Comptroller of the CurrencyC. T. Conover announced yesterday that he would not extend his moratorium on "nonbank banks" but would instead begin processing some of the pending 329 applications made by bank holding companies.

Conover's moratorium had blocked efforts of large banks to expand their operations across state borders -- an expansion that was leading toward a nationwide banking system, according to critics. Now this movement can resume, if the Federal Reserve's objections to nonbank banks are overcome.

Conover, in an announcement that had been anticipated, stated that any further delay of the 18-month ban "would amount to a usurpation of Congress' legislative authority. Therefore, under existing law, I feel compelled to begin deciding pending applications for nonbank banks." He added that, in his opinion, they are "clearly legal."

Nonbank banks are federally insured institutions that either take demand deposits or make commercial loans -- but not both. In that way, they avoid being designated as banks under the Bank Holding Company Act, which prohibits interstate banking.

The announcement brought angry reaction from the Independent Bankers Association of America, which represents small banks. Executive Director Kenneth Guenther declared, "This is an unfortunate step which further destabilizes our financial system. The regulator most closely associated with the Continental Illinois National Bank fiasco has now opted for further chaos rather than for the safety and soundness of the banking system."

The independent bankers object to regulators rather than Congress changing the fundamental structure of the banking system. They renewed their plea to President Reagan to review "this unfortunate and unwise decision."

Treasury Secretary Donald T. Regan defended Conover's actions, saying he had no choice but to uphold the law. He told a group of bankers that President Reagan could not act either. Putting the blame squarely on Congress, he added that its failure to legislate "is going to make regulation much more difficult."

Rep. Fernand St Germain (D-R.I.), chairman of the House banking committee, issued a statement warning that "divestiture of any newly formed nonbank banks will be required regardless of cost when legislation is enacted in the next Congress." He added, "Corporations which decide to proceed do so knowing the clear intention of the Congress to set the grandfather date as of July 1, 1983."

St Germain originally wanted no grandfather clause in banking legislation, which would have meant that parents of all nonbank banks would have had to sell them. But political pressure forced him to set a Jan. 1, 1983, cutoff date, which was then advanced to July 1. Many big bankers believe that if the next Congress is faced with a large number of nonbank banks, it will again back off rather than risk industry wrath and disruption by requiring massive divestitures.

It was the failure of Congress to enact legislation this year closing the Bank Holding Company Act loophole that caused the current situation. Conover originally had imposed the moratorium and then renewed it in the expectation that Congress would solve the problem. His aides said that the threat of lawsuits convinced him he had no other choice but to proceed.

Neither the Federal Deposit Insurance Corp. nor the Federal Reserve, which also are involved in nonbank bank regulation, ever instituted moratoria. In fact, the Fed, which is opposed to nonbank banks, tried to close the loophole last year, but was rebuffed by the courts. It then reluctantly approved an application by the U.S. Trust Corp. of New York to turn its Florida office into a nonbank bank.

Prior to that case, there were only about 60 nonbank banks in the country. That approval opened the floodgates to the many new applications. Since then, the Fed has not acted on any more applications, although several are still pending following approval last spring by the comptroller during a hiatus in the moratorium. Approval by the Federal Reserve would be required for all the 329 new applications.