WHEN THE D.C. Council held its hearing on the Bevill, Bresler case, Mayor Barry responded merely by blustering. But the council was asking a legitimate question: why did the city invest millions of dollars with an underfinanced and shaky firm when it had many sounder competitors from which to choose? The city's cash manager, Alvin C. Frost, warned the city in a memorandum last December that the dealer -- Bevill, Bresler & Shulman, Inc., of Livingston, N.J. -- was not reliable. Last month Bevill, Bresler went bankrupt while holding $10 million of the city's money. The city has recovered the money but may yet find itself entangled in litigation over the case.

At the hearing, Mr. Frost told the council that he had been repeatedly pressed by his superior, Assistant Treasurer Fred Williams, to throw business to Bevill, Bresler. That's interesting. Wouldn't you think that Mayor Barry would want to know a little more about what happened?

But Mr. Barry's first reaction was to denounce the hearing as a "political inquisition." His second was to ask plaintively why anyone would pressure the city's cash manager -- "What's the purpose?" Good question. What was the purpose? The mayor's supposed to be in charge. Has he really no interest in finding out what was going on? The mayor further huffed: "The implication is that there is some hanky-panky, and I resent it."

He shouldn't resent it; it's perfectly natural, since the affair has been public knowledge for a month and the mayor has yet to offer any explanation of it. There is no visible evidence of corruption. But there's plenty of evidence that the city's deputy mayor for finance, Alphonse G. Hill, was waltzed around very expertly by the salesmen from Bevill, Bresler and that he got very exasperated when dealings with these nice people were blocked by Mr. Frost -- who, let's remember, was totally right about them.

Mr. Frost was right about another thing as well. He warned the city that bond buyers don't like dealing with bad managers, and this kind of mismanagement leads to lower bond ratings and higher interest costs to the city. The council has an obligation to keep pushing until it gets the answers that it needs to assure itself that this fiasco won't be repeated.

Incidentally, Mr. Frost, the cash manager, told the mayor that he has been taking a hazing from his superiors for having committed the bureaucratic sin of being right when they were wrong. The mayor will have to put a stop to that if he wants to keep able financial people working for him.