The chairman of a House panel has launched an investigation of the bond insurance industry and has asked federal regulators whether legislative or regulatory reforms are needed as rating downgrades of two triple-A insurers followed their disclosure of exposure to subprime mortgage debt.

“I am especially concerned about the implications for state and local governments that rely on bond insurance when putting together deals to pay for roads, schools, and other construction projects,” Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Committee’s capital markets panel, said in almost-identical letters sent to Securities and Exchange Commission chairman Christopher Cox, Federal Reserve Board chairman Ben Bernanke, and six other federal and state regulators.

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