WASHINGTON -- Washington bank regulators are rewriting the rules governing mutual thrifts selling stock for the first time.

One influential regulator, Derrick D. Cephas, New York State superintendent of banks, laid out his views on the conversion issue in a Feb. 24 letter to thrift CEOs explaining the approach he expects to take in pending regulations, and in a Feb. 25 statement before the Senate Banking Committee here. Excerpts follow:

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