Attorney General Griffin B. Bell has denied as "a patent libel" a report in a New York newspaper. The Village Voice, that in 1976 he had discussed with former U.S. Attorney John Stokes a pending investigation into Bert Lance's affairs.The Voice report was quoted in an article last Sunday in The Washington Post. Bell described the reports as "reckless disregard of the truth and a gross abuse of the First Amendment."

HOW IT BEGAN is simple enough - a seemingly routine letter from the President making a seemingly routine request of a friendly Senate committee. His budget director, Thomas Bertram Lance, had encountered a problem. In the President's words, it "has placed an undue financial burden on Mr. Lance." The matter could be easily resolved by modifying an earlier agreement providing that Lance would dispose of all his stock in a Georgia bank by the end of the year.

From those innocent beginnings 11 weeks ago in the sultry Washington summer flowed the events that have shaken the foundations of the Carter presidency, struck at the core of his pledges, raised questions about his judgement and standards, laid bare weaknesses in his inner circle of advisers, stirred partisan discord, aroused passions against the press, shamed the Senate and the U.S. investigatory processes and once again drawn the nation through a period of presidential crisis.

An improbable story for such small stakes, but no more unlikely than the possibility of a third-rate, bungled burglary topping a President.

THE LANCE AFFAIR was no Watergate, of course. In fact, "the Lance affair" is a misnomer. From beginning to end, it was equally the Carter affair. As the President now has made poignantly clear, he and Lance were almost inseparable, politically, personally, culturally. They were partners in the presidency. There may have been a few similarly close relationships in the past - Harry Hopkins to Franklin D. Roosevelt and Robert F. Kennedy to John F. Kennedy come to mind - but certainly Carter and Lance were an extraordinary White House team.

In a sense, they were like the Corsican Twins. You could not cut one without wounding the other.Compounding that pain was another element - the galling knowledge that the first Southern President in more than a century faced his first crisis over the ethical standards and competence of the most important of the fellow Georgians he had brought to Washington.

Nor is the Watergate comparison invidious. Watergate and the political climate it created made it possible for Jimmy Carter to run for President, and win, by promising higher standards in government. His administration was to be better. "All we see is waffling, inaction, attempts to shift blame back and forth and to talk problems away," he said as a candidate. And, again: "The confidence in our own government must be restored, but too many officials do not deserve that confidence."

Yet by the time the Lance case had moved on to its inevitable conclusion, there stood the President of the United States playing a painfully old scene, defending a friend in trouble. But now it was Jimmy Carter's presidency and Jimmy Carter's friend and Jimmy Carter himself who was being called to account, firmly but respectfully, for putting personal loyalties above political promises.

His close aides, too - those who had followed him since the early, nationally invisible days in Georgia - were reacting similarly. To them, it was also a case of coming to the aid of a friend.

Indeed, their actions were reinforcing an impression about the Lance affair: Jimmy Carter and his personal entourage viewed it first, and almost entirely, as a fight. Their man was under pressure; they had to fight for him. It was as simple as that.

For instance, consider the scene in Press Secretary Jody Powell's White House office at 6 o'clock last Wednesday night, half an hour after the President had finished his emotional press conference. Powell and Hamilton Jordan, the gold-dust twins of Jimmy Carter's campaign and presidency, were holding forth to a circle of reporters. The gathering was not unusual; reporters often meet in Powell's quarters to clarify press conference points. But this time, as if emphasizing what the Lance affair already had amply demonstrated, Powell was joined by Jordan: In crisis, Carter's top circle of Georgians grows closer. Jordan ambled through the White House to stand by Powell, bringing two cans of beer to sip during the questioning.

The questions kept coming back to the same subject: Why was Lance's decision to resign, in the President's phrase, "the right decision?" Hadn't Carter again strongly expressed his complete faith in Lance's ability and integrity? Hadn't he said Lance had done nothing wrong? Hadn't he said Lance was irreplaceable? Hadn't Lance said he could continue to be an effective budget director? So why, after all the weeks of struggle, the multiple blunders and miscalculations, had they finally decided it was right for Bert to go?

"For my part," Powell said, "there is a limit to what you can ask a man to put his family through just out of a desire to serve in government. There is a point where it hardly seems worth it. And I suspect I would have reached that point long before he did."

Like the President, Powell and Jordan admitted to no mistakes. They said they had no regrets about the critical decision - which both had pressed for - to have the President fly by helicopter to Washington from Camp David, Md., on Aug. 18 to endorse Lance warmly with the words, "Bert, I'm proud of you." What was at stake throughout the affair, they said, was Lance's personal reputation. Silence from the President, or anything less than a full endorsement, would have undercut Lance's chances to fight back in public. Had the President not made that Aug. 18 statement, Powell said, "it would have been difficult for Bert to survive long enough to get a chance to defend himself."

More conversation, and then Powell was saying, yes, "it was a tough time for everybody." Was it Carter's greatest crisis? "Certainly, it was personally the most difficult for him and I suspect for most of us," Powell said.

Personally the most difficult . . . That tells what they felt, but it doesn't explain why. To try and understand that, you have to look toward the "special relationship," as the President put it, that has existed between Jimmy Carter and Bert Lance, and how that relationship has now affected Carter's presidency.

THE STORY OF how Lance and Carter met has been told often - Carter, the ambitious young South Georgia politician, speaking at some gathering under an oak tree; Lance, the ambitious young North Georgia banker, impressed by the speech and offering his personal support. That story, and accounts of how the two shared similar values growing out of small-town, rural Southern life and common Christian convictions, has the sweet flavor of a Sunday school tale.

What those stories fail to explain is why Carter found Lance so appealing. For all of Lance's demonstrated charm, gregariousness and capacity for hard work, he seems by his self-portrait and the accounts of others a thoroughly conventional type - an entrepreneur unencumbered by ideas, in the grander sense of that word, without any clear political or philosophical vision of a better America.

Lance himself has given perhaps the most intriguing clues about their relationship. Last Dec. 10, six weeks before Carter's inauguration, Lance met with Washington Post editors. While talking about Carter, he said: "I think I understand him probably as well as anybody in the country, with the exception of Rosalynn. And I understand how he does things, and we don't spend a lot of time talking about the weather and that sort of thing . . ." Then he added: "I like to beat him on the tennis court. He's a poor loser . . . He doesn't like to lose any anything. I don't either, so that's the reason that we have a good relationship."

Lance and Carter were political - and economic - allies for years. When Carter became governor in 1970, on his second try, Lance became his highway director. He too over what has been known in Georgia as the "Department of Politics and Paving," transforming it into the Department of Transportation under Carter's ballyhooed reorganization of the Georgia state government.

