THE SENATE Banking Committee today takes up the nomination of Robert H. McKinney to be chairman of the Federal Home Loan Bank Board, and the issues involved here are worth examining in conjunction with case of Mr. Lance. Taken together, these two cases go along way toward defining a sensible public policy on the thorny question of conflict of interest. To see why requires a closer look at both the public responsibilities of the FHLBB and the private interests of Mr. McKinney.

The FHLBB is one of those oddities in the government that is invested by law with regulatory and supervisory powers, but recieves no money from Congress; in that sense it is not quite like an ordinary regulatory agency. But all of its support comes from its member institutions: thousands of state and federally chartered savings and loan associations. It controls more than $400 billion in assets and is the major private source of funds to pay for building and buying homes. In this sense of being totally absorbed with one industry it is quite like other regulatory agencies - at least insofar as conflict-of-interest considerations are concerned. If its chairman, for example, retains a financial stake in the savings and loan business, there is no way for him to avoid a continuing, chronic conflict of interest, for there is almost no part of his public work, on any given day, that will not somehow directly or indirectly affect the welfare of a savings and loan association.

This brings us to Mr. McKinney, by all acounts a nice, hard-working fellow, active in civic affairs and much admired in his native Indianapolis.He was a classmate of the President's at the Naval Academy and ran the Indiana Democratic campaign - which could be how he came to the attention of the White House for the job. It doesn't matter. What does matter is that he is the chairman (as a reader points out in a letter on this page today, we mistakenly identified him in an earlier editorial as the president) of the First Federal Savings and Loan Association of Indianapolis. In addition, Mr. McKinney owns a sizeable amount of stock in a corporation of which he is also chairman and which deals primarily in life insurance and building supplies. This same corporation holds 25 per cent of another company that holds $35 million in mortgages. Finally, Mr. McKinney is a senior partner in a law firm that represents numerous real-estate and financial interests and that serves as general counsel to First Federal. In the past, Mr. McKinney has argued that maintaining such positions and such interests would not necessarily conflict with his being chairman of the FHLBB.

We disagree. It strikes us as altogether too much conflicting entanglement. So the first thing we would want to learn from today's hearings is how much untangling Mr. McKinney is prepared to do. We would suggest some other questions, having to do with Mr. McKinney's views on "redlining" - the practice of discrimination in mortage lending in inner-city neighborhoods. From all acounts, Mr. McKinney's record on this issue is, to say the least, disturbing.

This is not by any means to say that Mr. McKinney's past business connections - as long as those that are in conflict with his public responsibilities become things of the past, through careful divestiture - are necessarily disqualifying. The same way be said for his past business practices. He is entitled to the presumption that his new and wider responsibilities at the FBHLBB would give him a different perspective on a lot of things. And that, of course, is what the confirmation process is all about. It affords the Senate an opportunity to ask some searching questions about what a nominee thinks about the job in question and what he is prepared to do about potential conflicts. It is an opportunity to establish a record to which future performance can be held. We trust that in the case of Mr. McKinney the Banking Committee will take full advantage of these opportunities.