Since the Maryland savings and loan industry faltered in May, the administration of Gov. Harry Hughes has repeatedly found itself like the bear that went over the mountain. Every time it climbs one peak, it sees another looming in the distance.

The sale of three Maryland thrifts to Chase Manhattan Corp., for example, approved by the legislature Tuesday, frees $500 million in deposits, and removes a potential state liability of $100 million. Yet the Federal Reserve estimates the state could still face a loss of about $300 million stemming from potential liabilities at Old Court Savings and Loan and Community Savings and Loan, which are under state conservatorship. The sum could grow if First Maryland Savings and Loan, the third large ailing thrift where deposits are frozen, does not win federal insurance or find a buyer.

An industry insurance fund now controlled by the state is available to cover as much as $150 million of that loss. If Maryland taxpayers have to pay the remainder, the payment could have a ripple effect that the state might feel for years, according to financial analysts in and outside state government. State property taxes might go up; coveted projects like neighborhood road improvements could be postponed.

There are other, equally profound, effects associated with Maryland's lingering thrift crisis.

The Chase transaction also accelerates the expansion of interstate banking. Increased competition from large out-of-state banks is almost certain to reduce the number of lending institutions in Maryland, but it will also offer consumers more places to find the sophisticated services that such huge institutions can provide. Those savings and loans that survive as federally insured thrifts will be operating under stricter government controls.

But if financial services are expanding, the state's horizon may be shrinking. The state legislature is considering deauthorizing some capital projects to protect the state's coveted AAA bond rating, a badge of fiscal integrity that the state has worn since 1940, which earns it a more favorable rate of interest when it goes into the bond market to pay for capital improvements.

A sign that New York bond rating houses are stepping up their monitoring came last week when representatives of Standard & Poor traveled to Annapolis for briefings on how the state is managing its savings and loan problems and the possible aftermath.

As the governor repeatedly reminds the public, the state has made considerable progress since May, when reports of mismanagement at Old Court in Baltimore set off depositor runs that pushed the industry to the verge of collapse. At that time, Hughes took the unprecedented step of guaranteeing accounts at 102 state thrifts up to $100,000 and began the process of ushering the associations into the relatively safer harbor of federal insurance.

Thirty thrifts have won federal insurance since then and are operating normally; the administration has removed withdrawal limits from 53 others. Once Chase formally acquires Merritt Commercial of Baltimore, Friendship Savings and Loan of Bethesda and Chesapeake Savings and Loan of Annapolis, 16 thrifts will remain under withdrawal restrictions or bans. Those 16 associations have assets of roughly $1.5 billion, about one-sixth of the industry in Maryland as a whole.

But that progress masks a number of remaining major hurdles. Old Court is generally considered beyond rescue, with estimates of its ultimate losses at $175 million. Community Savings and Loan of Bethesda, despite new hope that it will be separated from its bankrupt real estate empire, remains a potentially costly albatross for the administration. And First Maryland of Silver Spring, where a freeze on withdrawals was extended Tuesday for an additional 30 days, is a prime candidate for conservatorship if it cannot get federal insurance. Hughes, mired in a muddle he has often described as the most difficult of his nearly seven years as governor, has few definitive replies to questions that remain unanswered despite this week's progress.

To the angry depositors whose cries for political revenge echoed in the halls of Maryland's State House two weeks ago, Hughes has offered a hardship withdrawal plan that will ease the desperation of some but fully satisfy few.

To taxpayers wondering what they will ultimately pay for the $100,000 deposit guarantee if one or more associations are eventually liquidated, Hughes says it's too early to tell.

To Maryland citizens who want to know how the state intends to pay for a final resolution of the thrift crisis, Hughes said at a news conference two weeks ago, "We don't have any contingency plan at this point."

What Hughes does say, repeatedly, is that the administration's goal from the outset has been to balance the needs of depositors and taxpayers and that its dogged effort to solve the lingering thrift crisis will eventually succeed. "I am the eternal optimist," Hughes said.

Perhaps the most frequently heard criticism of the administration's efforts over the last five months has been that, faced with an enormously complex problem involving relatively arcane areas of expertise, the state until very recently refused to bring in outside experts familiar with the power corridors of Washington and Wall Street. Frequent consultation with the Federal Reserve notwithstanding, the administration has depended most heavily on the governor's own aides and cabinet secretaries, and a small band of Baltimore lawyers.

The administration "just didn't have the talent quick enough, good enough and deep enough to really handle the crisis," said one person intimately familiar with the state's management of the crisis. That assessment is shared by one federal official, who said that, with better advice, the administration might have been able to extract a better and quicker deal from Chase and other money-center banks.

A related problem, according to some observers, has been a fragmentation of decision-making authority among Hughes' aides, cabinet secretaries, bureaucrats and state lawyers. In a situation that cried out for a czar who enjoyed the governor's full confidence, no one person was clearly in charge of the multifaceted problem.

"The effect of the fragmentation," said one figure close to the state's efforts, "is that it's been hard to get decisions made. It's like the least offensive idea can get approval but if it is a real controversial item, it's hard getting a decision because no one has the real authority. They say there are two things people shouldn't watch being made, sausage and legislation. There's a third: savings and loan decisions."

There are also a host of other, less tangible costs if the thrift crisis persists for many more months.

Perhaps most importantly, the public's faith and confidence in government and its regulators, in banks and neighborhood savings and loans -- all institutions that depend largely on people's trust -- will have been shaken.

"When this thing first started, the governor acted very fast, but as it turns out he gave a false sense of security," said Fred Schnur, a financial officer at the University of Maryland who has thousands of dollars tied up in Old Court.

"Obviously, the problems were far greater than anybody realized," Schnur added. "But as more time goes by, you lose your confidence. You start feeling like everybody led you down the garden path."

Since the beginning, Maryland's thrift crisis has had repercussions far beyond the state's borders, affecting everything from European money markets to the U.S. mortgage insurance industry.

Still, the shocks are felt most keenly here at home, especially at large savings associations whose growth and investment practices are being restrained by increased federal monitoring in the wake of the thrift crisis.

"We -- the industry -- are going to be under such control you wouldn't believe," said Kevin Maloney, president of Potomac Savings and Loan in Montgomery County, a small thrift with $21 million in assets and 2,000 depositors, which recently won federal insurance.

For example, federal officials who reviewed Potomac's holdings this summer recently notified Maloney that his thrift, like others, may not grow more than 25 percent in two consecutive quarters.

"The day of the old traditional thrift is over," says James A. Verbrugge, a University of Georgia finance professor, who is affiliated with a thrift industry consultant in Washington. "The ones that are going to survive will take advantage of this broadened, totally new financial services industry," offering everything from investment advice to computerized bill paying.

Robert Douglass, a Chase vice chairman, predicts similar changes for Maryland's commercial banks. In five years, Douglass said, consumers will have a choice of two kinds of institutions: very large banks like Chase and regional institutions that will absorb many of Maryland's larger banks, and small banks offering "personal high quality service" at greater cost.

If there is a fundamental lesson to be learned from Maryland's savings and loan crisis, said Wall Street's prominent economist Henry A. Kaufman, it is that "our regulatory authorities -- whether it's the FDIC or FSLIC -- are very good at trying to put out a fire. But they have not yet learned as well as they should to anticipate the fire."

Maryland's rush to insure all accounts and act as conservator of collapsed thrifts, added Kaufman, demonstrates that "we are unable to let financial institutions fail . . . . The government becomes a safety net to cover the debt."