Four years later, Lance ran for governor, attempting to succeed Carter. He reportedly spent about $1 million in the effort and incurred a complicated succession of debts that have yet to be entirely paid. But he lost, narrowly missing the Democratic primary runoff.

That political race may also have comeback to haunt Carter in his recent difficulties. There are those who say Jimmy Carter believes he was responsible for pushing Lance to make that effort - and that most, if not all, of Lance's subsequent financial troubles were a result of that campaign. In this view, Carter feels more responsibility for what later engulfed Lance than has been previously understood.

But Lance lost, and he became a big-city banker instead of a governor. He moved from Calhoun, Ga., to Atlanta in January, 1975, to become president of the National Bank of Georgia. A few months later, along with several business colleagues and some multimillion-dollar loans, Lance bought a controlling interest in the bank. His path was set.

Bert Lance was a gregarious promoter with big ideas. And by all accounts, the National Bank of Georgia's executive committee was eager to get him, even to the point of agreeing to buy a plane for his use. Lancelot & Co., a partnership consisting of Lance and his wife, LaBelle, just happened to have one for sale: an eight-year-old Beechcraft Queen Qir it had bought for $80,000 a year earlier. Lance had used it as a campaign plane, then collected rent on it from the bank for a few months. Finally, he sold it to the bank for $120,000 in July, 1975.

Lance's bank expansion plans included an "aggressive" agricultural loan program. Among the beneficiaries was Jimmy Carter. The National Bank of Georgia's 1975 annual report, which looks like a garish news magazine, summed up this transaction with a startling centerfold display of a huge peanut and a headline reading: NBG GOES NUTS IN PLAINS

"Because of The National Bank of Georgia's aggressiveness in agricultural financing, it's not surprising that one of their clients is a major peanut producer in Southwest Georgia," the report said of the banks $4.7 million in loans to the Carter family business. "Carter's Warehouse in Plains, Georgia, produced 6,000 tons of peanuts in 1975, and expects, with NBG's help, to double that production in 1976 . . . According to Billy Carter, president of Carter's Warehouse, the future is bright indeed for peanuts in Georgia and the U.S."

BERT LANCE CAME to Washington in a style befitting Sinclair Lewis' chronicles of Main Street and American boosterism. He arrived in the capital in a rented limousine. The front license plate read "BERT," the back one "LANCE." He was big, flamboyant, affable, a 6-foot-4-inch, 245-pound package of earnestness and guile. Among the mostly colorless Carter crew, Lance was the gargantuan figure, part Babbitt, part Gantry, part disarming prototype of the good old country boy.

"I can tell already we're going to like Washington," LaBelle Lance told a Time correspondent in their elegant Georgetown townhouse. "This is the biggest thrill of my life," her husband agreed.

If the Lances took to Washington, Washington also clearly took to them. Not, as everyone knows, because of Lance's special personal qualities, but because of that "special relationship" he had. He had the power, and obviously was going to use it. He had access. He had influence. When he ventured an opinion, Jimmy Carter listened. They joked together. They played tennis together. At times they prayed together.

In no time at all, Bert Lance became the most visible and important presence of all the newcomers and insiders. He sailed through his confirmation hearings. Whatever has been said since, there was no inclination on the part of any major politician of either party to challenge him.

When the final Senate vote was called, only one man was curmudgeonly enough to cast a dissenting vote.

Democratic Sen. Wiliam Proxmire of Wisconsin, chairman of the Senate Banking Committee, opposed Lance because of what he called Lance's "appallingly barren background" in the federal government. "He has had none - zero, zip, zilch, not one year, not one week, not one day" of experience in Washington, Proxmire protested of the man about to be put in charge of the $400 billion federal budget.

In the months that followed, Lance assumed greater prominence. He was Jimmy Carter's emissary to business, to Capitol Hill, overseer of the Carter effort to reorganize the vast federal bureaucracy. Next to the President, Lance's voice carried the most weight. Among the Georgians around Carter, he was first among equals. His power grew, his reach expanded as the Carter administration wound through the crucial early months that so often define and place a special stamp on all presidencies. But all that time, Bert Lance was carrying heavy personal . . . and private . . . liabilities. In the end they broke him and dealt the President personally, and the cast of Carter's administration, a heavy blow.

THE LANCE AFFAIR had its beginnings last fall, shortly after the election. Lance himself had remained in the background during the campaign, acting as a key adviser, but basically unknown to the public. Then, on Nov. 15, 1976, Carter and Lance huddled at the Plains, Ga., home of the President-elect. Lance was Carter's first choice for a high-level appointment.

What happened then was to become critical later. Carter wanted Lance to take a Cabinet-level post, reportedly either the Office of Management and Budget (OMB) or the Treasury. He also wanted Lance to divest himself "prudently and as soon as possible" for his huge stock holdings in the National Bank of Georgia in order to avoid any conflicts of interest.

Lance alluded to some of the problems he had had at the Calhoun First National Bank, where he was still chairman of the board. But both he and Carter have implied that it was a rather cursory account of those problems. According to the President, the only thing that stuck in his mind was that Lance had overdrawn on his campaign accounts at the bank during the 1974 governor's race.

For his part, Lance has said he couldn't remember mentioning the overdrafts he and his wife and family had run up over a four-year period, to as much as $450,000. Nor could he recall telling Carter about the cease-and-desist agreement that the Office of the Comptroller of the Currency had insisted upon. Lance and other directors of the bank had signed it as a "voluntary," but in fact dictated, agreement in the Comptroller's Atlanta regional offices the previous December. It was still in force, complete with embarrassing restrictions directed specifically at one Thomas Bertram Lance.

Earlier this month, in testimony before the Senate Governmental Affairs Committee, Lance suggested the agreement didn't even occur to him during his November meeting with Carter. "It really wasn't that important to me," he insisted! "The criticisms had been cleared up."

In fact, the situation was much more serious - and potentially explosive - for a Carter cabinet member. The Justice Department was still investigating Lance's campaign overdrafts for possible criminal violations. An FBI agent assigned to an embezzlement case involving a Calhoun bank official named Billy Lee Campbell had come across a "pattern" of other overdrafts on the personal accounts of Lance, his wife and additional bank officials and relatives. The agent had tried to subpoena those records that August, only to be put off by the bank President Atkins Henderson.

The search had been frustrated, but not abandoned. As for the cease-and-desist agreement, a federal bank examiner had made a special visit Oct. 21-22, just before the presidential election, to the Calhoun bank. He found "some improvement," but not enough, in his view, to justify lifting of the agreement.

