Fraud and insider abuse have become an "epidemic" in the nation's financial institutions, contributing to one of every three bank failures and one of every two savings and loan failures since 1984, according to information given yesterday to Congress by federal regulators.

The abuses contributed to failures that have cost the government at least $4.5 billion, but possibly as much $6 billion, congressional investigators say, adding that even that figure is conservative.

The information was disclosed in hearings by Rep. Doug Barnard (D-Ga.) on abuses in the nation's financial system. Barnard is chairman of the commerce, consumer and monetary affairs subcommittee.

The hearings have gained national attention because of record bank and S&L failures since 1982 and because of the push in recent months by federal bank regulators to deregulate financial services and allow banks to enter riskier markets such as securities underwriting.

Bank and S&L customers ultimately pay the tab for mismanagement and fraud through higher interest rates on loans and lower interest rates on deposit accounts. In addition, taxpayers are likely to pay ultimately to clean up much of the mess caused by the rising number of failing financial institutions, government officials concede.

Officials from the five federal bank regulatory agencies testified that fraud and insider abuse -- which involves improper transactions by bank and S&L executives -- have been on the rise in recent years.

They said that during the last year, regulators, the U.S. Justice Department, the FBI and the IRS have made strides in working together to nab white collar criminals.

But they said that staff shortages in field offices around the country have impeded their effort and have made it difficult to catch and prosecute criminals quickly. They said that the difficulty of training field investigators in the complexities of financial fraud also has slowed the government's ability to weed out abuse.

"More {criminals} get away than get caught," said Henry Oncken, U.S. Attorney for the Southern District of Texas, an area particularly hard hit by S&L and bank failures. "What triggers discovery is often accidental."

Even though regulators agree there has been a rise in bank fraud, the number of civil actions taken against banks by federal regulators -- particularly the Federal Reserve Board -- has declined during the last three years, congressional investigators found. The exception was the Federal Home Loan Bank Board, which has increased civil actions against problem S&Ls. When Barnard questioned the regulators about the decline, they said their enforcement is as rigorous as ever but they have found informal disciplinary actions are more effective in many cases.

The federal bank regulators appeared unanimous in insisting that while fraud and insider dealing are on the rise, the number of institutions hit by such abuses is a small percentage of the industry and therefore not undermining the safety and soundness of the nation's financial system. "It's costly to the {federal deposit} insurance fund, but it is not imperiling the system," said L. William Seidman, chairman of the Federal Deposit Insurance Corp. "Insider abuse, like sin and sinners, will always be with us. The best hope is to contain it."

Even though the number of institutions hit by fraud is a small percentage of all financial institutions, they account for a large share of the institutions that fail, and therefore a large percentage of the cost the government bears to clean up problem banks, S&Ls and credit unions, the regulators said.

For example, only 5 percent of credit union failures can be blamed on fraud, according to Roger W. Jepsen, chairman of the National Credit Union Administration. But those 5 percent account for 66 percent of the cost to the federal fund that insures deposits at credit unions and reimburses depositors when institutions fail, he said.

Many S&L and bank lobby groups have argued that most financial institutions fail because of economic problems, such as falling energy, agriculture and real estate prices. But, according to a memo written to Barnard by his staff, many failed S&Ls and banks might have been able to withstand economic pressure if there had been no abuses.

Misconduct can often be the final straw that breaks an institution, forcing it to fail, Barnard's staff said. For example, it said it has evidence that fraud involving only $300,000 in a bank with $40 million in assets was enough to topple the institution during an economic crunch.

But the investigators agree that mismanagement and incompetence can often run an honest institution into trouble. They agree with FBI and Justice officials who testified that determining the exact causes can be nearly impossible in many cases.