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AN ADMINISTRATIVE law judge's findings that Neil Bush engaged in conflicts of interest and unsafe business practices during his tenure as a director of a Denver savings and loan institution puts the president's son in an uncomfortable spot.

But it is one he deserves to be in.

His lawyer believes the original charges and the decision by the judge in support of them are both "absurd." Regrettably, it does not look that way to us.

The judge, Daniel J. Davidson, concluded reasonably that Bush erred when he voted as a director of the Silverado S&L to approve large loans from applicants without disclosing his own business relationships with those applicants.

The logical inference is that those undisclosed relationships might have led him to give the loan requests more support than they deserved. They suggest his judgment might have been unduly influenced by these personal and business ties. At least other directors had a right to know about them.

Several loans later went bad, contributing to the demise of Silverado in 1988. Taxpayers picked up a heavy tab for the failure: a cool $1 billion.

Davidson said Bush's conflict of interest and "unsafe and unsound practices" violated internal rules of the bank as well as government regulations. Certainly, these lapses showed imprudent judgment and ethical insensitivity.

Davidson recommended modest penalties for the infractions. His proposals now go before Timothy Ryan, head of the federal office that regulates S&Ls and a Republican appointee. That puts Ryan and the credibility of the whole agency on the spot.

The infractions, in addition to Bush's refusal to recognize the conflicts of interest and unsound business practices, as Davidson noted, justify at least the penalties recommended -- if not barring Bush, temporarily at the minimum, from sitting on a thrift board of directors.

President Bush correctly says he will keep his own hands off the case, a promise he should scrupulously honor. Otherwise, he could damage his own integrity and that of the presidential office.

Neil Bush, who left the board before his father was elected president, has said repeatedly that he never intends to join another thrift board of directors. Whether barred or not, he shouldn't.

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