The bank's loan portfolio was still a "problem" and needed to be restructured, the examiner, Robert Ashley Lee, told a special IRS investigation team in an affidavit last month. Lance's protestations notwithstanding, Lee's report "did not give the bank a 'clean bill of health.'" Had he been asked, Lee "would have recommended the Agreement be continued." But no one had asked him.

The discomfiting agreement was lifted anyway, immediately after a Nov. 22, 1976, visit by Lance to the offices of Donald Tarleton, director of the Atlanta regional office of the Comptroller of the Currency. Tarleton has sworn that "while I can understand how sinister motives can be placed on these facts, I wish to state that at no time - on Nov. 22 or otherwise - was I ever requested to rescind the agreement by Mr. Lance." He has testified that Lance just dropped by to advise him confidentially that Carter was going to name him budget director and to tell him of the plans for picking a temporary replacement at the National Bank of Georgia.

Lance has allowed that the agreement was mentioned "in an offhand manner," but Tarleton has insisted that he couldn't even remember that much.

The veracity of both men has challenged, openly and directly. Disturbed by Tarleton's congressional testimony, another federal bank official, Michael M. Patriarca, came forward last weekend and told IRS investigators of a dinner conversation he had with Tarleton Feb. 23, 1977, while both men were in Miami on official business. According to Patriarca, Tarleton told him of the Lance visit last Nov. 22 and quoted Lance as having stated essentially:

"Jimmy wants me to be head of the OMB, and I want to go into it with a clear record, so I just wondered if you could see your way clear to lift the agreement on Calhoun."

Whatever impelled him, Tarleton moved quickly, formally rescinding the restrictions on the Calhoun bank same day as the Lance visit. Shortly after Lance left his office, Tarleton had a chat with his regional counsel, Gary Pannell.

"Mr. Tarleton asked what OMB was all about" and Pannell told him, Pannell recounted later. "Mr. Tarleton indicated an announcement regarding the appointment would be made in the next couple of days." Tarleton then advised Pannell that he wanted to lift the agreement between the board of directors of the Calhoun National Bank and the Comptroller's Office, Pannell recalled. "Mr. Tarleton did not provide any explanation of why he wanted to lift the Agreement, he said."

MOST SENIOR OFFICIALS of the Comptroller's Office in Washington were, by their account, disturbed by Tarleton's action. Some were quite angry.

Then-acting Comptroller Robert Bloom has said he was outraged - but not enough, or reflection, to try to countermand the move. Far from it. Bloom, who had hopes of being named Comptroller in the Carter administration, made a number of helpful gestures on Lance's behalf in the weeks that followed: drafting a proposed innocuous-sounding press release for Lance about the Calhoun bank's problems that skirted some crucial points (such as referral of the campaign overdraft case to the Justice Department); keeping the text of the cease-and-desist agreement from FBI agents conducting a background investigation; consulting with Lance and his advisers and even informing the OMB director-designate of a letter Bloom was sending to the Senate Governmental Affairs Committee for its confirmation hearings last January.

Although aides showed Bloom derogatory information concerning Lance's performance at the National Bank of Georgia while Bloom was composing the letter, the acting Comptroller concluded it by pronouncing Lance "well qualified to serve as the Director of the Office of Management and Budget."

"Mr. Bloom . . . wanted to be kind to Mr. Lance," Lance's lawyer, Sidney Smith, recalled of one telephone conversation they had. Smith said Bloom also told him "he was at a 'dead end' unless he could be Comptroller."

The man who finally got the job, Comptroller John Heimann, remembers Bloom "chastising himself for what he had done" and saying "something to the effect that when he thought back as to why he did it, he guessed he did it to win some 'brownie points.'"

The bureaucratic bowing and scraping continued through the winter. Alerted by Bloom last Dec. 1 to the existence of the Justice Department investigation into the Lance campaign overdrafts at the Calhoun Bank. Lance attorney Smith found a sympathetic ear at the U.S. Attorney's office in Atlanta. Asked by Smith about the status of the case, U.S. Attorney John Stokes took prosecutor Jeffrey Bogart off it the same day, Dec. 1, and pronounced it closed the next day, Dec. 2. The action effectively squelched any thought of a parallel investigation into the personal overdrafts by the Lances, their relatives and other officials of the Calhoun Bank.

BY NOW IT WAS public knowledge that Lance had been tapped to be OMB Director. Although the formal announcement had yet to be made, The Los Angeles Times reported Lance's selection on Nov. 24, and Carter aides followed up with a virtual confirmation. U.S. Attorney Stokes, a Nixon appointee who had hopes of staying on his job until November of 1977, when he could have nailed down an $800-a-month pension, knew who Bert Lance was.

After closing the investigation, one of Stokes' aides recalled Stokes telling her that "he should call 'Jimmy and Bert' and tell them what he had done." In any case, he told Lance's lawyer.

Acting-Comptroller Bloom's Dec. 1 phone calls also served as a fresh alert to others. Lance took part in several of the conversations, which appear to have centered mainly on the press release Bloom had drafted. Other participants were attorney Smith and John Moore, a member of the same law firm, Alston, Miller & Gaines, who was responsible for drawing up the conflict-of-interest guidelines for the incoming Carter administration.

"During the conversations that took place that day all the calls in which he (Moore) participated were on a conference speaker telephone wherein each of them was able to hear what was said," IRS investigators quoted Moore as stating in an affidavit. "Some of the matters discussed during the conference calls between the involved parties concerned loan portfolio difficulties, defalcation by a former bank officer, overdrafts in accounts maintained by the Lance for Governor Campaign Committee during 1974, and the overdrafts of certain other accounts by persons related to Mr. Lance. They also discussed the facts and circumstances surrounding the issuance of the Agreement on the Calhoun First National Bank, and the subsequent progress by the bank to effect corrective measures set forth in the Agreement which resulted in the recision of the Agreement."

Now president of the federal Export-Import Bank, Moore further recalled that "they prepared a press release for Mr. Lance's use and Mr. Lance called President-elect Carter and briefed him on the contents of the press release. They all spoke with Mr. Carter on the conference speaker phone and he (Moore) inferred that Mr. Carter was knowledgeable of the matters discussed. He does not recall whether Mr. Carter was made aware of the referral to the Justice Department, but it is possible."

At some point, Lance left his lawyers in their Atlanta office to go to Plains."I met with President-elect Carter that afternoon (Dec. 1) at approximately 2:00 p.m.," Lance said in an affidavit. "I discussed the press release matter with Mr. Carter, but I do not recall if I had a copy of the release."

Whatever Carter learned does not seem to have disturbed him. Back in Atlanta the next day, U.S. Attorney Stokes closed the Justice Department investigation. And back in Plains on the next day, Dec. 3, Jimmy Carter announced his choise of Bert Lance on nationwide television.

