WASHINGTON -- The hunting season in Congress for more controls on financial derivatives, the latest Wall Street invention that has brought sweet profits to big brokerage firms and banks, has come to an early close.

Rep. Edward Markey, D-Mass., found out he didn't have any friends from the federal regulatory agencies to go into the woods with him.

It was no surprise that Fed Chairman Alan Greenspan, a long-time skeptic of federal intervention in the marketplace, found no use for legislation. Derivatives, he told Markey at a packed hearing last week, can actually help investors and businesses reduce risks in today's fast-paced markets of fluctuating currencies and interest rates.

Besides, Greenspan said, federal bank regulators have been keeping a watchful eye on the banks and their affiliates.

Markey heard a similar message from Arthur Levitt Jr., chairman of the Securities and Exchange Commission, which regulates the securities dealers. In his opening statement, Levitt called derivatives "a valuable economic tool."

"I'm not prepared to say at this moment, the sky is falling down, we need legislation immediately to protect American investors and American systems," Levitt said.

SEC officials have been talking in private with the large securities dealers about derivatives, trying to fashion stronger rules for market participants under current law. Only if those talks fail, Levitt said, will the SEC come to Congress and ask for legislation.

Markey could not even get support for legislation from his chairman, Rep. John Dingell, D-Mich. "The issues raised by derivatives are complex, and we need to exercise great caution and care in crafting solutions," said Dingell. This, from a man who has rarely seen a government regulation he didn't like, except when it comes to the auto industry.

All of this left Markey, who has a history of attacking corporate wealth dating back to the breakup of AT&T, clearly deflated. It is clear now that any derivatives bill he comes up with will go nowhere fast, and certainly not this year unless Wall Street crashes and traders end up throwing themselves out of windows.

Last year, Markey and the SEC worked hand in glove to produce legislation with new rules for government securities dealers in response to the Salomon Brothers bond trading scandal. This time around, Levitt said he doesn't see the need for a bill as long as the Wall Street dealers in derivatives keep cooperating with him.

The surprise in all this is that there appeared to be momentum for legislation when the congressional General Accounting Office, in its hefty study of the derivatives market, said something had to be done.

Even so, there were signs that the combination of Wall Street opposition and on-the-job federal regulators would carry the day.

In the first derivatives hearing that Markey held, the panel was told to keep the ink in the bottle by former SEC Chairman Richard Breeden, now drawing a comfortable salary from the financial services group at Coopers & Lybrand, and by E. Gerald Corrigan. It was Corrigan who first sounded the alarm on derivatives when he was president of the Federal Reserve Bank of New York. He now gets by chairing a global investment unit of Goldman Sachs & Co.

Maybe the regulators do have things in hand, and maybe sudden losses in derivatives won't bring financial markets to a halt. Maybe the people buying the things, chastised by their recent losses, will be more careful.

It looks like we can all go to the beach this summer without reading dreary newspaper articles about derivatives legislation in Congress.

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