(FORTUNE Magazine) – CALL IT the Case of the Missing Megabillions. We all know by now that taxpayers will have to fork over a sultan's ransom to make good the losses of America's insolvent S&Ls -- $140 billion to $180 billion, according to the latest government estimates, and well over $500 billion, if you add on interest expense and the extra costs a recession might bring. But most of us don't have a clue as to where those dollars went. Enter Bert Ely, who runs an Alexandria, Virginia, consulting firm that specializes in financial institutions. Ely's breakdown of the components of the crisis, illustrated here, offers the most detailed unraveling of this mystery yet. Follow those footprints from this page to the next, and you quickly grasp his main message: The chorus of Congresspersons and commentators who talk as if most of that money were stolen are dead wrong. According to Ely, criminal fraud accounts for only 3% of the $147 billion that he calculates is the net present value of the S&L bailout. Says Ely: ''A lot of what people are calling fraud is a combination of stupidity, bad judgment, and desperation dealing.'' That becomes clearer when you hold a magnifying glass up to two of the most expensive S&L failures: Western Savings of Phoenix and Miami's Centrust Savings. For nearly 60 years Western was owned and run by the Driggs family, a close-knit, civic-minded Mormon clan with no previous history as financial daredevils. But once Congress gave thrifts the green light to make riskier real estate loans in 1982, they revealed a shocking eagerness to advance huge sums for pie-in-the-sky projects. Among their worst decisions was an out-of-state loan to the 25,000-acre Banning-Lewis Ranch in Colorado Springs. That ranch is now the largest single landholding of the U.S. government's Resolution Trust Corp., which took over Western Savings in 1989. By last May the portfolio that the Driggs family had amassed during their five-year binge was so battered by collapsing real estate prices that BankAmerica, which acquired Western's retail network from the RTC, kept only $220 million of its $2 billion in loans. Unloading the rest of those gold-plated office towers and condos, the RTC figures, will cost taxpayers $1.7 billion. Centrust Savings of Miami charted a different route to disaster. Instead of diversifying out of money-losing home mortgages into real estate, David Paul, who took charge of this troubled S&L in 1983, plunged heavily into junk bonds. When that market cratered last year, Paul's $1.3 billion portfolio, consisting largely of deals underwritten by Michael Milken and Drexel Burnham Lambert, was exposed as illiquid and overpriced. Unlike the upright Driggses, this highflying wheeler-dealer treated Centrust like his personal piggy bank. According to the RTC, he used the thrift's money to buy a $7 million yacht and finance his purchase of a home on Miami's exclusive La Gorce Island. Paul also squandered nearly $30 million on an art collection and spent lavishly on silver lobster crackers, Baccarat crystal, and gifts from Tiffany.

Scandalous? Of course. But even if federal investigators bring charges against Paul -- and so far he's merely under investigation -- what's at stake is just a small fraction of the estimated $1.7 billion price tag that the RTC puts on Centrust's failure. The big hit comes from Paul's legal, if imprudent, speculation in junk bonds.

As bad as the S&L debacle is, many commentators are making it look even worse than reality. In assessing the tab, most responsible analysts caution against lumping interest costs into the final tally. The $147 billion cited by Ely, for example, is his estimate of the check the government would have to write to close the books on all insolvent thrifts tomorrow. If you assume instead that the Treasury finances that spending by issuing long-term bonds, the bill, stretched out over 40 years, climbs well above $500 billion. To emphasize the waste, some writers compare that amount with the annual cost of, say, Medicaid spending ($41 billion) or AIDS research ($3 billion). But that's like comparing two houses using the list price for one and the price plus mortgage costs for the other. Strap 40 years of interest onto the $300 billion annual defense budget, and nobody, not even Jesse Helms, would vote for another B2 bomber. Just as unfair -- and even more innumerate -- is the oft-heard claim that the S&L losses will exceed the costs of World War II. This comparison makes the kindergarten error of failing to adjust historical numbers for inflation. Sure, the U.S. spent $360 billion between 1941 and 1945 waging World War II. But translate that into 1990 dollars, and it swells to more than $2.5 trillion -- and that's before adding in the enormous interest expenses generated by financing a global war. So by all means, get mad. After all, even without the extra hype, $5 billion in white-collar crime, compounded by billions more in dumb deals, still leaves plenty to feel angry about. But don't forget the even larger role that a host of conflicting or poorly thought out government decisions played. For example, many S&Ls, pursuing their historical role as sources of long-term, fixed-rate mortgages, would never have gotten into trouble had they not been whipsawed by double-digit inflation and the lifting of interest-rate ceilings on deposits in the late 1970s and early 1980s. Ely's analysis is a useful reminder that bad policies, rather than bad men, are what landed us in this mess to begin with.

BOX: Tracking $147 billion ... ... and how it grows -- Consultant Bert Ely calculates the government could resolve the S&L mess tomorrow by writing a check for $147 billion. Financing that sum over 40 years at 8.5%, however, adds $500 billion in interest and lifts the total to $647 billion. For a fair comparison with other government expenses, most experts say to ignore interest.

$25 BILLION START back in the late 1970s. When rising inflation sent interest rates skyward, many thrifts -- stuffed with low-interest, 30-year fixed-rate mortgages -- couldn't generate enough income to cover the costs of their deposits. By 1983 these institutions had racked up $25 billion in losses just from that interest-rate mismatch.

$28 BILLION TO help S&Ls find alternative sources of income, Congress in 1982 voted to let them finance riskier real estate projects. Many got carried away. When prices plunged, they lost $28 billion on their loans to empty Texas office towers, Florida condos, and other turkeys.

$14 BILLION A STEEP rise in the thrifts' average operating costs during the 1980s contributed some $14 billion to the eventual cost of the bailout. Spending on silver lobster crackers and European junkets didn't help. But the big-ticket item was investment in unneeded branches.

$14 BILLION TO finance their lending spree, financially shaky S&Ls consistently paid depositors a premium above market rates. Over seven years that extra half to three-quarters of a percentage point added up to $14 billion.

$5 BILLION THE Justice Department has so far charged more than 300 individuals in major S&L cases and convicted 231. But consultant Bert Ely's ballpark estimate is that crooks stole no more than $5 billion.

$6 BILLION LOSSES on non-real estate deals -- $3 billion from junk bonds and an equal amount from business and personal loans -- will boost the cost of the bailout by roughly $6 billion.

$12 BILLION BLAME this $12 billion on government inefficiency. It's an estimate of the losses from mistakes made during S&L sell-offs. In some cases regulators are taking so long to act that a deal's value drops sharply before completion. In others, they are selling rashly and giving private buyers costly -- and unnecessary -- incentives.

$43 BILLION AN insolvent S&L, by definition, owes more than it owns. By keeping hundreds of losers open rather than shutting them down in 1983, regulators ensured that S&Ls would continue to pay depositors interest they didn't have, cloaking their inadequacy behind government-approved accounting gimmicks. The interest: $43 billion.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: 1990 2030

CHART: NOT AVAILABLE CREDIT: SOURCE; RESOLUTION TRUST CORP., INC. CAPTION: THE MOST EXPENSIVE SELL-OFFS