Ethics Issues Lie At Core of Senate S&L Muddle

THE ethics issue that hung around the House of Representatives most of this year has moseyed unbidden across Capitol Hill to the Senate. Once again it is as welcome as a skunk at a political fund-raiser. Big-time political fund-raising and its implications lie at the core of the current Senate ethics problem. The fundamental ethics question: Is it proper for members of Congress to do special favors for constituents who are big campaign contributors that they would not do for the average constituent? If so, what are the appropriate guidelines?

``This is one of the great gray areas of politics that very much needs more standards,'' says Michael Josephson, president of the Josephson Institute for the Advancement of Ethics. ``How much is it appropriate for a politician to do on behalf of a constituent? And under what conditions?''

Five senators stand in the spotlight: Alan Cranston of California, Dennis DeConcini of Arizona, John Glenn of Ohio, John McCain of Arizona, and Donald Riegle Jr. of Michigan. Senator McCain is a Republican; the others are Democrats.

The five are accused of having pressured a federal regulator so that he would be lenient with financially troubled Lincoln Savings and Loan Association. Lincoln's owner, Charles Keating Jr., had made substantial contributions to the senators for causes they supported. The five have denied any intent to exert pressure, or any other impropriety. Lincoln S&L became insolvent.

Who did what to whom and why are questions for which several groups now seek answers: a California grand jury, the Senate Select Committee on Ethics, and the House Banking Committee. The first two operate in secrecy; in contrast the House committee has been very visible, with six publicized hearings.

The hearings are part courtroom: Three tiers of congressmen try to determine where truth and responsibility lie as passionate witnesses point fingers every which way.

But they are also part circus. Inside the high-ceilinged oval that is the hearing room members of Congress good-naturedly engage in Washington's most competitive sport: delivering quotes so picturesque that they guarantee a place on the evening news. Rep. Jim Leach (R) of Iowa calls Mr. Keating ``an economic pornographer.'' Rep. Toby Roth (R) of Wisconsin, says, ``Even Perry Mason would have to ask: Why did the bank board let Mr. Keating off the hook?''

When Keating is sworn in he exercises his prerogative under House rules to demand that no TV, still cameras, or sound equipment record his testimony. Once they are turned off he exercises his constitutional prerogative against self-incrimination and refuses to testify at all.

Committee members suspect much of the blame for the Lincoln insolvency's estimated $2 billion cost to taxpayers is the fault of M. Danny Wall, director of the federal government's Office of Thrift Supervision. Two years ago his field examiners in San Francisco had pressed him to take over Lincoln, but he did not.

Mr. Wall vigorously defends this decision, saying the San Francisco office had not provided sufficient facts to permit such drastic action. Wall says although Sens. DeConcini and Cranston and Rep. Carroll Hubbard (D) of Kentucky called him about Lincoln, no calls were improper and his decisions were not influenced by politics.

Yet the questions about ethics, political contributions, and law linger, and the five senators await the outcomes of the three probes. Major political contributors have always had special attention from the lawmakers they fund, says political scientist Suzanne Garment of American Enterprise Institute. ``Public finance seems to be down the road at some point.''