A string of 600 bank failures during the past three years has drained so much cash from the fund that insures bank deposits that it will be insolvent by next year, U.S. Comptroller General Charles Bowsher said Friday.

Bowsher, testifying before the Senate Banking Committee, said his grim assessment was based on a preliminary audit by the General Accounting Office showing the Bank Insurance Fund holding reserves of between $2 billion and $5 billion.The Federal Deposit Insurance Corp., meanwhile, says the fund is worth $8.4 billion, according to unaudited figures presented last year, and calls the differing numbers "strictly an accounting issue."

Bowsher, who heads the General Accounting Office, the congressional watchdog agency, said it is highly probable that the fund will be insolvent by next year unless rebuilt.

"Paying for the failure of about 600 banks in the past three years has almost exhausted the fund's reserves," he said.

Bank reform legislation submitted by the administration last month would increase the FDIC's borrowing authority to $70 billion, $25 billion of which would come from the Federal Reserve.

The House Banking Committee was harshly critical of much of the reform measures, but even it agreed that a bailout is urgently needed.

"When GAO's good gray conservative auditors tell us that the fund may be overdrawn by at least $5 billion by the end of this year, the responsibility of the Congress and the administration to act is very clear," said Committee Chairman Henry Gonzalez, D-Texas.

Bowsher said the GAO is unhappy with that segment of the legislation because it would replace the fund's traditional reserve by a line of credit financed by the industry but, in effect, co-signed by the U.S. taxpayer.

As of Dec. 31, 1990, the GAO's preliminary estimate was that the insurance fund is worth between $2 billion and $5 billion.

"This level represents an all-time low, and the fund is in a precarious state," Bowsher said.

Bowsher said unless the fund is rebuilt, "it is highly probable that the fund will be insolvent at the end of 1991."

"We expect that the BIF fund balance at the end of 1991 will be somewhere between a high of $1 billion and a low of a negative $5 billion," Bowsher said.