What was going on when I was born?

AMERICAN homeowners became worried last February when the Federal Consumer Product Safety Commission voted to ban urea-formaldehyde foam, a type of insulation that has been installed in about 500,000 homes in the United States since the mid-1970's. The safety commission said that the insulation posed ''an unreasonable risk of injury,'' and initial press reports indicated that the Federal ban, which has not yet taken effect, might significantly devalue 500,000 houses containing such insulation. The ban will prohibit future installations but will not require homeowners to remove urea-formaldehyde foam already in place. In Massachusetts, for example, where the state banned urea-formaldehyde foam in 1979, several real-estate agents reported that houses with the insulation were more difficult to sell. But, according to government officials, property assessors and agents and brokers in the New York area, it is still too early to tell what effect, if any, the proposed Federal urea-formadehyde ban will have on housing prices.

The State Legislature, in an extraordinary move, tonight approved a state budget of its own making. The Assembly and Senate acted over the firm opposition of Governor Carey, who threatened to veto portions of the $27 billion proposal as too expensive. The Governor has repeatedly warned that the budget could create a fiscal crisis akin to the one that disrupted state finances in 1975, when Mr. Carey first took office. The Legislature's action meant that the state would have a budget on its the books in time for its new fiscal year, which starts Thursday, and thus be able to pay its bills. But the Governor's opposition could make the final outlines of the budget a matter of dispute for weeks.

The Supreme Court today reinstated the murder conviction of a former Green Beret captain who was found guilty in 1979 of the murders of his wife and children at Fort Bragg, N.C., nine years earlier. Ruling 6 to 3, the Justices overturned an appellate court's decision that Dr. Jeffrey R. MacDonald'sconstitutional right to a speedy trial had been violated by the Justice Department's delay in indicting him after the Army brought and then dismissed charges against him. Soon after the Court announced its decision this morning, agents of the Federal Bureau of Investigation took Dr. MacDonald into custody at his home in Huntington Beach, Calif., and took him to a Federal prison in Los Angeles to resume serving a life sentence. He had been free on $100,000 bond, which a Federal judge revoked today, and had practiced medicine in Long Beach since he won his appeal in 1980.

The United States Gold Commission today formally rejected the use of gold in either the domestic or international monetary systems. The 17-member commission, after studying the question for more than eight months, concluded in its final report that, while there might be a future occasion when gold's role should be enlarged, ''the majority of us at this time favor essentially no change.'' The commission did, however, decide to recommend that Congress authorize the Treasury to mint a new gold ''coin,'' dubbed the American Eagle, that would provide an alternative to sending dollars abroad for investing in gold coins issued by such countries as South Africa, Mexico and Canada. The American Eagle would have no dollar denomination, would not be considered legal tender and would be exempt from both capital gains and sales taxes. It would be sold only for its gold content.

President Reagan said tonight that he was open to suggestions for altering his proposed budget for the fiscal year 1983, including ''possible'' cuts in military spending so long as they did no harm to the overall military buildup. But he steadfastly defended his economic policies and said he would reject any compromise budget that altered his plan to reduce the income tax by 10 percent in 1983. He said that he supported the ''concept'' of a Constitutional amendment to require a balanced budget, but that it would have to include a provision limiting tax increases. The President, appearing for the first time in his term in a news conference televised in prime-time viewing hours, was less emphatic in his opposition to any change in Social Security benefits in the 1983 budget.

President Reagan said tonight that because the Soviet Union had ''a definite margin of superiority'' over the United States in nuclear arms, he could not agree to proposals for an early freeze in atomic weapons. But he said he remained committed to seeking a negotiated agreement with the Russians for reducing nuclear weapons ''dramatically,'' and he called on Moscow ''to join with us now to substantially reduce nuclear weapons and make an important breakthrough for lasting peace on earth.'' In a nationally televised news conference from the East Room of the White House, the first in his Administration to be held at night, Mr. Reagan sought in an opening statement to counter pressure from those seeking a nuclear freeze in Soviet and American arsenals. He said in answer to a question that such a move would leave the Russians with an advantage and take away any incentive for them to negotiate a meaningful reduction. ''If they're out ahead and we're behind and we're asking them to cut down and join us in getting down to a lower level, there isn't much of an incentive,'' he said.

Companies buying oil from Nigeria have notified that country that they plan to phase out their purchases, according to a report yesterday by Opecna, the news agency of the Organization of Petroleum Exporting Countries. But, in response to strong pressure from Saudi Arabia and other OPEC members, the companies will continue to purchase oil through April, Opecna added. John Flint, chief spokesman for the Mobil Corporation, a major purchaser of Nigerian oil, denied that his company had told Nigeria that it would phase out its purchases. Mobil said in a statement that it had agreed to ship from Nigeria 135,000 barrels of oil a day in April. The company would not disclose its previous volumes, but analysts who keep track of Nigerian petroleum operations said that this was more than Mobil had planned.

President Reagan said he was open to changes in his proposed budget for the fiscal year 1983, including ''possible'' military cuts, but he defended his economic policy and said he would reject any compromises to alter his plan to reduce 1983 income taxes. (Page A1.) Prices paid to farmers for raw products fell 0.8 precent in March after rising in the two prior months, the Agriculture Department said. The drop pushed the overall average of farm prices 7.7 percent below the level of a year ago. (D1.)

Until recently, soaring prices united nearly everyone against inflation and behind the Federal Reserve Board's restrictive monetary policies to get the inflation rate down. Thanks in part to the Fed, inflation has indeed fallen sharply, but so has the economy, while interest rates have remained perilously high. Now there is a growing consensus that the Fed has overstayed its course, and many economists both in and out of Government profess fear that unless the Fed releases its death-like grip on money and credit, high rates are going to choke off economic recovery. Of course, high rates are also being attributed to record budget deficits, but interest rates have long been more directly influenced by the Fed. ''High interest rates are killing us,'' said Jay Schmiedeskamp, chief economist for the Gallup Organization. ''Right now we desperately need lower rates. That is the one thing every economist would agree on.''

A day after the judge in the Stouffer's Inn arson and murder trial told the prosecutor that he had failed to prove his case, the lawyers for the defendant said that they would call only two witnesses instead of the dozen or so originally scheduled. The prosecution called 42 witnesses over a four-week period. Judge Lawrence N. Martin Jr. of Westchester County Court said yesterday, in the absence of the jury, that the case against the defendant, Luis Marin, was based on ''speculation.'' This morning, he began the session by telling the jury that it would hear closing arguments on Monday.

''We're like the Russian church on the eve of the revolution, arguing about the design of our vestments.'' - Senator Mark O. Hatfield, on debate on tax benefit. (A24:4.)

An agreement to reschedule $2.4 billion in debt that Poland failed to pay 500 Western banks last year will be signed in Frankfurt next Tuesday, an official of the Dresdner Bank of West Germany said today. Hans Friderichs, chairman of the bank, said at Dresdner's annual news conference today that the banks had verified that Poland completed payment of $500 million of interest owed for 1981. The creditors had made payment of the overdue interest a condition for signing the agreement, which postpones for several years payment of most of the $2.4 billion in principal due last year.