When National Bank of Washington failed last month, William S. Ogden called his old friend Robert Strauss to ask if Strauss's Washington law firm could take on the bank's legal work.

Ogden, put in charge of the bank by federal regulators, needed a law firm quickly, and Strauss, former chairman of the Democratic National Committee, agreed without hesitation that his firm -- Akin, Gump, Strauss, Hauer & Feld -- was available.

A team of attorneys headed by John J. Kendrick, the lead banking partner in the firm's Washington office, went to work on NBW, soon to be taken over by the Federal Deposit Insurance Corp.

But there was something about the legal team that Ogden didn't know: Kendrick, who divides his time between Akin, Gump's Dallas and Washington offices, had recently filed for personal bankruptcy in Dallas, saying he owed nearly $16 million to creditors, including banks that the FDIC had taken over.

Kendrick's law firm says there was no conflict in his working for NBW, and that he is no longer working on the NBW case. But Ogden and an FDIC official said they would not have hired Kendrick had they known of his personal financial problems. And congressional staffers say he is an example of someone who slipped through the cracks in federal rules for cleaning up the S&L and banking crisis.

After Congress passed legislation last year to resolve the thrift crisis, federal regulators adopted rules to restrict who could work for the Resolution Trust Corp., the agency charged with disposing of the assets of failed savings and loans.

The FDIC later adopted the same rules for troubled banks. Among the rules that both agencies follow is a prohibition on hiring or doing business with anyone who has caused a thrift or bank to lose more than $50,000.

Among Kendrick's creditors were failed banks and S&Ls that were under the control of the FDIC and the RTC. Kendrick invested in several financial institutions, including Texas-based Merchant's State Bank -- where he was a part-owner and director -- and FirstSouth, an Arkansas thrift that at the time of its 1986 collapse was the most costly S&L failure in history.

Kendrick borrowed millions of dollars from more than a dozen Texas banks and S&Ls. When asked at a creditors meeting in Dallas earlier this month what the loans were for, Kendrick replied that he didn't know what several were for, according to court records. At another point in the hearing he said he was borrowing from one bank to pay off another.

The main reason for Kendrick's bankruptcy filing was the failure of Merchant's State Bank, which he and other family members bought, he said.

"I invested in Texas and my investments hadn't worked out as planned," said Kendrick. "My personal investments shouldn't affect my ability to perform legal services. In fact, they make me a better attorney."

But the FDIC, which took over NBW and sold its deposits to Riggs National Bank, doesn't necessarily agree. "Normally, we wouldn't use an attorney who's in default on a loan owed to the FDIC," said Doug Jones, FDIC deputy general counsel. Jones hesitated, then added, "if we knew." He said that only principals of firms must notify the FDIC of such cases.

Ogden, who notified both agencies of his decision to hire Akin, Gump, said he didn't know of Kendrick's problems. "I'm sure they {the regulators} have many, many rules that I'm not aware of," Ogden said.

Ogden said he would not have hired Kendrick if he had known his situation. "I would have depended on Bob Strauss to have told me if there was any possible conflict of interest."

"I would not see anything wrong if we were working for the FDIC or any branch of the government," Strauss said. He said the rules do not apply to Kendrick because he was hired by Ogden, who worked for an agency that has not adopted the rules -- the Office of the Comptroller of the Currency (OCC).

Strauss added that he hadn't given any thought to whether Kendrick's personal financial situation might conflict with the business of his client, NBW. "Banks have a right to employ us," he said.

"Ogden works for us ... but we absolutely had nothing to do with the hiring of Mr. Kendrick," said Ellen Stockdale, a spokeswoman for the OCC. She said the agency does not have any policies that would affect an attorney working for the federally appointed managers of banks that are about to be taken over.

Staff members for the House Banking Committee argue that the arrangement violated the spirit of the law, if not the letter. Committee Chairman Henry B. Gonzalez (D-Tex.) has said he is concerned that the ethics rules be the same among government agencies.