UNSETTLING QUESTIONS about that choice found their way into print early the next month. On Jan. 8, The Washington Post carried an Associated Press story about the Justice Department investigation. On Jan. 11, The New York Times reported that the inquiry had been dropped by Stokes the day before Carter's appointment of Lance. On Jan. 16, another New York Times story recounted the Calhoun bank's habit - criticized by federal bank examiners in 1973 - of permitting depositors, including Lance's wife, LaBelle, and relatives of other bank officials "to make repeated overdrafts of their accounts while continuing to honor the checks and not press for quick repayment."

But the stories didn't make the front pages. They deserved to be pursued. Instead, they were buried and forgotten.

Any incoming President gets a free ride from the press, even on issues that cry out for scrutiny. It is somehow bad form after a long campaign to suggest out loud that the winter is less than perfect.As Bloom said in his own defense, "No one likes to be the skunk at the garden party."

But the bureaucracy is not the only segment of Washington that fawns over a new regime. The Senate - from individuals charged with particular responsibility for judging the fitness of a specific nominee, to the body itself with its constitutional duties of presidential advice and consent - is almost always accommodating at first. In the Lance case, notably so.

As Republican Sen. Charles Percy of Illinois said late last week after Lance's resignation, "Research showed the case closed. There were glowing letters from the U.S. Attorney. If the Comptroller of the Currency gave him such a beautiful, glowing tribute, why should we complain? Our staff were not trained investigators to go out and research deeply. The things we were told totally removed any question of why we shouldn't go ahead and confirm."

The newspaper accounts, with all the implicating material they contained, were virtually ignored. The FBI background report into Lance wasn't completed until Jan. 31 - after his confirmation. The senators didn't even read it until this month, when they were preparing for their televised hearings.

But the real reason for the failue was more complicated. That "special relationship" again - and the special awareness it bred in this politically sensitive and cynical capital. As one senator said last Friday: "If ever there was anyone Carter should have known - including Ham Jordan - it was Lance."

In the weeks following Lance's confirmation, a critical report on Lance surfaced here and there. On Feb. 7, The Village Voice, under a headline about "Cracker Credit," spoke of "a possible scandal involving the Carter administration." The story suggested LaBelle Lance's overdrafts had run as high as $250,000. It added that "FBI agents were vexed" at being called off the inquiry by U.S. Attorney Stokes, who, "in turn, supposedly received a telephone call from the new Attorney General Griffin Bell."

White House Press Secretary Powell was said to have brushed aside requests for information by remarking. "We don't think it's a problem." He was also quoted as saying: "A lot of small-town banks work this same way. If your customers are folks of good family and reputation, you just don't bounce checks on them."

In May, Time magazine gave some of Lance's heavy debts national publicity. His chief source of income, it reported, was the dividends from the early 200,000 shares of National Bank of Georgia stock he had acquired. But the bank was starting to run into problems. It was writing off bad real estate loans and facing the prospect of having to discontinue its dividends.

Still the Lance affair slumbered, just beneath the surface, as spring gave way to summer.

The catalyst came July 11 in the form of that seemingly routine letter from Jated, agreement in the Comptroller's Atlanta regional offices the previous December. It was still in force, complete with embarrassing restrictions directed specifically at one Thomas Bertram Lance.

Earlier this month, in testimony before the Senate Governmental Affairs Committee, Lance suggested the agreement didn't even occur to him during his November meeting with Carter. "It really wasn't that important to me," he insisted! "The criticisms had been cleared up."

In fact, the situation was much more serious - and potentially explosive - for a Carter cabinet member. The Justice Department was still investigating Lance's campaign overdrafts for possible criminal violations. An FBI agent assigned to an embezzlement case involving a Calhoun bank official named Billy Lee Campbell had come across a "pattern" of other overdrafts on the personal accounts of Lance, his wife and additional bank officials and relatives. The agent had tried to subpoena those records that August, only to be put off by the bank President Atkins Henderson.

The search had been frustrated, but not abandoned. As for the cease-and-desist agreement, a federal bank examiner had made a special visit Oct. 21-22, just before the presidential election, to the Calhoun bank. He found "some improvement," but not enough, in his view, to justify lifting of the agreement.

The bank's loan portfolio was still a "problem" and needed to be restructured, the examiner, Robert Ashley Lee, told a special IRS investigation team in an affidavit last month. Lance's protestations notwithstanding, Lee's report "did not give the bank a 'clean bill of health.'" Had he been asked, Lee "would have recommended the Agreement be continued." But no one had asked him.

The discomfiting agreement was lifted anyway, immediately after a Nov. 22, 1976, visit by Lance to the offices of Donald Tarleton, director of the Atlanta regional office of the Comptroller of the Currency. Tarleton has sworn that "while I can understand how sinister motives can be placed on these facts, I wish to state that at no time - on Nov. 22 or otherwise - was I ever requested to rescind the agreement by Mr. Lance." He has testified that Lance just dropped by to advise him confidentially that Carter was going to name him budget director and to tell him of the plans for picking a temporary replacement at the National Bank of Georgia.

Lance has allowed that the agreement was mentioned "in an offhand manner," but Tarleton has insisted that he couldn't even remember that much.

THe veracity of both men has challenged, openly and directly. Disturbed by Tarleton's congressional testimony, another federal bank official, Michael M. Patriarca, came forward last weekend and told IRS investigators of a dinner conversation he had with Tarleton Feb. 23, 1977, while both men were in Miami on official business. According to Patriarca, Tarleton told him of the Lance visit last Nov. 22 and quoted Lance as having stated essentially:

"Jimmy wants me to be head of the OMB, and I want to go into it with a clear record, so I just wondered if you could see your way clear to lift the agreement on Calhoun."

Whatever impelled him, Tarleton moved quickly, formally rescinding the restrictions on the Calhoun bnk same day as the Lance visit. Shortly after Lance left his office, Tarleton had a chat with his regional counsel, Gary Pannell.

"Mr. Tarleton asked what OMB was all about" and Pannell told him, Pannell recounted later. "Mr. Tarleton indicated an announcement regarding the appointment would be made in the next couple of days." Tarleton then advised Pannell that he wanted to lift the agreement between the board of directors of the Calhoun National Bank and the Comptroller's Office, Pannell recalled. "Mr. Tarleton did not provide any explanation of why he wanted to lift the Agreement, he said."

MOST SENIOR OFFICIALS of the Comptroller's Office in Washington were, by their account, disturbed by Tarleton's action. Some were quite angry.

