Federal lawmakers and a commercial banking group are warning the Treasury Department that, due to struggles in the financial and municipal bond markets, they should avoid any rule-making that could further restrict banks from purchasing tax-exempt bonds.

A group of five representatives, including House Financial Services Committee chairman Barney Frank, D-Mass., and theClearing House Association, the nation's oldest bank association, sent letters to the Treasury this month requesting that officials use caution in writing regulations designed to close a perceived loophole in the tax code regarding banks with tax-exempt debt holdings.

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