UPDATE 2-U.S. bailout fund needs emergency reserve -nominee

(Recasts with comments on TARP resources, background)

By David Lawder

WASHINGTON, June 4 (Reuters) - The $700 billion U.S. bailout fund has "roughly" $100 billion remaining, but it will be important to conserve enough uncommitted funds to deal with any future emergencies, the Treasury Department's nominee to oversee the program said on Thursday.

"It's important that we leave some headroom in this program because we're not yet out of this crisis," Herb Allison told the U.S. Senate Banking Committee in a confirmation hearing.

Allison, who was named last September to head mortgage finance company Fannie Mae FNM.P after the Treasury seized control of it to avert a collapse, cautioned against complacency despite improvement in financial markets and banks' increasing ability to raise new capital.

"We are not yet out of the woods with this economic crisis, we all have to be aware of that," he said. "We have to be vigilant. We can't be complacent. We have to be willing to modify these programs, if necessary, going forward."

Allison, who prior to working at Fannie Mae was chief executive of pension fund TIAA-CREF and spent 28 years at Merrill Lynch, said the government could still be managing its bailout investments past October 2010, which is the cut-off date for new investments.

But he echoed the Obama administration's stated desire to hold investments for as short a period as possible.

"This program is designed to deal with an extremely serious financial crisis. It was not set up to be a long-term program," Herb Allison told the committee.

He declined to estimate how much could be repaid as early as next week from large banks that have applied to return government capital they received last October as the financial crisis reached its worst point.

JPMorgan Chase & Co (JPM.N), Goldman Sachs (GS.N), Morgan Stanley (MS.N) and American Express (AXP.N) are among bank holding companies that have met key Federal Reserve conditions to repay billions of dollars in taxpayer funds.

Allison's smooth confirmation hearing was in contrast to the often contentious congressional questioning of his predecessor, Neel Kashkari, a former Goldman Sachs investment banker who was appointed to oversee the bailout fund during the Bush administration but stayed on until early May.

Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said he would seek a quick confirmation vote and called Allison a "good choice". (Editing by James Dalgleish)