Then-acting Comptroller Robert Bloom has said hewas outraged - but not enough, on reflection, to try to countermand the move. Far from it. Bloom, who had hopes of being named Comptroller in the Carter administration, made a number of helpful gestures on Lance's behalf in the weeks that followed: drafting a proposed innocuous-sounding press release for Lance about the Calhoun bank's problems that skirted some crucial points (such as referral of the campaign overdraft case to the Justice Department); keeping the text of the cease-and-desist agreement from FBI agents conducting a background investigation; consulting with Lance and his advisers and even informing the OMB director-designate of a letter Bloom was sending to the Senate Governmental Affairs Committee for its confirmation hearings last January.

Although aides showed Bloom derogatory information concerning Lance's performance at the National Bank of Georgia while Bloom was composing the letter, the acting Comptroller concluded it by pronouncing Lance "well qualified to serve as the Director of the Office of Management and Budget."

"Mr. Bloom . . . wanted to be kind to Mr. Lance," Lance's lawyer, Sidney Smith, recalled of one telephone conversation they had. Smith said Bloom also told him "he was at a 'dead end' unless he could be Comptroller."

The man who finally got the job, Comptroller John Heimann, remembers Bloom "chastising himself for what he had done" and saying "something to the effect that when he thought back as to why he did it, he guessed he did it to win some 'brownie points.'"

The bureaucratic bowing and scraping continued through the winter. Alerted by Bloom last Dec. 1 to the existence of the Justice Department investigation into the Lance campaign overdrafts at the Calhoun Bank. Lance attorney Smith found a sympathetic ear at the U.S. Attorney's office in Atlanta. Asked by Smith about the status of the case, U.S. Attorney John Stokes took prosecutor Jeffrey Bogart off it the same day, Dec. 1, and pronounced it closed the next day, Dec. 2. The action effectively squelched any thought of a parallel investigation into the personal overdrafts by the Lances, their relatives and other officials of the Calhoun Bank.

BY NOW IT WAS public knowledge that Lance had been tapped to be OMB Director. Although the formal announcement had yet to be made, The Los Angeles Times reported Lance's selection on Nov. 24, and Carter aides followed up with a virtual confirmation. U.S. Attorney Stokes, a Nixon appointee who had hopes of staying on his job until November of 1977, when he could have nailed down an $800-a-month pension, knew who Bert Lance was.

After closing the investigation, one of Stokes' aides recalled Stokes telling her that "he should call 'Jimmy and Bert' and tell them what he had done." In any case, he told Lance's lawyer.

Actin-Comptroller Bloom's Dec. 1 phone calls also served as a fresh alert to others. Lance took part in several of the conversations, which appear to have centered mainly on the press release Bloom had drafted. Other participants were attorney Smith and John Moore, a member of the same law firm, Alston, Miller & Gaines, who was responsible for drawing up the conflict-of-interest guidelines for the incoming Carter administration.

"During the conversations that took place that day all the calls in which he (Moore) participated were on a conference speaker telephone wherein each of them was able to hear what was said," IRS investigators quoted Moore as stating in an affidavit. "Some of the matters discussed during the conference calls between the involved parties concerned loan portfolio difficulties, defalcation by a former bank officer, overdrafts in accounts maintained by the Lance for Governor Campaign Committee during 1974, and the overdrafts of certain other accounts by persons related to Mr. Lance. They also discussed the facts and circumstances surrounding the issuance of the Agreement on the Calhoun First National Bank, and the subsequent progress by the bank to effect corrective measures set forth in the Agreement which resulted in the recision of the Agreement."

Now president of the federal Export-Import Bank, Moore further recalled that "they prepared a press release for Mr. Lance's use and Mr. Lance called President-elect Carter and briefed him on the contents of the press release. They all spoke with Mr. Carter on the conference speaker phone and he (Moore) inferred that Mr. Carter was knowledgeable of the matters discussed. He does not recall whether Mr. Carter was made aware of the referral to the Justice Department, but it is possible."

At some point, Lance left his lawyers in their Atlanta office to go to Plains. "I met with President-elect Carter that afternoon (Dec. 1) at approximately 2:00 p.m.," Lance said in an affidavit. "I discussed the press release matter with Mr. Carter, but I do not recall if I had a copy of the release."

Whatever Carter learned does not seem to have disturbed him. Back in Atlanta the next day, U.S. Attorney Stokes closed the Justice Department investigation. And back in Plains on the next day, Dec. 3, Jimmy Carter announced his choise of Bert Lance on nationwide television.

UNSETTLING QUESTIONS about that choice found their way into print early the next month. On Jan. 8, The Washington Post carried an Associated Press story about the Justice Department investigation. On Jan. 11, The New York Times reported that the inquiry had been dropped by Stokes the day before Carter's appointment of Lance. On Jan. 16, another New York Times story recounted the Calhoun bank's habit - criticized by federal bank examiners in 1973 - of permitting depositors, including Lance's wife, LaBelle, and relatives of other bank officials "to make repeated overdrafts of their accounts while continuing to honor the checks and not press for quick repayment."

But the stories didn't make the front pages. They deserved to be pursued. Instead, they were buried and forgotten.

Any incoming President gets a free ride from the press, even on issues that cry out for scrutiny. It is somehow bad form aftr a long campaign to suggest out loud that the winter is less than perfect. As Bloom said in his own defense, "No one likes to be the skunk at the garden party."

But the bureaucracy is not the only segment of Washington that fawns over a new regime. The Senate - from individuals charged with particular responsibility for judging the fitness of a specific nominee, to the body itself with its constitutional duties of presidential advice and consent - is almost always accommodating at first. In the Lance case, notably so.

As Republican Sen. Charles Percy of Illinois said late last week after Lance's resignation, "Research showed the case closed. There were glowing letters from the U.S. Attorney. If the Comptroller of the Currency gave him such a beautiful, glowing tribute, why should we complain? Our staff were not trained investigators to go out and research deeply.The things we were told totally removed any question of why we shouldn't go ahead and confirm."

The newspaper accounts, with all the implicating material they contained, were virtually ignored. The FBI background report into Lance wasn't completed until Jan. 31 - after his confirmation. The senators didn't even read it until this month, when they were preparing for their televised hearings.

But the real reason for the failue was more complicated. That "special relationship" again - and the special awareness it bred in this politically sensitive and cynical capital. As one senator said last Friday: "If ever there was anyone Carter should have known - including Ham Jordan - it was Lance."

In the weeks following Lance's confirmation, a critical report on Lance surfaced here and there. On Feb. 7, The Village Voice, under a headline about "Cracker Credit," spoke of "a possible scandal involving the Carter administration." The story suggested LaBelle Lance's overdrafts had run as high as $250,000.It added that "FBI agents were vexed" at being called off the inquiry by U.S. Attorney Stokes, who, "in turn, supposedly received a telephone call from the new Attorney Gneral Griffin Bell."

