Writers Gary De Carlo, Dale Frashuer and Paul Leka from Bridgeport, Connecticut got together one afternoon to record a B-side for De Carlo's "better songs." They used part of an old song Frashuer and Leka wrote 8 years previously called "Kiss Him Good-bye," and slapped on a chorus without words, just "Na na" with an occasional "Hey, hey." There was no band, just the 3 of them with a spliced up drum track. By 5 am that morning they emerged from the studio to witness a fire with a lot of "steam" coming out of a manhole.
When Bob Reno of Mercury Records wanted to release the song as an A-side, De Carlo, Leka and Frashuer didn't want their names associated with the song, so Leka remembered the "steam" incident and used that for a group name. Ironically, De Carlo's other songs released under his name flopped while this "embarrassment" went to #1. He was so dismayed that he refused to record more Steam records; Paul Leka had to recruit other musicians to make up the group. (Thanks to Kent at Forgotten Hits