THE big news at Attorney General Janet Reno's White House press conference on May 2 was the reversal of policy on Cuban refugees. Another big story was the Oklahoma City investigation -- the arrest of two men whose movements seemed to coincide with those of suspect Timothy McVeigh. In passing, Ms. Reno announced that Larry Potts, acting deputy director of the Federal Bureau of Investigation, was being named to that job permanently on the strong recommendation of director Louis Freeh. She praised Mr. Potts as ''an extraordinary agent,'' and gave him high marks for his supervision of the Oklahoma City investigation, which looked a lot better that day than it has since.
That day the Potts appointment, which is not subject to Senate confirmation, was a little-noticed inside page story. Several days later came a huge double take. Hadn't Potts been in charge of the 1992 siege in Idaho when an FBI sharpshooter killed the wife of white separatist Randy Weaver? Didn't Deputy Attorney General Jamie Gorelick censure Potts for inadequate oversight? Wasn't Potts also in charge of the April 19, 1993, tank and tear-gas raid on the Branch Davidians in Waco, Texas, that ended with the compound in flames and more than 80 dead?
House Speaker Newt Gingrich seized upon an issue -- the Potts promotion seemed almost calculated to feed the paranoia of the militias that have made Idaho and Waco symbols of their hatred of government. On television, Mr. Gingrich said the Potts appointment would increase concerns about civil liberties and ''slow down the antiterrorist legislation.'' President Clinton responded that the country needs the antiterrorist bill now and nothing can justify turning it into ''a political football.'' But he did not address the Potts appointment.
It remains a mystery why the censured Potts would be promoted amid a raging controversy over Waco, so neuralgic an issue that it will lead to congressional hearings. I am told that Reno had been warned by at least one of her subordinates that this might be the result.
But the attorney general found herself in a dilemma. It was she, new to her job in April 1993, who had approved the plans for Waco after consulting FBI director William Sessions and his deputies, including Larry Potts. She had accepted their word that child abuse was going on inside the compound. In one of the meetings, according to an account in The New Yorker, ''someone had made the comment that David Koresh was beating babies.'' That was not substantiated by subsequent reports. A psychiatrist adviser to the FBI, Dr. Charles Perry of Texas Children's Hospital, told The New Yorker ''The FBI maximized things they knew would ring a bell with her.''
But, after the raid, Janet Reno became famous as the rare official who takes full responsibility for decisions. Her subordinates, whom she hardly knew, had presented a united front. After several times asking, ''Why now?'' she had given the green light for the Waco raid. Could she now penalize Larry Potts for a decision for which she had accepted responsibility? Especially when Louis Freeh, who wasn't there when it happened, expressed full confidence in Potts?
Did anybody consider that the Potts promotion would be like a red flag to the militias? Yes, but I'm told that the attorney general and the FBI director were determined not to cave in to those they call ''the crazies.''
So, now, with the bloom off the rose of his Oklahoma City investigation, Potts is at the center of a controversy that will further complicate the search for national consensus against terrorism.