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Wall Street’s ability to hide and disguise significant risk through the abuse of derivatives and other “novel financial products” would be greatly reduced under a proposed modernization of tax rules issued last week by the Republican head of a top House committee. The “discussion draft” released by House Ways and Means Committee Chairman Rep. Dave Camp, R-MI, would revamp, among other things, the tax treatment of bonds traded at a discount or premium on the secondary market, increase the accuracy of determining gains and losses on securities sales and prevent harvesting of tax losses on securities. “Updating these tax rules to reflect modern developments in financial products will make...