House Financial Services Committee chairman Barney Frank, D-Mass., called for new rules to curb abuses in the auction-rate securities market at a hearing yesterday, as federal and state regulators indicated the ARS market is virtually dead and would require major structural changes to regain liquidity.

Meanwhile, an industry official warned committee members that the billion-dollar ARS buyback programs that 16 banks and broker-dealers have agreed to under settlements with federal and regulators may be at risk amid the current liquidity problems and major turmoil facing the financial markets.

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