EDITORIAL : MORE CLOUDS OVER CLINTON RENO TARNISHES HER REPUTATION BY REJECTING AN INDEPENDENT PROBE OF WHITE HOUSE FUND RAISING.

JAMES McDougal, Bill Clinton's former business partner in the Whitewater matter, said Monday that he ``just got sick and tired of lying'' for the president.

Meanwhile, Attorney General Janet Reno, hitherto widely regarded as a lonely pillar of integrity in the White House's ethical swamp, continues to stand by the nation's chief executive.

Reno did the expected Monday, again rejecting a request by high-ranking congressional Republicans to seek the appointment of an independent counsel to investigate White House and Democratic National Committee fund-raising scandals.

Reno split one legal hair after another in explaining her reasons. She said that conditions for appointing an independent counsel did not exist because there is not enough evidence to show that federal crimes have been committed or that people covered by the law, such as Clinton and Vice President Al Gore, were involved. Thus, she said, no legal conflict of interest exists.

That may be the case under the narrowest possible interpretation.

But Reno also ignored some damaging evidence of a conflict of interest - especially the blatant effort of the White House to discredit FBI investigators. We refer specifically to the administration's claim last month that the FBI told White House staffers not to inform superiors that China might try to make illegal political contributions. The FBI (which reports to Reno) flatly denied it ever made such an implausible demand.

Reno's decision promises to be small comfort for Clinton and the first lady. The Republicans will keep the pressure on in Congress. And so surely will Whitewater independent counsel Kenneth Starr, who can call on McDougal as a cooperative witness. Starr said Monday that ``we have found his (McDougal's) cooperation very helpful to us.''

(McDougal on Monday was sentenced to prison for three years. He could have been put away for 84 years on his conviction on 10 felony fraud and conspiracy counts, but leniency was granted at Starr's request.)

McDougal's willingness to talk is only one of many problems faced by the Clintons. A grand jury in Little Rock is hearing testimony about financial aid arranged for Webster Hubbell, a reluctant Whitewater witness, by White House insiders.

If the Hubbell matter leads Starr's investigators to probe White House funding activities, perhaps there will be no need for the appointment of a separate counsel after all. But that wouldn't let Reno off the hook for failing to do her duty.