Federal regulators said yesterday they will give government subsidies totaling almost $2 billion a year to insolvent Texas savings and loan associations under a long-awaited plan for bailing out Southwestern S&Ls that have gone broke.

The plan outlined by Federal Home Loan Bank Board Chairman M. Danny Wall calls for consolidating at least 100 failed Texas S&Ls into bigger, healthy associations, then giving them government notes, cash and other subsidies until they regain their financial strength. Otherwise, he said, the Federal Savings and Loan Insurance Corp. (FSLIC) would have to close the insolvent associations and pay off their depositors, which might bankrupt the insurance fund.

Congress approved a $10.8 billion recapitalization of the FSLIC fund last year, but Wall emphasized that "the agency would use more notes than cash to solve problems."

Wall and other FHLBB officials estimated that it will cost between $6 billion and $7 billion up front to replenish the capital of Texas associations alone, and another $2 billion the first year to keep them going.

Bank board member Roger Martin said 104 savings associations in Texas are insolvent -- meaning that their debts are greater than their assets, so they could not pay off their depositors if they had to. The insolvent associations lost a total of $2 billion last year, he added. That doesn't count the losses of another 39 Texas institutions that are classified as "troubled" and are potential candidates for federal aid.

George Barclay, chairman of the Federal Home Bank of Dallas, said the plan is to keep the failed Texas S&Ls in business for the time being in hopes that the depressed Texas economy will turn around. Texas S&Ls own about $8.7 billion worth of real estate that has been repossessed from developers who couldn't meet mortgage payments; the lenders would face massive losses if the real estate had to be sold now, but regulators are speculating that it will be worth more sometime in the future.

If the Texas economy does not improve, the federal subsidies would have to continue for some time "but not indefinitely," Barclay said.

Barclay said executives of some savings and loans that have gone broke may be allowed to manage associations that receive federal subsidies.

Wall said regulators believe they can raise at least $1 billion in new capital for the S&Ls from private investors who hope to profit by buying and reorganizing failed Texas associations. So far federal officials have had trouble attracting outside investors, but Wall said the plan aims to make investing in Texas associations more attractive by offering "creative FSLIC financial and regulatory assistance to create marketable entities."

Wall's plan calls for cutting the number of savings and loans in Texas from the present 218 to between 160 and 180 by consolidating associations and for closing about 400 of the 1,800 savings and loan offices and branches in the state.

Wall repeated his promise that the federal bailout will not permit creation of a giant savings and loan with branches all over Texas, a competitive threat feared by other Texas financial institutions. Wall said banning a statewide S&L "reflects the geography of the market" and was not done in response to pressure from House Speaker Jim Wright or other Texas politicians who want such a ban.

Bank board member Lawrence White admitted that the agency "has had just an awful reputation for being a patsy in deals" because we "paid the costs and got no gains" when taking over failed associations. In future deals, he added, officials will insist on a share of future profits -- including partial ownership of associations that get help -- in return for sharing any future losses.

White and Wall said the prototype for Texas bailouts will be a recent FSLIC merger in Louisiana, where several failed associations were combined with a healthy one on the condition that the government get as much as 40 percent of future profits.

They cited a hypothetical example of how five insolvent S&Ls might be merged with a healthy one, closing many branches, laying off executives and tellers and reducing overhead. FSLIC could give the merged S&L cash to replenish its capital reserves, but instead probably would give it a government note for several million dollars.

The note would serve as a cushion to protect depositors from losses and the government would pay interest on the note, directly subsidizing the association's operations. FSLIC would provide a second subsidy to make up for the money the S&L was losing on its repossessed property and bad loans.