White House Press Secretary Powell was said to have brushed aside requests for information by remarking. "We don't think it's a problem." He was also quoted as saying: "A lot of small-town banks work this same way. If your customers are folks of good family and reputation, you just don't bounce checks on them."

In May, Time magazine gave some of Lance's heavy debts national publicity. His chief source of income, it reported, was the dividends from the early 200,000 shares of National Bank of Georgia stock he had acquired. But the bank was starting to run into problems. It was writing off bad real estate loans and facing the prospect of having to discontinue its dividends.

Still the Lance affair slumbered, just beneath the surface, as spring gave way to summer.

The catalyst came July 11 in the form of that seemingly routine letter from Jimmy Carter to Democratic Sen. Abraham Ribicoff, chairman of the Senate Governmental Affairs Committee. Carter asked the committee's consent to set aside the Dec. 31, 1977 deadline for the sale of Lance's NBG stock.Its price had dropped sharply since Lance acquired it in 1975 and 1976; in the President's view, a forced sale would pose "an undue financial burden" on Lance.

Bert Lance then owed a variety of banks some $5 million, including $3.4 million to the First National Bank of Chicago, which held the Georgia bank's stock as collateral. His private problems were about to become public.

IT WAS THE WORST Washington summer in memory - record heat, record air pollution alerts - and the first after years of successive crises beginning with Vietnam and running through Watergate and its aftermath that seemed "normal" from a news standpoint. It did not turn out that way. After only six months of relatively smooth sailing and accompanying public acclaim, the Carter administration hit its rock.

The crisis came gradually. A day after Carter sent his letter to Ribicoff, a new Comptroller of the Currency took his oath of office. John G. Heimann had been "aware of allegations from various quarters that T. Bertram Lance, Director, Office of Management and Budget, prior to his assumption of that office, may have committed infractions of laws or regulations relating to national banks." The Office of Comptroller of the Currency regulates national banks. John Heimann was now the man in charge.

On July 14, two days after he took office, Heimann quietly ordered an inquiry into Lance's banking affairs.

Meanwhile, the Ribicoff committee was widely expected to rubber-stamp the President's request to set aside Lance's deadline for the sale of his stock. Indeed, the committee scheduled a hearing for July 22 to do just that - but here the press became a factor.

At this point a number of news stories raising questions about Lance began to appear. William Safire, The New York Times columnist and former Nixon speech-writer, was especially critical. Then, on July 21, The Washington Post published a story raising questions about the timing of Lance's $3.4 million loan from the First National Bans personal reputation. Silence from the President, or anything less than a full endorsement, would have undercut Lance's chances to fight back in public.Had the President not mad that Aug. 18 statement, Powell said, "it would have been difficult for Bert to survive long enough to get a chance to defend himself."

More conversation, and then Powell was saying, yes, "it was a tough time for everybody." Was it Carter's greatest crisis? "Certainly, it was personally the most difficult for him and I suspect for most of us," Powell said.

Personally the most difficult . . . That tells what they felt, but it doesn't explain why. To try and understand that, you have to look toward the "special relationship," as the President put it, that has existed between Jimmy Carter and Bert Lance, and how that relationship has now affected Carter's presidency.

THE STORY OF how Lance and Carter met has been told often - Carter, the ambitious young South Georgia politican, speaking at some gathering under an oak tree; Lance, the ambitious young North Georgia banker, impressed by the speech and offering his personal support. That story, and accounts of how the two shared similar values growing out of small-town, rural Southern life and common Christian convictions, has the sweet flavor of a Sunday school tale.

What those stories fail to explain is why Carter found Lance so appealing. For all Lance's demonstrated charm, gregariousness and capacity for hard work, he seems by his self-portrait and the accounts of others a thoroughly conventional type - an entrepreneur unencumbered by ideas, in the grander sense of that word, without any clear political or philosophical vision of a better America.

Lance himself has given perhaps the most intriguing clues about their relationship. Last Dec. 10, six weeks before Carter's inauguration, Lance met with Washington Post editiors. While talking about Carter, he said: "I think I understand him probably as well as anybody in the country, with the exception of Rosalynn. And I understand how he does things, and we don't spend a lot of time talking about the weather and that sort of thing . . . " Then he added: "I like to beat him on the tennis court. He's poor loser . . . He doesn't like to lose at anything. I don't either, so that's the reason that we have a good relationship."

Lance and Carter were political - and economic - allies for years. When Carter became governor in 1970, on his second try, Lance became his highway director. He took over what has been known in Georgia as the "Department of Politics and Paving," transforming it into the Department of Transportation under Carter's ballyhooed reorganization of the Georgia state government.

Four years later, Lance ran for governor, attempting to succeed Carter. He reportedly spent about $1 million in the effort and incurred a complicated succession of dibts that have yet to be entirely paid. But the lost, narrowly missing the Democratic primary runoff.

That political race may also have come back to haunt Carter in his recent difficulties. There are those who say Jimmy Carter believes he was responsible for pushing Lance to make that effort - and that most, if not all, of Lance's subsequent financial troubles were a result of that campaign. In this view, Carter feels more responsibility for what later engulfed Lance than has been previously understood.

But Lance lost, and he became a big-city banker instead of a governor. He moved from Calhoun, Ga., to Atlanta in January, 1975, to become president of the National Bank of Georgia. A few months later, along with several business colleagues and some multimillion-dollar loans, Lance bought a controlling interest in the bank. His path was set.

Bert Lance was a gregarious promoter with big ideas.And by all accounts, the National Bank of Georgia's executive committee was eager to get him, even to the point of agreeing to buy a plane for his use. Lancelot & Co., a partnership consisting of Lance and his wife, LaBelle, just happened to have one for sale: an eight-year-old Beechcraft Queen Air it had bought for $80,000 a year earlier. Lance had used it as a campaign plane, then collected rent on it from the bank for $120,000 in July, 1975.

Lance's bank expansion plans included an "aggressive" agricultural loan program. Among the beneficiaries was Jimmy Carter. The National Bank of Georgia's 1975 annual report, which looks like a garish news magazine, summed up this transction with a startling centerfold display of a huge peanut and a headline reading: NBG GOES NUTS IN PLANTS

"Because of The National Bank of Georgia's aggressivencess in agricultural financing, it's not surprising that one of their clients is a major peanut producer in South-West Georgia," the report said of the bank's $4.7 million in loans to the Carter family business. "Carter's Warehouse in Plains, Georgia, produced 6,000 tons of peanuts in 1975, and expects, with NBG's help, to double that production in 1976 . . . According to Billy Carter, president of Carter's Warehouse, the future is bright indeed for peanuts in Georgia and the U.S."

