MINNEAPOLIS -- The federal government should take tough new steps, possibly including legislation or regulation, to protect states and localities from losses in derivatives trading, the executive board of the Government Finance Officers Association said Sunday.

"The GFOA believes that greater federal government involvement in the regulation of derivative products is warranted to avoid market disruption and the loss of scarce taxpayer funds," the board said Sunday as it approved a two-page policy statement drafted by the GFOA's cash management committee.

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