At a conference sponsored by the Federal Reserve Bank of Boston on Oct. 29, 1981, the bank's chief economist, Richard W. Kopcke, revealed that two out of every three savings-and-loan institutions were actually insolvent. With great prescience, Kopcke put the ultimate bailout cost at $30 billion to $200 billion.

The outer range of his cost estimate -- made almost nine years ago -- is topped by new estimates by government officials that put the price at $250 billion over the next 10 years, and more than $500 billion over 30 years.

Budget Director Richard Darman's new calculations place the price of the bailout -- just for the coming fiscal year -- at a staggering $41 billion to $68 billion.

Kopcke's calculation of insolvency was based on pricing assets and liabilities at realistic market levels -- not the phony, overvalued asset levels that S&Ls put forward (and federal regulators accepted) as a way to keep their doors open.

Sharply higher interest rates in the '80s not only raised dramatically the costs paid by the S&Ls to obtain deposits, but also lowered the real market value of many of their mortgages, written years before at lower rates. Higher interest rates deflate the real market value of a mortgage in exactly the same way they do a fixed-interest bond.

But under conventional accounting practices, an S&L was allowed to count its mortgages at face value regardless of changes in interest rates. As the '80s began, some mortgage loans were worth 50 cents on the dollar, or less.

Kopcke proposed a common-sense standard -- the then-current value of mortgages -- as a better barometer of the real net worth of thrift institutions. But obviously, an institution with a declining net worth based on actual market conditions would face the need to raise new capital. Using his current-value yardstick, Kopcke found that the average net worth of all thrift institutions worked out to a shocking minus 7 percent. He calculated that the reported net worth of most S&Ls ''will drop very close to zero during the 1980s.''

Had the federal regulators put a true value on the S&Ls' deteriorating assets in 1981, as Kopcke suggested, they probably would have averted the severity of the crisis as it developed. It would have required going to Congress for $30 billion to $50 billion, merely to bring the net worth of the industry back to zero from minus 7 percent. It would have been a cheap price to pay. Instead, brain-dead S&Ls were kept alive artificially by accounting gimmickry, enabling them to lose even more money.

Deregulation -- the Garn-St.Germain Act of 1982 -- speeded up decontrol of interest-rate ceilings, which was completed in 1986. It threw S&Ls into a competition for deposits with the burgeoning money-market mutual funds. Along with a relaxation in state laws, deregulation gave S&Ls freedom to expand into commercial and consumer loans, an area where -- as home-mortgage specialists -- they had no expertise.

Logic would at least have expanded government supervision as deregulation took effect. But insanely, the quality and quantity of supervision was allowed to deteriorate.

And squaring the circle of mistakes, the federal government removed any need for S&L managers to act in a prudent way by guaranteeing their depositors, through the Federal Savings and Loan Insurance Corp., the safety of accounts up to $100,000. The S&L managers now had every reason to throw caution to the winds -- and they did, with a vengeance.

Looking back at who should share the blame, a special word needs to be said about the role of the press. Kopcke's warning, and similar red flags raised by Prof. Edward J. Kane of Ohio State University, went generally unheeded in national stories, (although many newspapers were diligent in digging out and reporting on local S&L scandals).

There is little doubt that in reporting financial news, newspapers hesitate to be the bearer of bad news. Especially, we have been taught not to touch off a run on financial institutions. In being supercautious, we in the media have fallen into the trap of being un-Naderlike, more protective of the business and financial establishments than of consumer or taxpayer interests.

We can make amends, in part, by being vigilant in pressing for full disclosure and punishment of all who contributed to the mess -- including politicians who overstepped proper bounds. But beyond that, there is the need to underscore the urgency of a change in regulations relating to the $100,000 deposit ''ceiling.'' It should be lowered, in stages, to encourage individual depositors to seek out high-quality institutions.

Even more important, any insured-ceiling figure should apply to an individual's total deposits. As of now, anyone can break millions into $100,000 chunks and get federal insurance on each deposit at separate banks and S&Ls. Uncle Sam has no obligation to provide insurance for personal fortunes. That compounded the present disaster. It mustn't be allowed to happen again.