AS THE COST estimates soar, some of the Democrats in Congress have naturally begun to wonder whether the S&L disaster can't be used to attack President Bush. That thought leads to a more interesting question: Exactly whose fault was this gigantic scandal, anyway?

The short answer is that it was a thoroughly bipartisan affair. Mr. Bush can always point out that in the years when the scandal was forming he was not in his present office -- unlike so many of the members of the majority in the House and Senate. In the last presidential election campaign the Democratic candidate never made anything of the S&L issue precisely because such a number of prominent Democrats were deeply involved.

The S&L disaster originated in the idea, firmly rooted in both parties, that the savings and loan institutions were a necessary and desirable means of financing home mortgages and the real estate industry. The builders and the S&L lobbyists drummed away on one simple, compelling message -- that anybody who tried to tighten S&L standards was making it harder for Americans to buy their homes.

The S&Ls prospered for many years by taking in customers' deposits and lending the money out, at a slightly higher rate of interest, on mortgages. But that was suddenly reversed in the late 1970s. While they were carrying huge portfolios of mortgages paying 6 or 7 percent, they found themselves having to pay much more -- sometimes twice as much -- to hold deposits in competition with the new money funds. By the early 1980s the S&Ls were losing money at spectacular rates.

Both the Reagan administration and Congress responded with a series of panic-stricken attempts to rescue the S&Ls by relaxing the financial safety requirements. New regulations and new legislation allowed them to get into riskier kinds of lending with none of their own money at stake. It was like trying to preserve an airline from bankruptcy by relaxing the air safety rules. Should you be surprised that the number of crashes began to rise?

The central error was to let S&Ls operate with no capital. Capital is the owners' money and when an S&L -- or a bank -- runs losses, its capital is the cushion that protects the federal deposit insurance fund. Because Congress and the Reagan administration joined in encouraging S&Ls to stay in business with no capital, the S&l losses fell directly on the insurance fund. It was quickly exhausted, and that's why the taxpayers are now going to be hit for whatever it takes -- perhaps hundreds of billions of dollars -- to replace the customers' lost deposits.