Outgoing House Banking Committee chairman Henry Gonzalez urged the committee's next chairman to convene hearings as soon as possible to explore recent derivatives losses.

"As you know, the Orange County debacle and the alleged fraudulent activities at Bankers Trust raise serious questions about the use and regulation of derivatives," Gonzalez, a Texas Democrat, wrote in a letter last week to Rep. James Leach, R-Iowa.

Gonzalez said he hoped the two lawmakers can work together to protect taxpayers in the next Congress.

"You and I have worked together introducing legislation, `the derivatives safety and soundness supervision act of 1994', and I hope we can continue in this effort to ensure that derivatives use does not threaten the viability of our financial system and the deposit insurance funds," Gonzalez said.

An Orange County, Calif., investment pool recently lost more than $2 billion due to risky derivatives investments, and Bankers Trust, one of the largest derivatives dealers, will be charged with defrauding derivatives customers.

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