WASHINGTON -- Though most capital insiders doubt Congress will act this year to tighten oversight of bank derivatives activities,- House Banking Committee Chairman Henry B. Gonzalez said Thursday that he intends to move legislation to do just that.

"The recent revelation that the Bank of America had to bail out an affiliated money market mutual fund because of derivatives losses at the fund raises questions about the adequacy of the regulatory oversight." the Texas Democrat said at a hearing Thursday.

"I am absolutely opposed to banks using deposit insurance to support massive speculation," he said. "I don't care if they want to go into the brothel business, so long as they don't use taxpayer money."

Rep. Gonzalez and Rep. Jim Leach, R-Iowa, are sponsoring legislation that would require the federal banking agencies to cooperate in developing capital, accounting, disclosure, and-examination standards for finan-- cial institutions involved in derivatives activities.

Regulators Opposed

Most observers doubt Congress has either the time or the interest in passing a derivatives bill this year. The regulators have been unanimous in telling Congress that they already have enough authority, and the banking industry has made the same argument.

However, Comptroller General Charles A. Bowsher. head of the General Accounting Office, urged the House Banking Committee to act on a bill this year.

Although a number of institutions are putting into effect recommendations issued by the Group of 30, an international association of bankers and investment bankers, "not everyone is moving at the same speed," he said.

"The advantage of legislation is that it kind of pushes everybody down the road to do it," he said.

Incomplete Standards Cited

Mr. Bowsher also told the panel that accounting standards for derivatives are incomplete and inconsistent and have not kept pace with business practices.

"Insufficient accounting rules and disclosures for derivatives increase the likelihood that financial reports will not fairly represent the substance and risk of these complex activities," Mr. Bowsher said.

The legislation introduced by Rep. Gonzalez and Rep. Leach deals only with insured financial institutions, in large part because the banking committee wants to avoid sharing jurisdiction for the legislation with the House Energy and Commerce Committee, which oversees the securities and insurance industries.

However, economist Henry Kaufman told the panel that although regulation of derivatives markets is out of date, Congress should not enact legislation that deals only with .one group of players, such as commercial banks.

That would "amount to a step backward, because other market participants ... would not be covered," he said.

Rep. Gonzalez dismissed the arguments of regulators and bankers who have testified that new legislation is not needed.

"These are the same industry players and regulators that brought us similarly hyped endeavors such as loans to lesserdeveloped countries, highly leveraged transactions, and massive real estate loans, which collectively resulted in the loss of hundreds of billions of dollars in soured loans," he said.

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