WASHINGTON -- The top Republican on the House Banking Committee yesterday called for federal constraints on derivatives activities and criticized the Treasury's plan to consolidate the banking agencies, saying it would politicize bank regulation.

While allowing the derivatives industry to regulate itself might have been possible once, "the quantum growth in derivatives trading has changes the nature of the market and the public relationship to it" so much that "prudential restraints must be established before improvidential acts occur," Rep. Jim Leach, R-Iowa, told those attending a banking conference here.

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