ARLINGTON, Va. -- A deal on regulatory consolidation appears imminent, but Congress may not have time to deal with the issue this year, a senior Treasury official warned Monday.

Treasury Under Secretary Frank Newman told a conference sponsored by the Bank Administration Institute that talks between the administration and the Fed were "good spirited" and "very constructive."

"But it is very late in the legislative year, and that is something Congress will have to consider," he said.

Afterward, Mr. Newman said he didn't want to suggest that it would be impossible to pass legislation this year.

"I'm not trying to prejudge it," he said. "But we know it is a limited year."

This year's legislative session is almost certain to be cut short by the campaign season.

In the meantime, the House and Senate banking committees are expected to be tied up over the next several weeks dealing with interstate branching and community development bank legislation.

In addition, legislative work will be disrupted by long holidays in June and July, culminating in a monthlong August recess.

Mr. Newman also said an announcement could come soon. "It's a matter of days, rather than weeks."

The Treasury official also told the finance and accounting conference that derivative products represent "a legitimate risk-management tool."

"It's possible to do imprudent things with them, but banks have done that with lots of things, from Third World debt to real estate," he added.

Mr. Newman said derivative products are complicated, but "there is a lot of complexity in making a good commercial loan."

However, Mr. Newman said he expects Congress to take a serious look at legislation on derivatives.

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