Federal regulators mishandled the disposal of failed savings institutions in 1988 and likely added to the cost of the S&L bailout, a new report says.

The regulators were accused of not giving all bidders for the thrift institutions an equal chance to compete.

The four-volume report was prepared by the Washington law firm Steptoe & Johnson for the Bush administration and Congress. Copies have been delivered to the oversight board of the Resolution Trust Corp. headed by Treasury Secretary Nicholas F. Brady and to the House and Senate banking committees.

The Associated Press reviewed the report, which has not been made public.

The report sharply criticized the now-defunct Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corp.

"It appears on the basis of all the available facts that FSLIC and the bank board were less than successful in fulfilling their self-imposed competitive mandate," the report said. Better handling of bids likely would have meant more competition and a savings for taxpayers, it said.

The Resolution Trust Corp. has replaced the FSLIC in disposing of failed S&Ls. The bank board was dismantled and many of its responsibilities passed to the new Office of Thrift Supervision in the Treasury Department.

The 1988 deals, many thrown together in the last few days of the year to take advantage of an expiring tax loophole, have been sharply criticized by congressional Democrats. The deals will cost taxpayers an estimated $69 billion over the next decade.

The new report said, for example, the combination of 87 failed S&Ls in Texas into 15 larger institutions was mismanaged.

"The plan did not provide the same opportunities for all potential bidders to compete on a fair and equitable basis," the report said.

But it added that some factors were beyond the regulators' control, including the expiration of the tax loophole, skepticism among investors about the bailout plan and the deteriorating condition of the S&L industry in Texas.

The report said that February 1988 solicitations for bidders lacked key information, including the number and identity of the thrifts to be sold in each package or their size or financial condition.

The notices also should have been published in the Federal Register or in financial publications, the report said.

A selected group of about two dozen potential investors received much more information about the proposed transactions in a February 1988 meeting in Washington and March meetings in Dallas, it continued.

Eight of 14 successful bidders participated in those meetings weeks or months before the information was provided to other bidders, it said.

The report also said that some bidders were disqualified for submitting incomplete applications apparently through no fault of their own.

"In at least two instances, groupings of thrifts appear to have been specifically created for and negotiated with only a single bidder, with no notice of the availability of these new groupings to other bidders," it said.

The report said in two cases the bank board failed to review FBI background checks of successful bidders.

One case, that of Indiana insurance executive James Fail, was explored in Senate hearings this summer by Sen. Howard Metzenbaum (D-Ohio). The report provided no information about the second case.

The study of bidding procedures was the second and final report on the 1988 deals required by a 1989 S&L bailout law.

The first report, which was released in September, said regulators could reduce the taxpayer cost of the 1988 deals by $3 billion to $4 billion over the next decade but only by spending about $20 billion now to replace long-term government help due the new owners of rescued thrifts.