BERT LANCE CAME to Washington in a style befitting Sinclair Lewis' chronicles of Main Street and American boosterism. He arrived in the capital in a rented limousine. The front license plate read "BERT," the back one "LANCE." He was big, flamboyant, affable, a 6-foot-4-inch, 245-pound package of earnestness and guile. Among the mostly colorless Carter crew, Lance was the gargantuan figure, part Bannitt, part Gantry, part disarming prototype of the good old country boy.

"I can tell already we're going to like Washington," LaBelle Lance told a Time correspondent in their elegant Georgetown townhouse. "This is the biggest thrill of my life," her husband agreed.

If the Lances took to Washington, Washington also clearly took to them. Not, as everyone knows, because of Lance's special personal qualities, but because of that "special relationship" he had. He had the power, and obviously was going to use it. He had access.He had influence. When he ventured an opinion, Jimmy Carter listened. They joked together. They played tennis together. At times they prayed together.

In no time at all, Bert Lance became the most visible and important presence of all the newcomers and insiders. He sailed through his confirmation hearings. Whatever has been said since, there was no inclination on the part of any major politician of either party to challenge him.

When the final Senate vote was called, only one man was curmudgeonly enough to cast a dissenting vote. Democratic Sen. William Proxmire of Wisconsin, chairman of the Senate Banking Committee, opposed Lance because of what he called Lance's "appallingly barren background" in the federal government. "He has had none - zero, zip zilch, not one year, not one week, not one day" of experience in Washington, Proxmire protested of the man about to be put in charge of the $400 billion federal budget.

In the months that followed, Lance assumed greater prominence. He was Jimmy Carter's femissary to business, to Capitol Hill, overseer of reorganize the vast federal bureaucracy. Next to the President, Lance's voice carried the most weight. Among the Georgians around Carter, he was first among equals. His power grew, his reach expanded as the Carter administration wound through the crucial early months that so often define and place a special stamp on all presidencies. But all that time, Bert Lance was carrying heavy personal . . . and private . . . liabilities. In the end they broke him and dealt the President personally, and the cast of Carter's adminstration, a heavy blow.

THE LANCE AFFAIR had its beginnings last fall, shortly after the election. Lance himself had remained in the background during the campaign, acting as a key adviser, but basically unknown to the public. Then, on Nov. 15, 1976, Carter and Lance huddled at the plains, Ga., home of the President-elect. Lance was Carter's first choice for a high-level appointment.

What happened then was to become critical later. Carter wanted Lance to take a Cabinet-level post, reportedly either the Office of Management and Budget (OMB) or the Treasury. He also wanted Lance to divest himself "prudently and as soon as possible" of his huge stock holdings in the National Bank of Georgia in order to avoid any conflicts of interest.

Lance alluded to some of the problems he had had at the Calhoun First National Bank, where he was still chairman of the board. But both he and Carter have implied that it was a rather cursory ac count of those problems. According to the President, the only thing that stuck in his mind was that Lance had overdrawn on his campaign accounts at the bank during the 1974 governor's race.

For his part, Lance has said he couldn't remember mentioning the overdrafts he and his wife and family had run up over a four-year period, to as much as $450,000. Nor could he recall telling Carter about the cease-and-desist agreement that the Office of the Comptroller of the Currency had insisted upon. Lance and other directors of the bank had signed it as a "voluntary," but in fact dicated, agreement in the Comptroller's Atlanta regional offices the previous December. It was still in force, complete with embarrassing restrictions directed specifically at one Thomas Bertram Lance.

Earlier this month, in testimony before the Senate Governmental Affairs Committee, Lance suggested the agreement didn't even occur to him during his November meeting with Carter. "It really wasn't that important to me," he insisted. "The criticisms had been cleared up."

In fact, the situation was much more serious - and potentially explosive - for a Carter cabinet member. The Justice Department was still investigating Lance's campaign overdrafts for possible criminal violations. An FBI agent assigned to an embezzlement case involving a Calhoun bank official named Billy Lee Campbell had come across a "pattern" of other overdrafts on the personal accounts of Lance, his wife and additional bank officials and relatives. The agent had tried to subpoena those records that August, only to be put off by bank President Atkins Henderson.

The search had been frustrated, but not abandoned. As for the cease-and-desist agreement, a federal bank examiner had made fa special visit Oct. 21-22, just before the presidential election, to the Calhoun bank. He found "some improvement," but not enough, in his view, to justify lifting of the agreement.

The bank's loan portfolio was still a "problem" and needed to be restructured, the examiner, Robert Ashley Lee, told a special IRS investigation team in an affidavit last month Lance's protestations not notwithstanding, Lee'a report "did not give the bank a 'clean bill of health.'" Had he been asked, Lee "would have recommended the Agreement be continued." But no one had asked him.

The discomfiting agreement was lifted anyway, immediately after a Nov. 22, 1976, visit by Lance to the offices of Donald Tarleton, director of the Atlanta regional office of the Comptroller of the Currency. Tarleton has sworn that "while I can understand how sinister motives can be placed on these facts, I wish to state that at no time - on Nov. 22 or otherwise - was I ever requested tjo rescind the agreement by Mr. Lance." He has testified that Lance just dropped by to advise him confidentially that Carter was going to name him budget director and to tell him of the plans for picking a temporary replacement at the National Bank of Georgia.

Lance has allowed that the agreement was mentioned "in an offhand manner," but Tarleton has insisted that he couldn't even remember that much.

The veracity of both men has been challenged, openly and directly. Disturbed by Tarieton's congressional testimony, another federal bank official, Michael M. Patriarca, came forward last weekend and told IRS investigators of a dinner convesation he had with Tarleton Feb. 23, 1977, while both men were in Miami on official business. According to Patriarca, Tarleton told him of the Lance visit last Nov. 22 and quoted Lance as having stated essentially:

"Jimmy wants me to be head of the OMB, and I want to go into it with a clear record, so I just woundered if you could see your way clear to lift the agreement on Calhoun."

Whatever impelled him, Tarleton moved quickly, formally rescinding the rescinding the restrictions on the Calhoun bank same day as the Lance visit. Shortly after Lance left his office, Tarleton had a chat with his regional counsel, Gary Pannell.

"Mr. Tarleton asked what OMB was all about" and Pannell told him, Pannell recounted later. "Mr. Tarleton indicated an announcement regarding appointment would be made in the next couple of days." Tarleton then advised Pannell that he wanted to lift the agreement between the board of directors of the Calhoun National Bank and the Comptroller's Office, Pannell recalled. "Mr. Tarleton did not provide any explanation of why he wanted to lift the Agreement, he said."

MOST SENIOR OFFICIALS of the Comptroller's Office in Washington were, by their account, disturbed by Tarleton's action. Some were quite angry.

