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A REPORT LAST WEEK from the Resolution Trust Corp. merely confirms what has long been suspected - that Hillary Rodham Clinton's former law firm more than just skated near the edge of unethical behavior.

And it would seem that the first lady herself has ignored some potential conflicts of interest that would have been obvious to a first-year law student.The RTC's inspector general detailed eight contracts to do legal work for federal financial regulators in which lawyers for the Rose law firm failed to reveal ties and conflicts that might have disqualified them. The cases involved Rose negotiations for the federal government with companies caught in the collapse of the Arkansas savings and loan industry.

Much of the focus was on the failed Madison Guaranty Savings & Loan. And while it details a number of complex transactions, the real but unwritten point it makes is about the way business was conducted in a state where the power pool from industry, politics, finance and law is so small that it takes major diligence to avoid conflicts of interest.

Of course, that is if one is of a mind to do so in the first place.

Like group sex, everyone seems to be involved with everyone else at the same time.

Hillary Mrs. Clinton's role as a practicing attorney during her husband's long tenure as Arkansas governor was perhaps the largest potential conflict of interest. She apparently made only a passing attempt not to represent those with business before the state. Just the mere fact her husband was the state's chief executive brought clients to the Rose firm, and not sharing in the profits from that business, as she has contended, is a lame excuse. After all, any way the firm benefits, she benefits.

Also, it didn't stop her from sitting on boards, among them Tyson Chicken, Arkansas' largest employer, whose companies clearly were impacted by Bill Clinton's decisions.

On one occasion, Hillary Clinton was cited by the RTC for taking part, albeit a small one, in a federal action against Dan Lassater, whose savings and loan had defaulted, costing taxpayers several millions of dollars. Lassater was a close friend of her mother-in-law, her brother-in-law, and, for that matter, her husband.

The Lassater case, in which Rose sued in behalf of the government to recover some of the taxpayer losses, should never have been handled by anyone in the firm, let alone Hillary Clinton.

Although reports of these apparent ethical breaches have been circulating since Bill Clinton took office, the RTC's findings put an an official stamp on them that isn't ever going away, even if the larger Whitewater issue does.

One would think that the president's education far from the Ozarks - Georgetown, Oxford, Yale - would have protected him from the pitfalls of local political custom. At least, the more obvious ones.

It didn't.

But then Clinton never really left his home state. He was born and bred in the briar patch and went right back there to reach his political goals.

And while they may teach you how to play the game one way at Georgetown and Oxford and Yale, that isn't always the way it is played in Little Rock, where both Bill and Hillary appear to have learned (or in Clinton's case, never forgotten) the rules well.

Sadly, the report is a clear warning about the dangers of electing a president from such a narrow and inbred base as Arkansas'.