Some Pieces Still Missing From Puzzling S&L Drama

THE stage is dark now in the largest hearing room at the Hart Senate Office Building: It's a two-week intermission at this paneled playhouse. The political drama that's already been running four weeks here seeks to discover the relationship between savings and loan owner Charles Keating and five United States senators.

The fundamental question the Senate Ethics Committee seeks to answer is whether a quid pro quo existed between Mr. Keating's contributions to the five and any actions by them to intercede with federal regulators on behalf of his S&L. Specifically, the committee is probing whether actions by any of the five violated Senate rules.

The curtain rises Jan. 2 on the next act, when the committee resumes its deliberations by hearing witnesses called by lawyers for the five senators.

The five all insist they have done nothing wrong. They are: Alan Cranston (D) of California, Dennis DeConcini (D) of Arizona, John Glenn (D) of Ohio, John McCain (R) of Arizona, and Donald Riegle (D) of Michigan.

Several of the six senators on the Ethics Committee find the story line of the play a puzzle. ``I'm still trying to put that puzzle together ... there's some pieces that don't quite fit,'' said a perplexed Sen. David Pryor (D) of Arkansas a few hours before the committee began its two-week recess Saturday afternoon.

One of the ill-fitting pieces is how the Lincoln Savings and Loan Association, which Keating controlled, could have obtained without high-level political pressure the favorable ruling that it did from the Home Loan Bank Board in May 1988. That ruling came one year after federal regulators were so disturbed by conditions at Lincoln that they recommended the Justice Department consider prosecution.

Former top Keating aide James Grogan testified over the weekend that during the intervening year he only sought help from Senator Cranston, and that the Californian often refused him.

Among other things the 1988 Bank Board ruling took enforcement out of the hands of regulators in San Francisco and resulted in delaying enforcement proceedings against Lincoln: ``It was basically very favorable to Lincoln,'' committee chairman Howell Heflin (D) of Alabama said.

``It's a mystery to me that that could have been done without substantial influence being brought by someone on the Home Loan Bank Board to get them'' to rule so favorably for Keating, Senator Heflin added.

Committee members will have to decide exactly how much weight to give to the testimony of Edwin Gray, former head of the bank board and main accuser of the five. Mr. Gray said he felt pressured by the four senators who asked him to a no-aides meeting on April 2, 1987, to complain about the treatment Lincoln was receiving from federal regulators. Yet Gray admitted that he had not prepared for the meeting, that it was he who recommended the senators meet on April 9 with federal regulators, and that he did not brief the regulators on what to expect.

Similarly, committee members will have to decide how to assess the testimony of regulator William Black, the first person to say he thought intervention by Cranston added to the government's ultimate cost when Lincoln failed. Author of an extremely detailed memorandum of the April 9 meeting, Mr. Black under cross-examination exhibited difficulty remembering some details and understanding the thrust of lawyers' questions.

During the month of testimony thus far the committee has heard witnesses charge that Keating was simultaneously dragging out an examiners' probe of his S&L by noncooperation, and complaining loudly to senators that the probe was taking too long.

Broader issues lie beyond the narrow question of whether any of the five senators violated Senate rules. One question is whether voters, who can watch daily on cable television, will conclude that the senators deserve reelection. (Cranston already has said he will retire.)

Another is whether the hearings will seriously affect the careers of the five while they remain in Congress. ``A big question,'' says consultant Burt Ely, ``is whether Riegle is going to be able to continue as chairman of the Senate Banking Committee.''

Finally, there are the issues of campaign finance reform and congressional intervention with federal regulators. ``No question there's a need for financing reform, a need for the Senate and the House members to act more judiciously in regulatory matters,'' says Robert Losey, a professor of business administration at American University.

Dr. Losey says the protestations of several senators ``that this is the way the game is played were self-serving and not very convincing. If this is the way the game is played, the game needs to change.''