COLUMN ONE : S&Ls; Left in Political Doghouse : Some financial firms have been honest and conservative. But that doesn’t matter in this election as candidates shun their contributions.

The letters S and L have become the scarlet letters of politics.

Consider what happened in July at World Savings & Loan in Oakland, where Herbert and Marion Sandler operate what is widely lauded as the nation’s best-run thrift and an industry model for avoiding risky investments that helped cause the thrift crisis.

World Savings’ reputation was little comfort to Theodore R. Muenster, the Democratic challenger in Tuesday’s U.S. Senate race in South Dakota. Realizing that S&L; dollars can be political poison, Muenster forfeited $2,000 that the Sandlers contributed to his campaign.

“Returning money from someone who plays by the rules and does things right is downright silly,” complains Herbert Sandler. “We’re a squeaky-clean operation.”

Squeaky-clean doesn’t count for much in this election. The S&L; branding iron is searing candidates left and right, Democratic and Republican. What arguably is the nation’s most complex financial scandal ever has been crammed into 30-second commercials, 10-second sound bites and one-page press releases linking opponents in any way possible to the letters S and L. Cynics joke that candidates with passbook savings accounts are even at risk.

In some cases the accusations are well deserved, aimed at incumbents with questionable ties to scandal-plagued thrifts. But in many cases the accusations are shots from the hip clearly designed to take advantage of the public’s confusion over the complex problem. One member of the House Banking Committee has been accused of siding with the savings and loan business “12 out of 15 times,” even though his votes on industry-related matters probably number in the hundreds.

“It’s good guys and bad guys. Any candidate who had anything to do with an S&L; is considered a bad guy,” said Robert Litan, a Brookings Institution fellow specializing in financial institutions.

“You’re talking about McCarthyism to the 10th power. It’s guilt by association,” says Rep. Bob McEwen (R-Ohio).

Litan says the savings and loan topic has degenerated into “a Willie Horton-type issue,” making reference to the rapist who became a cornerstone of George Bush’s presidential campaign in 1988 against Massachusetts Gov. Michael S. Dukakis. “That’s the level at which people understand this,” Litan said.

It’s hard to say if anybody is likely to win because of S&L; smears, but it has become a factor in several close races. For example, Democrat Calvin Dooley is in a tight race for Congress against Rep. Charles Pashayan Jr. (R-Fresno) by raising questions about Pashayan’s ties to notorious thrift kingpin Charles H. Keating Jr. And accusations of thrift ties are prominent in the tight battle for California governor between Sen. Pete Wilson (R-Calif.) and former San Francisco mayor Dianne Feinstein.

To be sure, plenty of candidates have a lot to answer for when it comes to their role in the savings and loan debacle, which will stiff taxpayers with a $600-billion bill well into the next century. And S&Ls; undoubtedly would be even more of an explosive campaign issue had any of the five senators most closely linked to Keating faced reelection this year. Those in the so-called Keating Five include Sen. Alan Cranston (D-Calif.) and Sen. Donald Riegle (D-Mich.), who is in such hot water he donated to the Treasury Department $212,000 in previous savings and loan contributions.

Past Ties Embarrass

In Chicago, Rep. Frank Annunzio (D-Ill.) is dogged by his past ties with Keating and for cozying up to the thrift industry’s main trade group at a time when it was pushing for looser standards.

Sen. John F. Kerry (D-Mass.), who has publicly expressed his outrage about S&L; kingpins, is embarrassed over disclosures of links to Florida thrift executive David Paul, who is being sued by the government for allegedly squandering $31 million. Among other things, Kerry attended a “Great Chef’s Dinner” that Paul hosted in 1988 at a cost of about $129,000. Paul brought six European chefs to the United States and dispatched an employee of his CenTrust Savings to Paris to plan it.

But many of the accusations are undeserved, or at least unproven.

Rep. Stan Parris (R-Va.) last week was accused of having had lunch once with Keating. Parris insists he has never met with him. Reacting to a commercial that focuses on the issue, Parris’ campaign staff points to a Washington Times interview early this year in which Keating himself said Parris was the only lawmaker he tried to meet who didn’t hit him up later for campaign donations.

