The Keating Five [ scratched out ] Three [ scratched out ] One

IN its conclusion that two of the senators identified as the Keating Five merely ``exercised poor judgment,'' and that two others did nothing worse than ``gave the appearance of being improper,'' the Senate Ethics Committee itself gave an appearance of impropriety. Some critics are using stronger terms, like ``whitewash.'' The Keating Five - Sens. Alan Cranston, Dennis DiConcini, Donald Riegle, John Glenn, and John McCain - were accused of improperly interfering with federal thrift regulators on behalf of wheeler-dealer Charles Keating's Lincoln Savings and Loan in Irvine, Calif. The eventual collapse of Lincoln is expected to cost taxpayers $2 billion. Not coincidentally, the five lawmakers or organizations they control pocketed $1.3 million in campaign contributions from Keating.

After a special counsel's probe and its own hearings, the six-member, bipartisan panel reported last week that only Senator Cranston's actions warrant further investigation and possible censure by the entire Senate. (Cranston, who is ill, has already announced he will not run again next year.) The other cases were dismissed with a wrist slap.

Cranston's conduct clearly was the most improper; in at least four instances, he performed favors for Keating within days of receiving large donations. But by almost anyone's definition of probity, at least two other senators, DeConcini and Riegle, crossed an ethical line.

To its credit, the committee called on the Senate to devise written rules governing members' intervention with federal officials in behalf of constituents and contributors. It's long overdue that such actions be regulated by an ethical code.

Equally important, the panel acknowledged the need for reform in campaign-finance laws. It noted that 80 percent of the money contributed by Keating was ``soft money'' - donations to political action committees, political-education organizations, and voter-registration groups that, though nominally independent, are controlled by or exist to benefit specific lawmakers. It is imperative that Congress impose restrictions on such slush funds.

As the committee report says, ``The reputation and honor of our institution demand it.''