WASHINGTON -- House Banking Committee Chairman Henry Gonzalez, D-Tex., wants to get his hand into rewriting the Government Securities Act in order to propose amendments to overhaul the federal rules governing Treasury auctions.

In a letter sent Sept. 18 to House Speaker Thomas S. Foley, D-Wash., Rep. Gonzalez asked that the government securities bill, which cleared the Senate July 30 and was referred to the House Energy and Commerce Committee, be jointly referred to his committee.

"The flagrant violations of the rules governing the government securities auction process by Salomon Brothers and the failure of the regulatory agencies to prevent and detect such conduct" require "a thorough review and possibly overhaul of the regulation of the government securities market," Rep. Gonzalez said.

Under House rules, the Energy and Commerce Committee, chaired by Rep. John Dingell, D-Mich., generally has jurisdiction over government securities legislation, but the banking committee has jurisdiction over Treasury auction procedures as part of its overall authority over legislation involving credit and monetary policy, said Rep. Gonzalez.

The House Ways and Means Committee, chaired by Rep. Dan Rostenkowski, D-Ill., also has taken an interest in the Salomon Brothers scandal and is slated to have hearings on the subject next week.

Rep. Gonzalez did not specify what kinds of changes in Treasury auction procedures he may seek, but Rep. Edward Markey, D-Mass., chairman of the Energy and Commerce Securities subcommittee, has said he wants to consider reforms without waiting for the Securities and Exchange Commission and other federal agencies to complete their investigations of Salomon Brothers. The federal investigation is not due to be completed until December, when Congress will probably not be in session.

Rep. Gonzalez and Rep. Dingell are both expected to introduce legislation to reauthorize the Government Securities Act some time next week.

In a related development, Rep. Markey and Rep. Jim Slattery, D-Kan., have asked Treasury Secretary Nicholas Brady to provide a detailed record on meetings over the last two years by members of the Treasury Borrowing Advisory Committee of the Public Securities Association. The House members asked for the report by Sept. 27.

The borrowing committee is made up of representatives of the 39 primary dealers and meets every quarter with investment company executives, as well as officials from Treasury and the Federal Reserve. The meetings take place a day before Treasury announces its latest borrowing estimates in connection with the quarterly auction of notes and bonds.

Rep. Markey and Rep. Slattery told Mr. Brady in a Sept. 17 letter that because the meetings involve discussions between private industry executives and Treasury regulators about the government bond market, some House members had questions "regarding the appearance of impropriety."

Treasury tightened the auction rules last week, adding a requirement for primary dealers to verify large, winning bids. In addition, Treasury said it will release the quarterly borrowing estimate two days before each refunding announcement, which will mean the information is publiic before the meeting of the PSA advisory panel.

According to Joe Sims, a spokesman for the securities association, "dealers generally seem to be viewing these changes very positively" and are hopeful that they will prevent any further abuses. Still, the association told Congress last week that it favors an electronic auction system and other changes to enhance federal surveillance of trading activity.

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