WASHINGTON — Though legislation that cleared the House Financial Services Committee yesterday would allow any municipality to participate in a derivative transaction as long as its counterparty is regulated, a high-level Treasury Department official said municipalities are still protected because those regulated parties will have to meet comprehensive business-conduct standards.

Michael Barr, Treasury’s assistant secretary for financial institutions, made the remark after being asked about a provision of the bill — which the committee approved mostly along party lines by a 43-26 vote — that defines eligible contract participants for derivatives as they pertain to state and local governments.

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