Of the 21 savings and loan associations paying the highest rates in the country, half are in Maryland and all are privately insured rather than federally insured.

According to Savers Rate News, which surveys thrifts around the country, the top rates for all types of accounts in the nation are paid by thrifts insured by the Maryland Savings Share Insurance Corp., which backs deposits in S&Ls chartered by the state. Heading the list of those paying the best rates are Custom Savings, Merritt Commercial Savings and Loan and Old Court Savings and Loan, all of Baltimore.

The difference in rates paid to depositors was probably the most eye-catching contrast between state and federally insured savings associations until last week's shutdown of privately insured savings associations in Ohio suddenly and dramatically focused attention on another question -- security.

Nearly two-thirds of Maryland's savings and loans are privately rather than federally insured. Unlike federal insurance, which is backed by the full faith and credit of the U.S. government, private insurance is not backed by the state. According to state and thrift officials, the rules governing the two types of savings associations differ little. But some observers question whether interpretation and enforcement of the rules are as tough under MSSIC as under the system administered by the FSLIC.

MSSIC was set up in 1961, following the collapse of several of the state's savings institutions, and since 1973 the state has required some form of insurance for all S&Ls. Of 160 savings and loans in the state of Maryland, 101 are insured by Maryland Savings Share Insurance Corp.; the others, by the Federal Savings and Loan Insurance Corp.

Maryland officials said their examination of the state-insured savings and loans since a "bank holiday" was declared in Ohio last week suggests that Maryland institutions are not likely to suffer a similar fate. "These associations are in good shape," according to Ejner Johnson, chief of staff for Gov. Harry Hughes.

In addition to generally higher rates, another attraction for savers is that it is possible to have multiple accounts, each insured to $100,000, at a MSSIC thrift. FSLIC thrifts limit each account holder to $100,000. Otherwise both types of institutions are competitive.

From the institution's viewpoint, there is little difference in the laws and regulations governing them, although there is a difference in the perception of how these rules are administered. Robert Smith, president of Maryland Federal Savings and Loan, recalled some years ago when his institution was examined by both federal and state officials. He said the feds were tougher then. Also, MSSIC thrifts had a more permissive attitude toward investments, such as equity in unimproved land, he said.

Although Smith and others agree that MSSIC has tightened the rules, there appears still to be a general perception that FSLIC is stricter. MSSIC is seen as less particular in its audits and more flexible in its interpretation of the rules, according to one former official of a MSSIC-insured thrift who asked not to be identified.

Consequently, he added, MSSIC thrifts have the reputation of being bolder and very aggressive in making investments. Many are privately held stock corporations, owned or established by developers, who use privately insured funds to finance their projects.

Many MSSICs opted for the state system at a time when MSSIC conferred significant advantages on its members. When federally insured institutions were limited by federal interest rate ceilings on what they could pay on deposits, MSSIC thrifts were free to compete for depositors who were leaving banks and thrifts looking for higher interest rates. That gave them an edge over their competition that survives today.

Another advantage that still exists is the smaller amount of paperwork and administrative costs required. This is particularly significant for small S&Ls (those with under $100 million in assets), which make up 80 percent of MSSIC's membership.

As far as investments are concerned, there is little difference on paper. FSLIC limits loans to a single borrower to not more than 10 percent of the lender institution's savings or net worth, whichever is larger. MSSIC limits these loans to 5 percent of savings. FSLIC requires net worth of 3 percent of liabilities; MSSIC requires 3.75 percent.

Interpretation and enforcement are another matter. MSSIC, like FSLIC, has an array of sanctions it can use to discipline wayward members. These range from restricting advertising, if the S&L is growing too rapidly, all the way to issuing cease-and-desist orders, throwing out management and liquidating the institution, in extreme cases. However, according to Senior Vice President Paul Trice, MSSIC has never in the past 20 years found it necessary to use extreme measures. MSSIC has 11 directors, only three of whom are public members. The others are executives of member thrifts, a fact, critics contend, that makes them reluctant to discipline their peers.

During the past five years MSSIC has merged one weak S&L with another with the assistance of MSSIC funds, according to Charles Kresslein of the Maryland Savings and Loan League. In the same period, FSLIC has ordered five such supervisory mergers of federally chartered Maryland S&Ls and sued the former directors of one for fraud.

Maryland's state regulator, the Savings and Loan Division, only recently gained powers to sanction thrifts, including the power to issue cease-and-desist orders and remove officers. Asked if there were cases where he would have used it, S&L division chief Charles Brown said, "We weren't out there fishing. We just wanted comparable powers."

"State auditors are pretty much a joke," said a former MSSIC thrift executive, who asked not be identified. "They are lower paid and less experienced."

Trice said that there are currently two vacancies on the staff of 30, which includes 19 field examiners. Trainees start at $12,600 annually, and there is substantial turnover. State Sen. Howard Denis (R) has introduced legislation to authorize $1.5 million to pay for additional auditors.

Trice said all MSSIC thrifts are now operating in the black and that their current average ratio of net worth to insured liabilities is 5.26 percent, a record that puts MSSIC-regulated thrifts far ahead of federal S&Ls nationwide.

State law prohibits the savings and loan division from releasing individual data on the financial condition of savings and loans. Brown and Kresslein acknowledge there are three or four Maryland thrifts -- all insured by MSSIC -- that are being closely monitored by officials because of questionable loans. At least one has signed an "insurance agreement" which says, in effect, "If you don't do what MSSIC asks, MSSIC will take you over." That compares with up to 10 percent of thrifts nationally said to be in real danger.

Apart from about 20 MSSIC thrifts that are too small to qualify, it is not clear how many of the other 80 MSSIC thrifts would qualify for FSLIC if an Ohio-like crisis arose.

MSSIC has about $350 million, plus access to the Fed's discount window, to insure its thrifts. Eight institutions each have assets in excess of $350 million.