Then-acting Comptroller Robert Bloom has said he was outraged - but not enough, on reflection, to try to countermand the move. Far from it. Bloom, who had hopes of being named Comptroller in the Carter administration, made a number of helpful gestures on Lance's behalf in the weeks that followed: drafting a proposed innocuous-sounding press release for Lance about the Calhoun bank's problems that skirted some crucial points (such as referral of the campaign overdraft case to the Justice Department); keeping the text of the cease-and-desist agreement from FBI agents conducting a background investigation; consulting with Lance and his advisers and even informing the OMB director-designate of a letter Bloom was sending to the Senate Governmental Affairs Committee for its confirmation hearings last January.

Although aides showed Bloom derogatory information concerning Lance's performance at the National Bank of Georgia while Bloom was composing the letter, the acting Comptroller concluded it by pronouncing Lance "well qualified to serve as the Director of the Office of Management and Budget."

"Mr. Bloom . . . wanted to be kind to Mr. Lance." Lance's lawyer, Sidney Smith, recalled of one telephone conversation they had. Smith said Bloom also told him "he was at a 'dead end' unless he could be Comptroller."

The man who finally got the job, Comptroller John Heimann, remembers Bloom "chastising himself for what he had done" and saying "something to the effect that when he thought back as to why he did it, he guessed he did it to win some 'brownie points."

The bureaucratic bowing and scraping continued through the winter.Alerted by Bloom last Dec. 1 to the existence of the Justice Department investigation into the Lance campaign overdrafts at the Calhoun Bank. Lance attorney Smith found a sympathetic ear at the U.S. Attorney's office in Atlanta. Asked by Smith about the status of the case, U.S. Attorney John Stokes took prosecutor Jeffrey Bogart off it the same day, Dec. 1, and pronounced it closed the next day, Dec. 2. The action effectively squelched any thought of a parallel investigation into the personal overdrafts by the Lances, their relatives and other officials of the Calhoun Bank.

BY NOW IT WAS public knowledge that Lance had been tapped to be OMB Director. Although the formal announcement had yet to be made, The Los Angeles Times reported Lance's selection on Nov. 24, and Carter aides followed up with a virtual confirmation. U.S. Attorney Stokes, a Nixon appointee who had hopes of staying on his job until November of 1977, when he xould have nailed down an $800-a-month pension, knew who Bert Lance was.

After closing the investigation, one of Stokes' aides recalled Stokes telling her that "he should call 'Jimmy and Bert' and tell them what he had done.' In any case, he told Lance's lawyer.

Acting-Comptroller Bloom's Dec. 1 phone calls also served as a fresh alert to others. Lance took part in several of the conversations, which appear to have centered mainly on th press release Bloom had drafted. Other participants were attorney Smith and John Moore, a member of the same law firm, Alston, Miller & Gaines, who was responsible for drawing up the conflict-of-interest guidelines for the incoming Carter administration.

"During the conversations that took place that day all the calls in which he (Moore) participated were on a conference speaker telephone wherein each of them was able to hear what was said," IRS investigators quoted Moore as stating in an affidavit. "Some of the matters discussed during the conference calls between the involved parties concerned loan portfolio difficulties, defalcation by a former bank officer, overdrafts in accounts maintained by the Lance for Governor Campaign Committee during 1974, and the overdrafts of certain other accounts by persons related to Mr. Lance. They also discussed the facts and circumstances surrounding the issuance of the Agreement on the Calhoun First National Bank, and the subsequent progress by the bank to effect corrective measures set forth in the Agreement which resulted in the recision of the Agreement."

Now president of the federal Export-Import Bank, Moore further recalled that "they prepared a press release for Mr. Lance's use and Mr. Lance called President-elect Carter and briefed him on the contents of the press release. They all spoke with Mr. Carter on the conference speaker phone and he ( Moore ) inferred that Mr. Carter was knowledgeable of the matters discussed. He does not recall whether Mr. Carter was made aware of the referral to the Justice Department, but it is possible."

At some point, Lance left his lawyers in their Atlanta office to go to Plains. "I met with President-elect Carter that afternoon (Dec. 1) at approximately 2:00 p.m.," Lance said in an affidavit. "I discussed the press release matter with Mr. Carter, but I do not recall if I had a copy of the release."

Whatever Carter learned does not seem to have disturbed him.Back in Atlanta the next day, U.S. Attorney Stokes closd the Justice Department investigation. And back in Plains on the next day, Dec. 3, Jimmy Carter announced his choice of Bert Lance on nationwide television.

UNSETTLING QUESTIONS about that choice found their way into print early the next month. On Jan. 8, The Washington Post carried an Associated Press story about the Justice Department investigation. On Jan. 11, The New York Times reported that the inquiry had been dropped by Stokes the day before Carter's appointment of Lance. On Jan. 16, another New York Times story recounted the Calhoun bank's habit - criticized by federal bank examiners in 1973 - of permitting depositors, including Lance's wife, LaBelle, and relatives of other bank officials "to make repeated overdrafts of their accounts while continuing to honor the checks and not press for quick repayment."

But the stories didn't make the front pages. They deserved to be pursued. Instead, they were buried and forgotten.

Any incoming President gets a free ride from the Press, even on issues that cry out for scrutiny. It is somehow bad form after a long campaign to suggest out loud that the winner is less than perfect. As Bloom said in his own defense, "No one likes to be the skunk at the garden party."

But the bureaucracy is not the only segment of Washington that fawns over a new regime. The Senate - from individuals charged with particular responsibility for judging the fitness of a specific nominee, to the body itself with its constitutional duties of presidential advice and consent - is almost always accommodating at first. In the Lance case, notably so.

As Republican Sen. Charles Percy of Illinois said late last week after Lance's resignation, "Research showed the case closed. There were glowing letters from the U.S. Attorney. If the Comptroller of the Currency gave him such a beautiful, glowing tribute, why should we complain? Our staff were not trained investigators to go out and research deeply. The things we were told totally removed any question of why we shouldn't go ahead and confirm."

The newpaper accounts, with all the implicating material they contained, were virtually ignored. The FBI background report into Lance wasn't completed until Jan. 31 - after his confirmation. The senators didn't even read it until this month, when they were preparing for their televised hearings.

But the real reason for the failure was more complicated. That "special relationship" again - and the special awareness it bred in this politically sensitive and cynical capital. As one senator said last Friday: "If ever there was anyone Carter should have known - including Ham Jordan - it was Lance."

In the weeks following Lance's confirmation, a critical report on Lance surfacedf here and there.On Feb. 7. The Village Voice, under a headline about "Cracker Credit,"[TEXT OMITTED FROM SOURCE]