(MONEY Magazine) – The Treasury's initial estimate of the savings and loan bailout's cost to taxpayers and the industry was scary enough: $126 billion through 1999, on top of $39 billion committed already. Last year, the General Accounting Office upped the figure to $257 billion by 2021. But those estimates may turn out to be far from the mark. MONEY calculates that the bailout will cost taxpayers alone at least $530 billion over the next 30 years, more if the savings industry does not pay its full share. That equals $3,240 for every taxpayer in the U.S.

We made our estimate with the help of economist Warren Heller of Veribanc, a Wakefield, Mass. firm that rates the safety and soundness of financial institutions. Here's how we did it: We started with the $39 billion the government allotted in 1988 to protect depositors at 223 failed thrifts after previous S&L collapses overwhelmed the industry-financed Federal Savings and Loan Insurance Corporation. Currently, another 820 thrifts with $500 billion in deposits and other liabilities have failed or are expected to fail shortly. Losses from these thrifts have already hit $55 billion and are likely to swell by another $43 billion before the insolvencies are resolved. That would bring the total to $137 billion ($39 billion plus $55 billion plus $43 billion). That figure in turn assumes that when the bailout agency -- the Resolution Trust Corporation -- gets around to unloading the assets of failed thrifts, the selling prices will equal the value at which the assets are carried on the S&Ls' books. ''Not likely,'' says Heller. Congress has mandated that the RTC get no less than 95 cents on the dollar, but even that is probably unrealistic. And the market value of the holdings will decline over time, primarily because of neglect, perhaps at 3% a year. Assuming the RTC disposes of the assets by 1996 -- the year the agency is scheduled to go out of business -- at a constant pace, getting 90 cents on the dollar, the real gap between failed thrifts' assets and liabilities could turn out to be more than $200 billion. The savings industry is supposed to pay up to $54 billion of that sum (the GAO, however, doubts the industry can come up with that much); it has contributed about $20 billion so far. The taxpayer will be stuck with the rest. Now we come to the really big expense: financing. Going on the optimistic assumption that the industry contributes $54 billion, Congress will probably pay for the taxpayers' share of the rescue by borrowing $146 billion with long-term bonds. At a moderate 8% interest rate, borrowing costs would add another $385 billion, for a grand total of $530 billion -- or enough to buy a median priced $96,200 home for every man, woman and child in Indiana.

BOX:

Outlays to resolve failed thrifts $200 billion Maximum industry contribution $54 billion Interest expense at 8% $385 billion Total taxpayer cost over 30 years $530 billion Cost per taxpayer $3,240