Federal regulators have been told they could reduce the overall costs of the savings and loan cleanup by perhaps billions of dollars by immediately paying off private investors who purchased several hundred failed thrifts in 1988. But to do so would compel the Treasury to borrow even larger amounts at a time when Congress and the administration are deadlocked over the federal budget deficit.

The Resolution Trust Corp., which is overseeing the thrift cleanup, has been receiving a series of studies of the controversial 1988 S&L deals from accountants and lawyers seeking to pin down the costs to taxpayers and looking for possible savings. The cost of the deals is currently estimated at $66.9 billion over 10 years.

The 1988 deals, arranged by the now defunct Federal Home Loan Bank Board, involved the sale of 220 failed thrifts to 96 private investors and financial institutions. The government had to promise hefty tax benefits and subsidies as inducements. These arrangements have been characterized by congressional critics as excessively generous to the buyers.

Those familiar with the conclusions by the RTC's consultants said they found it would be cheaper for the government to borrow funds and pay off the buyers now, instead of continuing to make yearly subsidy and interest payments.

"We've got some ideas on where savings can be had," said William H. Roelle, director of the resolutions and trust division of the RTC. Roelle refused to disclose agency estimates of the possible savings but said it could be substantial. "Obviously, it's a lot of money," he said.

But any such borrowing would require the approval of Congress, which is already getting an earful about savings and loan costs from an angry public. At the same time, it is trying to cope with other major fiscal concerns, including the federal deficit and the cost of the crisis in the Persian Gulf.

"There are substantial savings if you could face up to the costs at this time," said Rep. Bruce Vento (D-Minn.), chairman of a special task force formed last year to monitor the RTC.

The consultants have arrived at three principal recommendations for cutting subsidy and interest costs to the government. Sources knowledgeable about the proposed revisions described them this way:

The first would cut subsidies the government has agreed to pay on uncollectable loans and bad assets assumed by the thrift buyers. Instead of paying such subsidies every year on a loan in arrears, for example, the government could estimate the loan's true value -- rather than its book value -- and pay the thrift buyer the difference.

Alternately, the government could buy back such assets and sell them to someone else.

The Federal Deposit Insurance Corp. currently estimates the cost of those subsidies will be $15.4 billion over the 10-year life of the government's assistance agreements to '88 thrift buyers.

Second, to encourage the new thrift owners to sell off bad assets more quickly, the RTC is considering offering to pay them disposition fees. The faster the asset is sold, the higher the fee. The yearly subsidies on bad assets -- called yield maintenance agreements -- now provide a thrift owners with a disincentive for selling off troubled or nonperforming assets -- loans that are not earning interest.

Finally, the RTC is considering having the government prepay high yield notes that were provided to the buyers. Thrifts hold $19.7 billion in such notes -- most issued in the 1988 deals -- and about $13 billion of them are contractually prepayable. It would be cheaper for the government to borrow funds now at current rates and prepay the high-rate notes.

The hard political question is whether Congress and the administration can stomach increasing the deficit by billions of dollars more to achieve the savings.

"It's too early to tell how it will play politically," said one administration official.

Vento said the investment should be made. "I don't think we have any choice but to respond. But he said he is not convinced the Bush administration is prepared to borrow heavily now and acknowledge the true cost of the 1988 deals. "There's a lot of resistance to putting the issue out front," he said. "As messenger of that information, it carries certain risks."

There are other factors as well in deciding whether to revisit the sales. Some buyers are likely to resist a payoff that would force them to reinvest their funds in today's weak economy. "There's nowhere these guys can plunk a billion dollars down" and make as lucrative a return as they expected on the thrift deals, said one official.

And there are some concerns that it might appear the government is reneging on the '88 deals, which could scare off future buyers of failed or troubled thrifts.

Treasury Undersecretary Robert R. Glauber said the government has room to maneuver within the terms of the '88 contracts. "These deals were structured in ways that gave options to the government. When the government chooses to exercise those options, it cannot be construed as bad faith," he said. "That should not scare off future buyers."

Among the deals critics considered overly generous to buyers is Revlon Group Inc. chief executive Ronald O. Perelman's acquisition of five thrifts merged into First Gibraltar Bank in Houston. First Gibraltar is to receive $5 billion in government assistance on a $315 capital contribution by the buyers. Last year, its first year of operation, First Gibraltar had a 44 percent return on its investment.

Other sales that have drawn criticism include James Fail's purchase of 15 failed thrifts grouped together as Bluebonnet Savings Bank of Dallas. Fail, one of whose companies was earlier convicted of securities fraud, bought the thrifts largely with $70 million in borrowed money and with the help of a Washington lobbyist who was an aide to George Bush when he was vice president. Bluebonnet is slated to receive $1.85 billion in government assistance.

The RTC is supposed to complete a report to its oversight board on the 1988 thrift sales by Aug. 31, but agency officials said last week they probably will not complete their work until sometime in September.