Proposal by Ethics Panel to Punish Cranston Seen : Congress: Sources expect him to face serious penalty, but not expulsion from Senate, for links to Keating S&L;.

The Senate Ethics Committee is likely to recommend that Sen. Alan Cranston (D-Calif.) be disciplined by the full Senate for his actions on behalf of former Lincoln Savings & Loan owner Charles H. Keating Jr., knowledgeable sources said Monday.

The sources indicated that they expect Cranston to face something short of expulsion but more serious than a letter of reprimand--probably censure, denouncement or some step that would condemn his actions without forcing him from office.

The six-member committee, which completed 26 days of public hearings earlier this month, is scheduled to begin its final closed deliberations in the so-called “Keating Five” case later this week. A decision by the committee is expected in March.

Five senators are accused of improperly trying to influence federal regulators on behalf of Lincoln in exchange for contributions from Keating to their campaigns and their favorite political causes.

William W. Taylor III, Cranston’s attorney, said that he cannot predict how the committee will vote on the case against his client. “I don’t have any information that the committee has decided anything, either tentatively or finally,” Taylor said. “When they begin to deliberate, they may all change their minds many times.”

Nevertheless, well-placed sources said that a majority of committee members are currently prepared to vote to recommend Senate action against Cranston on the basis of evidence showing him to have been more deeply involved in Keating’s efforts to influence federal regulators than any of the other senators.

In addition to Cranston, the “Keating Five” includes Sens. Dennis DeConcini (D-Ariz.), Donald W. Riegle Jr. (D-Mich.), John Glenn (D-Ohio) and John McCain (R-Ariz.).

Sen. Trent Lott (R-Miss.), one of six members of the Senate Ethics Committee, said publicly on Jan. 8 that he would be “amazed” if the committee did not send the case against at least one of the “Keating Five” senators to the full Senate. Lott would not name the senator he was referring to, but sources said it was Cranston.

Generally, the committee can independently drop the charges or issue a letter of reprimand. Alternatively, it can ask the full Senate to censure or condemn the senator or expel him.

Lott indicated that the committee will take one of the latter actions against at least one senator, but he did not say which recommendation he considers most likely.

No senator has been expelled since the treason cases growing out of the Civil War.

At present, according to the sources, it is not clear whether Cranston is the only senator whose case is likely to be referred to the Senate floor. Although charges against McCain and Glenn are almost certain to be dropped, they say, the committee appears divided over what type of punishment to recommend for Riegle and DeConcini.

Cranston, 76, who has already announced that he will not seek reelection in 1992, is in California recuperating from surgery related to prostate cancer. Taylor said that the senator is expected to return to work in Washington in late February.

Although Cranston presented an opening statement in his own defense at the outset of the committee’s hearings, his cancer treatments prevented him from being cross-examined in public by the committee or its special counsel, Robert S. Bennett.

The charges against the “Keating Five” stem from their alleged efforts to influence federal regulators at a time when Lincoln was under investigation by the Federal Home Loan Bank Board.

Some regulators charge that interference by the senators delayed a federal takeover of Lincoln; other regulators say that the delay had nothing to do with the role played by the senators.

When Lincoln eventually was seized by the federal regulators in April, 1989, the government assumed responsibility for about $2 billion in losses at the federally insured thrift.

The evidence presented at the hearings by Bennett suggests that Cranston played a more active and independent role than the other senators in assisting Keating in his efforts to influence federal regulators who were investigating alleged mismanagement of Lincoln. Witnesses portrayed Cranston and Keating as friends who enjoyed each other’s company.

Furthermore, Cranston solicited far more money from Keating than all of the other four senators combined--about $40,000 for his campaign coffers, $85,000 for the California Democratic Party and $850,000 for voter registration groups founded by the senator.

Unlike the other four senators, Cranston has acknowledged that, on at least two occasions, he solicited contributions from Keating at the same time that the savings and loan executive sought his assistance in dealing with federal regulators.

Although never challenging the basic facts of the case as presented by Bennett, Cranston and Taylor hotly disputed the implication that the senator had traded influence for contributions. They argued that Cranston’s behavior conformed to standard Senate practices.

“None of us did anything unethical,” Cranston told the panel in a statement. “More than one senator has told me: ‘There, but for the grace of God, go I.’ ”

All five senators were drawn into the case because they attended meetings with federal regulators in April, 1987, in which, the regulators say, they were asked improperly to take actions favorable to Keating.

Bennett, who investigated the case for more than a year before the committee hearings began, is known to have recommended privately to the panel that the charges against McCain and Glenn be dropped. He recommended that Cranston, DeConcini and Riegle be punished.

Both McCain and Glenn refused to assist Keating after hearing during those meetings that regulators had found potential criminal violations at Lincoln.

Like Cranston, DeConcini continued to assist Keating until Lincoln was seized two years later. Although Riegle did nothing more for Lincoln after 1987, he has been accused of misleading the panel about the circumstances under which he received contributions from Keating.