Americans are outraged by the S&L crisis. Tens of thousands of innocent people have lost their money. Taxpayers will shell out hundreds of billions of dollars for the cleanup.

Americans are justifiably angry that many of the greedy S&L operators who have defrauded their customers are getting away scot-free. They are angry that the federal banking agencies did not act earlier and more forcefully to prevent this mess.Depositors will not lose their money, but investors - some of whom put their life savings into now worthless bonds - will have to go to court to recover even a fraction of their investments.

In response to the outrage, dozens of bills have been introduced in Congress to deal with the S&L crisis. But, some bills, drafted hastily and not subject to public hearings, have provisions that appear to protect the average person but would put a ball and chain on efforts to go after the S&L crooks.

One such idea considered by Congress in the past year is a particular favorite of the regulators whose inaction contributed to this mess.

This proposal would give the legal claims of the federal banking authorities against the officers, directors, lawyers, or accountants of failed S&Ls a "priority" over the claims of private citizens against these same individuals.

Proponents of this idea claim it is only fair to allow the federal government to be at the head of the line when any money is recovered from the S&L criminals. The justification is that it would save taxpayer money.

The idea has a nice ring to it, but it's a wolf in sheep's clothing. Why?

It would shield the wrongdoers from citizen's suits - no one would bring a citizen's suit if, later on, the federal bureaucrats could claim first dibs at any monies recovered.

This is not only unfair, but would increase S&L fraud and ultimately lead to a greater cost to the American taxpayers.

Recognizing this, numerous responsible organizations have publicly and vigorously opposed such a "priority." Congress and a U.S. Court of Appeals have already rejected the "priority" idea. The Securities and Exchange Commission has filed papers in court opposing the concept as well.

Let me illustrate why enacting a "priority" would be such a mistake. A retired couple who had been defrauded into investing their life savings in bonds issued by an S&L that later failed would lose any possibility of recovering their money if the FDIC first exhausted the assets of the wrongdoers.

In California, in the Lincoln S&L failure, 23,000 bondholders claim they were defrauded into purchasing worthless investments. Bond salesmen at Lincoln were told that the "weak, old and ignorant" were excellent prospects for these bonds. If a "priority" applied to their case, they would have no hope of recovery.

Second, a "priority" would harm enforcements and lead to more fraud. Since there would be little or no chance of recovery for a private party in a case in which the FDIC later asserted its "priority," individual citizens would no longer file fraud suits against S&L wrongdoers.

Because of limited resources, the Justice Department is going after the worst fraud cases first. If citizens have no incentive to sue, equally egregious "smaller" cases may never be prosecuted.

I say, let the citizens loose on the S&L thieves! "Private attorneys general" play a key role in the bank fraud enforcement scheme. Victims have the most incentive to bring suits, and these suits augment the efforts of the FDIC and the Department of Justice.

The SEC has stated that these private suits are an "essential supplement" to the enforcement scheme. If they are eliminated, there will be more, not less, fraud and a higher cost to taxpayers.