Parris campaign workers also are busy distributing photocopies of nonpartisan praise in the Congressional Record from House Banking Committee Chairman Henry B. Gonzalez (D-Tex.), who credits Parris with recognizing early the depth of the savings and loan mess.

Thrift Reform Bill

A brochure is circulating accusing Rep. D. French Slaughter (R-Va.) of bailing out S&L; crooks solely because he voted for last year’s thrift reform bill--which actually bailed out depositors by guaranteeing they wouldn’t lose their savings. Pictured is a man holding his infant son and saying: “I’d like to ask Slaughter what I’m supposed to tell my boy when he can’t go to college because I’m stuck bailing out a bunch of thieves.”

In many campaigns, candidates scramble to pin the S&L; issue on an opponent first. In Michigan, Republican Senate candidate Bill Schuette accused opponent Sen. Carl Levin (D-Mich.) of taking contributions from Keating’s law firm. Levin fired back that Schuette took contributions from a large accounting firm tainted by a savings and loan collapse.

In California’s gubernatorial race, Feinstein in August accused Wilson of taking more money, $243,000, from S&L; executives over the past 10 years than any other member of Congress. Wilson’s reply was that he had two election campaigns in that period, while other candidates, such as Cranston, ran only one.

Four days later, Wilson countered by accusing Feinstein’s husband, financier Richard C. Blum, of making a “sweetheart “ deal by investing in a failed Oregon savings and loan. Documents and sources familiar with the deal show his money helped rescue the institution.

Details seem to matter little, as long as some connection is made to a savings and loan. Phony $100,000 bills bearing the picture of Rep. Chalmers P. Wylie (R-Ohio) are being passed around Ohio. Printed on the bills is the phrase “In Chalmers We Trust” and “Savings & Looting.”

By contrast, few are making a big deal about the thousands of dollars thrown around by the scandal-plagued and now defunct Drexel Burnham Lambert investment bank.

Drexel once paid Rep. Carlos J. Moorhead (R-Glendale) and another congressman a $2,000 honorarium to stroll through its former junk-bond office in Beverly Hills. It isn’t an issue in that campaign. Nor is Drexel much of an issue in State Controller Gray Davis’ re-election bid. In the late 1980s, Davis received some $66,000 in campaign donations from Drexel and companies with close ties to the investment bank. There was no evidence of any quid pro quo with Drexel in either Davis’ case or Moorhead’s.

Tentacles Everywhere

Linking candidates to S&L; campaign donations is easy. Part of the reason is that the tentacles of some executives and trade groups stretched everywhere. Keating and some 75 members of his family and business associates raised more than $700,000 in campaign contributions for 37 state and federal politicians from 1984 to 1988.

But it’s also easy tying S&L; campaign donations to candidates because many contributors can be loosely called savings and loan donors. The political watchdog group Common Cause, for example, lists the nation’s top savings and loan campaign giver as Cincinnati financier Carl H. Lindner and his family. The watchdog group says they gave $828,920 from January, 1981, to April, 1990.

Lindner has often invested in savings and loans over the years, and once employed Keating. But calling Lindner a thrift executive is about like classifying Walt Disney Co. as a cartoon maker; it’s a small part of the picture.

Lindner, whose net worth is estimated by Forbes magazine at $800 million, has vast holdings that include large insurance operations, manufacturing, the Hanna-Barbera cartoon factory and a piece of the Cincinnati Reds baseball team. Still, every dollar he gave in contributions was dubbed S&L; money in the Common Cause study, which is frequently cited in campaigns.

And some of the money comes from perfectly healthy thrifts that now are seen as industry models, shunning the high-risk junk bonds and shaky real estate investments that contributed to the failure of many thrifts.

World Savings’ parent, Golden West Financial, and the Sandlers have been large political contributors over the years. So have two other thrifts considered to be well run, Great Western Financial in Beverly Hills and H. F. Ahmanson in Los Angeles, parent of Home Savings of America.

Still, candidates are gun-shy about being associated with savings and loans in any way, regardless of their health. Muenster’s press secretary, Steve Erpenbach, said the candidate knew full well that the Sandlers are highly regarded by savings and loan analysts, the financial press, other thrift executives and regulators. But he thought it might be hard to explain the Sandlers’ contribution to voters.

“In his own mind, he was comfortable with it,” Erpenbach said of the Sandler donation. “But with the public mind it’s another matter.”