US bank group wants Fed to oversee risk in system

WASHINGTON Jan 30 (Reuters) - A group representing large financial institutions urged the U.S. Congress on Friday to give the Federal Reserve new powers to ensure stability of the country's financial system.

These powers would override all regulators and apply to all types of financial firms and markets, according to the Financial Services Roundtable plan to reform the U.S. regulatory system.

Congress and the Obama administration are set to revamp the way financial institutions, products and markets are supervised after lapses in oversight contributed to the biggest economic crisis in decades.

The House Financial Services Committee, chaired by Rep. Barney Frank, is expected to soon start considering proposals to overhaul the financial regulation system.

The proposal from the roundtable, which represents firms such as Bank of America (BAC.N) and Allstate Corp (ALL.N), is one of many plans that are being floated.

The Roundtable wants one federal body to insure bank and thrift deposits, guarantee policies issued by national insurers and resolve all failing financial firms.

Last year, the U.S. government was forced to improvise when it rescued firms like investment bank Bear Stearns, mortgage finance giants Fannie Mae FNM.N and Freddie Mac FRE.N and insurer American International Group (AIG.N).

"Each were resolved in a different way with a different approach," said Roundtable President Steve Bartlett, who said he did not think that was the way to resolve failed institutions.

The Roundtable's plan also includes creating a national body that would encompass futures and securities regulators. The so-called "National Capital Markets Authority' would supervise and regulate markets, corporate finance and accounting policies for all public companies.

The mortgage finance giants and federal home loan banks would fall under one agency. Banks, thrifts, broker-dealers, investment companies and others that provide financial services products would fall under another the umbrella of another regulator.

The five main regulators would be overseen by one financial markets coordinating council, under the Roundtable's plan. (Reporting by Rachelle Younglai; Editing by Tim Dobbyn)