Top officials from both the Bush administration and Wall Street are saying that major surgery is needed to treat the ills of the nation's banking and financial system.

And they stepped up their calls for action by Congress to deal with financial problems they say go beyond the current slump in the economy and the savings and loan crisis."The legal and regulatory structure of our financial system is outmoded, burdensome and inefficient," said Treasury Secretary Nicholas Brady, addressing the annual convention of the Securities Industry Association, Wall Street's main trade group. "Fundamental reforms are needed."

"The issue is not whether we should reform the financial system," asserted Richard Breeden, chairman of the Securities and Exchange Commission. "The question is how."

"We need to have a financial summit," said Gedale Horowitz, senior executive director of Salomon Brothers Inc., who took over as chairman of the SIA for 1991.

Their statements came after President Bush indicated his support for a drive to rewrite the rules under which American banks, investment firms and other financial businesses operate.

The Treasury is working on a detailed proposal, due out in January, for changes in the financial laws. Being examined is reform of the federal deposit insurance system, which has been cited by many observers as a key factor in the S&L crisis.

Brady also spoke of giving close scrutiny to decades-old rules that set barriers between banks and brokerage firms, and that restrict interstate activities by banks.

Prospects for early action on any of these ideas by Congress remain hazy, especially given the apparent onset of a recession and uncertainties raised by the showdown in the Persian Gulf.

But proponents of prompt action on financial reform say economic woes and competition from financial institutions based in other countries, among other things, are only likely to worsen the situation as time passes.