Three New England governors, including Maine’s John McKernan, made a strong and successful appeal this week for federal regulators to relax their iron grip on the region’s banking industry.

In a classic overreaction to external events, junior-level banking regulators had been putting a steady squeeze on lending institutions in Maine, New Hampshire and Massachusetts.

Because of the national savings and loan crisis, which has its epicenter far outside the region, and the New England real estate slump, which left many indigenous banks dangling, holding the bag on bad commercial and development loans, a panic mentality appeared to be setting in where it was least expected and potentially, most destructive: among government regulators.

The S&L bailout and the run of sour loans at New England banks had caused regulators to so intimidate some lending institutions that the banks were shying away from regular commercial customers, forcing historically good risks to find money out of state.

Among the horror stories from the business community were those about commercial borrowers who actually were having notes called in by their banks because a smudge on the borrower’s payment record made the loan technically non-performing, and therefore, in the eyes of the government, a liability for the lending institution.

This chilling effect on lending and borrowing was threatening to undermine the bedrock health of the regional economy. The three govenors, McKernan, Michael Dukakis of Massachusetts and Judd Gregg of New Hampshire, understood that the New England economy could not rebound from its current difficulties if it was starved for capital. There also was a danger that a continued freeze on credit might aggravate conditions here and send the region into a tailspin economically.

As a result of their pilgrimage, the federal government has promised swift action to prevent a credit shut-off to the region’s small and medium-sized businesses. Based on the response of Robert Clarke, the comptroller of the currency and the country’s top banking regulator, and Alan Greenspan, chairman of the Federal Reserve Board, both listened attentively and sympathetically.

Clarke, according to McKernan, made a commitment to come to New England in June to personally counsel lenders and regulators against cutting off credit to good risks. Although the comptroller felt it was only natural for the system to tighten up somewhat in reaction to the problems in the banking industry, it clearly was inappropriate for the system to overreact with a “blanket shutting off of the faucet of lending.”

That is a reasonable and balanced response to the situation. The next step for Mr. Clarke: see that the message gets out to federal regulators.