Administration Acts to Give S&Ls; Freer Rein : * Banking: The move, part of election-year crusade against red tape, allows thrifts to open branches anywhere in the nation. It sets up a confrontation with Congress.

The Bush Administration on Thursday took the first major step in an election-year crusade against government red tape, declaring that it will act unilaterally to allow savings and loan associations to open branches anywhere in the country.

It was a direct challenge to the Democratic Congress, which refused last year to remove legal barriers against interstate banking. The move was the most significant since the President announced a three-month moratorium on burdensome government regulations two months ago.

Pursuing the theme of confrontation, Vice President Dan Quayle told reporters that “this is a turf battle” between the White House and Congress. The legislators “don’t like it because we begin to assert our rightful jurisdiction over the federal bureaucracy.”

Quayle claimed that consumers will save $10 billion to $20 billion because of a lengthy list of regulations deferred or denied by the Administration since Jan. 28.

Toward that end, the Office of Thrift Supervision said Thursday that it would make official its controversial proposed rule to allow S&Ls; to move without hindrance across state lines. This step eliminates “needless regulatory burdens and red tape” on financial institutions and will make thrifts more efficient and competitive, the White House said in a statement.

The Administration claims that it has the authority to allow federally chartered thrifts to open branches in any state without congressional approval. The ruling means thrifts will be allowed to operate nationwide for the first time since the Great Depression.

The decision drew an immediate blast from the influential Independent Bankers Assn. of America, representing thousands of small community institutions, which helped defeat interstate banking last year. By declaring the nation an open market for thrifts, the White House “thumbs its nose at congressional prerogatives,” the bankers group said.

The aggressive step by the Office of Thrift Supervision also “contributes to the Administration’s congressional gridlock” on contentious issues such as funding the savings and loan cleanup, the bankers group said.

The House overwhelmingly rejected additional funding on Wednesday for the Resolution Trust Corp., the agency that seizes and disposes of hundreds of failed thrifts.

RTC Chairman Albert Casey said Thursday that each day’s delay in funding will cost the taxpayers $2.5 million because the agency pays for the cost of keeping insolvent thrifts open, instead of selling them to private investors. The agency will continue taking control of failed S&Ls;, he said, but will stop offering them to buyers.

“Without the certainty of funds, we cannot ask the business community to spend its capital . . . to bid on these institutions,” Casey said. The RTC needs the funds from Congress to cover losses at the S&Ls; to make them attractive to possible bidders.

No further votes on House funding for the RTC are likely until late next week. House Banking Committee Chairman Henry B. Gonzalez (D-Tex.) is waiting for indications that President Bush will get a majority of House Republicans to support the unpopular bill.

House Democrats rejected the measure after it became apparent during the voting that it would be supported by only a handful of Republicans.

Gonzalez warned that he may push legislation to reduce federal deposit insurance, which now protects deposits up to $100,000. If there is no backing for the S&L; cleanup, he said, “we may have no choice but to scale down deposit insurance, limit coverage and sharply reduce the exposure of the federal government when institutions fail.”

The Senate voted last week to give the RTC funding until April, 1993. But the House has refused to extend the funding deadline that expired Wednesday.

Congressional delay will hamper the RTC’s efforts to dispose of S&L; assets and reduce its work force, Casey warned. At least 1,000 jobs “will have to remain filled for at least several additional months,” he said.

Despite the intensity of the RTC funding dispute, the Administration will press ahead with its deregulation efforts, officials insisted.

Bureaucrats “were just pumping out regulations” until the President ordered the moratorium in late January, Quayle said. “It’s an incurable disease. They just want to go ahead and regulate.”

At the White House, “we’re fighting the dragons every day and slaying a few,” Quayle said. He said he is deciding whether to ask the President to extend the 90-day moratorium. “This is just the beginning,” Quayle said.

The White House also announced other regulatory relief for banks and thrifts, including modifying the definition of capital so that credit card servicing relationships and mortgage servicing rights can be counted.