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By Dave Clarke and Thomas Ferraro

WASHINGTON (Reuters) - A top Republican lawmaker predicted on Friday he would be exonerated by a congressional investigation into whether he broke any insider trading laws or ethics rules, but it was unclear if he would be able to retain his job as the chairman of a key committee.

"I welcome the opportunity to set the record straight," said Spencer Bachus, chairman of the House of Representatives Financial Services Committee. "I have fully abided by the rules governing members of Congress and look forward to the full exoneration this process will provide."

The probe has generated speculation that he might be unable to hold on to his chairmanship unless the story quickly went away.

"If it doesn't, I don't doubt the leadership will quietly work to get him to step aside," a Republican aide told Reuters.

Bachus' committee oversees financial markets and the housing sector as well as the federal agencies in charge of regulating this area of the economy.

Barney Frank, the lead Democrat on Bachus' panel, declined to comment on the investigation, but said, "In my dealings over the years with Spencer Bachus, with whom I disagree on a number of policy issues, I have found him to be honorable and straightforward."

The Washington Post reported on Thursday that the Office of Congressional Ethics is investigating whether trades Bachus made in recent years, including at the height of the 2007-2009 financial crisis, broke insider trading laws because they were based on "material, non-public" inside information.

Bachus was the top Republican on the committee at the time and attended briefings with officials, such as then Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, on the crisis and how the government might respond.

"THROW THEM ALL OUT"

The issue of insider trading by members of Congress flared up following a November 13 report by CBS' "60 Minutes" questioning whether some members of Congress have used what they learned from their privileged posts to make lucrative investments.

The report was based on a book, "Throw Them All Out," by Peter Schweizer, who is a fellow at the conservative Hoover Institution.

The report put political pressure on Congress to act. The House and Senate have both passed versions of legislation that would put curbs on insider trading by lawmakers and other government officials.

Bachus' trades during the financial crisis are highlighted in Schweizer's book. On November 16 Bachus wrote the book's publisher, Houghton Mifflin Harcourt, disputing many of the claims, including whether he made investments betting General Electric Co's stock would go down.

"The book is absolutely false and factually incorrect," he said in the letter.

The Office of Congressional Ethics is an independent panel created by Congress in 2008 that investigates possible ethics violations by lawmakers.

Kelly Brewington, communications director for the Office of Congressional Ethics, said the office does not confirm or deny investigations.

If the watchdog finds evidence of any problems it can then recommend that the House Committee on Ethics, chaired by members of Congress, take action.

Michael Steel, a spokesman for House Speaker John Boehner, said: "We can't comment on something we have no information about. The OCE has not communicated anything to the Speaker's Office on the matter."

(Reporting By Dave Clarke and Thomas Ferraro; Editing by Xavier Briand)

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