AT FIRST Mayor Marion Barry did not mention to reporters that the financing for his new house included a discount interest rate on the mortgage. Then his banker said the mayor got no discount. Meanwhile, the mayor's wife said there was a discount but she didn't remember how much. Now Mayor Barry has announced that the discount was a substantial 3 1/4 percentage points off the current 12 percent interest rate. Leaving aside the "point" the bank says he wasn't charged at settlement, the discount interest rate would have meant a savings to the mayor's family of more than $87,000 over the 30-year life of the loan. The mayor said he has decided not to take the lower interest rate; he will pay the full 12 percent.

Mr. Barry was, of course, hardly the only politician or VIP in Washington (or Maryland or elsewhere, for that matter) to have been given preferential treatment by a bank or business. It has been the custom for banks to give Cabinet officers, senators and other powerful people special deals. It was wrong for those special arrangements to be made then, and it is certainly wrong for the mayor -- who has direct influence over the local banking and development business -- to accept special offers from a bank now. The mayor's justification for taking the special interest rate has been that his wife, as a member of the bank's board of directors, was entitled to the discount. But that explanation is weak.The fact is that he is the mayor and he is sharing the benefit.

So the mayor is right to refuse the discount. He was wrong to have accepted it in the first place. As mayor, he is in a position to help the Independence Federal Savings and Loan Association, which gave him the lower interest rate. As mayor, he is also in a position to help the members of the bank's board of directors who may have private business with the city government. This amounts to a conflict of interest for the mayor. There is little difference between what the mayor did and accepting an outright gift from a businessman; and a spokesman for the D.C. Board of Elections and Ethics said city officials may not legally accept personal gifts of over $100. eGifts, as defined by city law on ethics, include favors, services and loan gratuities. What the mayor accepted, temporarily, for his personal benefit was a low-interest loan that would have amounted to an $87,000 gift to be given over the next 30 years. If that isn't an outright gift, it's certainly a heavy consideration.