Some members of Maryland's General Assembly seem unwilling to, or incapable of, tightening the reins on state-chartered savings and loans even after widespread abuses in the industry nearly toppled it last year.

Here, then, is a proposal that would allow reluctant lawmakers to save face and reform the state's savings and loan industry: Phase out the dual system of state and federal regulation by requiring all state-chartered S&Ls to obtain federal charters. Emergency legislation enacted last year requires all state-insured S&Ls to obtain federal deposit insurance. Adding an amendment requiring them to obtain federal charters is not only a logical step but probably a more palatable choice for many lawmakers who are reluctant to approve tough regulations for state-chartered S&Ls.

Even though a committee of the Maryland House of Delegates has overwhelmingly approved a measure calling for tighter regulation of state-chartered S&Ls, some lawmakers apparently aren't convinced that drastic reform is either necessary or desirable.

Maryland's savings and loan industry nearly collapsed nine months ago because some S&L executives abused the public's trust in a fit of wheeling and dealing and mismanagement of assets and liabilities.

Gov. Harry Hughes has endured blistering criticism for the way in which he has handled the nine-month crisis and for not ordering a full-scale investigation into the operation of state-chartered S&Ls after he had been warned of possible serious irregularities. But the legislature stands guilty of failing on several occasions to strengthen laws that govern the regulation of S&Ls.

The General Assembly fell asleep at the wheel when warnings of possible abuses in the industry were being posted regularly in recent years. The industry subsequently has been thrown into turmoil by widespread abuses. But given an opportunity to make amends this week, one lawmaker literally fell asleep while his colleagues wrestled with long-term solutions to the problem.

Shortly after the Hughes administration transmitted the reform measure (the bill was drafted by the special counsel who conducted an investigation into the origins of the crisis) to the General Assembly, some members of the legislative body complained that it was "draconian" and "overkill."

A series of amendments approved in committee quieted some of the doomsayers, but the measure is far from being approved. "I think some members of the Senate will really look at this bill as being too restrictive," predicted an S&L executive who requested anonymity.

Ironically, industry leaders, though strongly opposed to a key provision, haven't circled the wagons for a last-ditch fight to kill the reform measure. "Generally speaking, it's something that the industry can live with," Charles H. Kresslein Jr., president of the Maryland Savings and Loan League, volunteered.

The major stumbling block as far as the league is concerned is a provision that would restrict state-chartered S&Ls to making investments in a region that includes Maryland, the District and four neighboring states. The league is "trying to protect the larger institutions" by lobbying for an expansion of the region to include all 14 states covered in Maryland's regional interstate banking bill, Kresslein explained.

Even as the debate rages over geographic boundaries, the state is attempting to identify the assets of Maryland-insured S&Ls that invested in questionable real estate ventures in some parts of the Southeast. Nonetheless, the issue should be the "quality of assets as opposed to geographic boundaries," Kresslein contends.

With prompting from the industry, perhaps its defenders in the General Assembly will find that the proposed regulatory reforms are less onerous than they appear. In the meantime, skeptics and defenders of the reform measure may find the following remarks from Kresslein useful.

"If you look at the differences between state-chartered and federally chartered [S&Ls], there is no distinct advantage to remaining a state-chartered institution. I can't imagine a large association seeing an advantage in being state-chartered."

Kresslein confined his remarks to large associations, but one can apply the same logic in discussing smaller S&Ls. Certainly no one in Maryland has suggested that federal regulations are draconian. And S&L executives probably would agree that it's more difficult to operate under two sets of regulations in a dual system where a state-chartered S&L is federally insured.

Reining in Maryland's renegade S&Ls is an absolute necessity, even if the proposed reforms are tough. By approving legislation requiring S&Ls to obtain federal charters, however, the General Assembly can eliminate the state's role in regulating the industry and save face for those reluctant to vote for tough state regulations.