House Banking Committee Chairman Jim Leach warned regulators this week not to bail out hedge funds that make bad investments, even iftheir failure threatens the health of a creditor bank.

"Investing in and lending to hedge funds is by nature a risk-oriented activity, and those who do so should be subject to market discipline and not given any reason to believe government-assisted rescues are likely," he wrote to Treasury Secretary Robert E. Rubin. The letter, dated Feb. 23, was made public Thursday.

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