban states' prohibitions of due-on-sale provisions in mortgage contracts held by all HUD-approved lenders. The states would have a three-year period in which they could override the ban in all new mortgage contracts.

A similar provision in the Pratt bill would preempt state laws that bar due-on-sale clauses in mortgages held by S&Ls.

Garn's bill also contains several provisions that would authorize the FSLIC and the FDIC to assist financially troubled institutions. Included in those provisions are authorizations for interstate and cross-industry mergers of banks and S&Ls that face severe financial conditions.

While Garn's bill is the most comprehensive to date for addressing the problems of financial institutions, two areas of concern will have to wait until next year, the senator said.

Changes in the McFadden Act, which bars interstate banking, and the Glass-Steagall Act, which prohibits commercial banks from operating securities-trading affiliates, will be considered next year, he said.

The need to consider some type of comprehensive legislation now, said Garn, is dictated by steadily increasing competition within the financial services industry.