The health of commercial banks was of little concern to William Sinclair when he argued strongly and convincingly last summer for policy changes to protect taxpayers from further liability in the savings and loan crisis. Neither, it seems, was the health of banks on the minds of those who should have been monitoring such things.

Sinclair's stance is no surprise, since he, after all, is president of a District thrift institution, Washington Federal Savings Bank. Not only has Washington Federal had its share of problems in the past, but the entire thrift industry is mired in a decade-long crisis. But his worries about taxpayers' liability for S&L problems seem to parallel those in a rather disturbing report on commercial banks released this week by the General Accounting Office.

The GAO's findings raise serious concerns about the condition of the Federal Deposit Insurance Corp. fund, which insures bank deposits. A warning from the comptroller general of the GAO that the fund could be in deep trouble strongly indicates that bank regulators should have been thinking in the same ways that Sinclair thought about thrifts.

Taxpayers may have to bear a greater financial burden for the handling of problems at federally insured savings and loans, Sinclair had suggested. The warning from the GAO amounts to the same thing: Taxpayers could wind up with a huge liability for deep-rooted problems in the banking industry.

The FDIC fund, which insures deposits up to $100,000 and protects depositors against losses when a bank fails, is in "precarious condition" and could be wiped out by a recession or a major bank failure, the GAO said in a report to Congress. The cost to taxpayers, of course, would be enormous.

The point raised separately by Sinclair and the GAO has been overlooked for too long in the smug assumption that deposit insurance funds were strong enough to withstand disasters in the nation's banking and thrift industries.

Complacency about problems that beset savings and loans throughout most of the 1980s made it that much easier for those problems to spawn the current crisis. The GAO report on the deposit insurance fund is strikingly similar to early alarms alerting the country to what was to become a crisis in the S&L industry.

Sinclair was both astute and prescient, as it turns out, in citing the dangers -- hidden and apparent -- to the insurance fund. The S&L crisis, or more specifically, the government's handing of the crisis, is putting undue pressure on the insurance fund, Sinclair had said in an interview this past summer.

Sinclair, like others in the thrift industry, surely would like to see federal regulators ease rigid capital requirements and allow troubled but honestly run thrifts to work out their problems instead of being seized by the Resolution Trust Corp. (RTC), the agency created last year to handle the S&L crisis. "There has got to be some flexibility for those that are not in compliance {with capital standards} to get healthy," Sinclair had insisted.

Clearly, the staggering number of thrifts that have been taken over by regulators has driven up the cost of the S&L rescue. The pleas of Sinclair and other S&L executives may be perceived as purely selfish attempts to hang onto their institutions. The point that taxpayers will wind up paying more than anticipated for cleaning up the S&L mess is valid, nonetheless.

L. William Seidman, the FDIC's chairman, at least agrees that somehow the government has to find ways to reduce the S&L cleanup's cost. "What we are trying to do is find a way to handle those institutions that would be less costly to the taxpayers than putting them into the" RTC, Seidman said in congressional testimony only a day before the GAO report was made public.

Clearly, Seidman sees a need for greater flexibility in directing the S&L cleanup. Skeptics fear this policy reassessment will resurrect the regulatory practice of "forbearance," the much-criticized standard that enabled sick S&Ls to remain open while continuing to hemorrhage. "We need flexibility, not forbearance," Sinclair insisted several months ago.

The need for flexibility was demonstrated later when regulators decided to modify the rigid loans-to-one-borrower rule for S&Ls, allowing healthy institutions to lend more than 15 percent of their capital for residential projects.

In the meantime, there is a greater need for legislative and regulatory reform of the nation's banks and S&Ls, starting with an overhaul of the deposit insurance system. A $40,000 limit on insurance coverage for an individual depositor seems not only adequate but prudent.

It should be obvious by now that the savings and loan industry's problems have been compounded by a terribly expensive quick-fix remedy, based almost entirely on the premise that the industry was looted by crooks. Fraud wasn't the primary cause of the S&L crisis. Weak management played a significant role. So, too, did a dramatic rise in interest rates in the early 1980s, wrongheaded deregulation in the mid-1980s, highly questionable real estate loans and the real estate recession that followed.

In its attempt to straighten out the mess, the government has created a whole new industry for disposing of real estate and other assets of failed S&Ls. It is a situation ripe for opportunists to make a killing at taxpayers' expense.

A good many banks, like their counterparts among S&Ls, made too many costly mistakes in the real estate market. Now they're paying a painful price in a depressed market. Many are still reeling from overexposure to foreign loans. Taxpayers, meanwhile, are faced with the ominous warnings contained in the GAO report on the health of banks. Still, many of the same assumptions and complacency that preceded the S&L crisis are in evidence.

The lessons of the S&L crisis have yet to be learned.