Warren Heller doesn't scare easily.

While Congress and some regulators see danger and financial meltdown in the use of off-balance-sheet instruments, Mr. Heller sees little risk. He says only 713 banks - a mere fraction of all U.S. banks - are using derivatives. Smaller still is the number - only 54 - that have derivatives positions which exceed their assets. Mr. Heller, director of research at Veribanc Inc., the Wakefield, Mass., research firm, has quickly become a leading expert on derivatives use by banks. He says that federal officials are unnecessarily jittery on the subject.

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