Federal Reserve Board Chairman Alan Greenspan has reassured the chairman of the Senate Banking Committee that despite explosive growth in the derivative securities market, the Fed is actively and effectively monitoring bank activities in those markets.

His Sept. 11 letter to Sen. Donald W. Riegle Jr.. D-Mich., was the latest in a series of responses by regulators to questions raised by Riegle and his colleagues about the impact of derivatives, including those backed by mortgages, on safety and soundness of financial institutions.

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