The House subcommittee on financial institutions yesterday approved a bill to bail out the Federal Savings and Loan Insurance Corp. despite the chairman's description of the plan as "a lot of smoke and mirrors."

Chairman Fernand St Germain (D-R.I.) said the rescue effort to aid insolvent thrifts by injecting $15 billion into FSLIC, the agency that insures deposits at S&Ls, definitely would increase the federal budget deficit. And Rep. Bruce Vento (D-Minn.) labeled it a "pea and shell game."

The FSLIC bailout plan would create a federal funding corporation to sell bonds and use the money raised to assist failing S&Ls over the next five or six years. The corporation would receive $3 million in cash from the 12 regional Federal Home Loan Banks, which would be used to buy zero-coupon Treasury bonds to back corporation bonds issued for sale to investors. Interest on the corporation's bonds would be paid through assessments on the industry and from Federal Home Loan Bank funds.

In the original draft of the legislation, the industry's payments were to be funneled through FSLIC to the corporation. This prompted the Congressional Budget Office to declare that the bailout would increase the federal deficit by $12 billion. After that determination, the date of the subcommittee markup session had to be postponed twice.

Late last week, the Treasury modified the plan so the payments would not be channeled through FSLIC. Instead, the financing corporation would have the power to assess the S&Ls directly. The CBO promptly declared that the change took the payments off the government's books and thus meant the plan would have no effect on the federal deficit.

Yesterday, after the bill passed by voice vote, St Germain declared that he thought the CBO's original opinion about increasing the deficit was correct.

"But since everyone is now waltzing to the same tune, I decided to hold the markup," he added with a smile.

The financing corporation would be authorized to assess the S&Ls about $2.3 billion a year to raise money for the failing thrifts.

Healthy savings and loans have complained that they should not have to pay assessments to shore up their ailing colleagues.

Some have threatened to reorganize as savings banks insured by the much sounder Federal Deposit Insurance Corp., the federal insurer of bank deposits.

The General Accounting Office has estimated that FSLIC, which had $4.6 billion in assets at the end of last year, will need an additional $16 billion to $22 billion to take care of the more than 200 insolvent S&Ls. Others believe that will not be enough.

The thrift industry had a near record year in 1985, earning $3.8 billion.