WRAPUP 3-Financial watchdog's power crucial--Obama aide

* "Independent authority" important-White House's Gibbs

* Where financial watchdog "housed" another issue-Gibbs

* Comment comes amid Senate fight over financial reforms

* Dodd backs Treasury-led systemic risk council-spokeswoman (Recasts with White House spokesman, Gabriel comments)

By Kevin Drawbaugh and Caren Bohan

WASHINGTON, Feb 22 (Reuters) - An Obama administration spokesman on Monday stressed the importance of "independent authority" for a proposed U.S. financial consumer watchdog and said where it was "housed" was another issue.

The comment from Robert Gibbs, spokesman for the White House, came as two U.S. senators tried to forge a bipartisan agreement on tighter financial regulation, with analysts watching closely for signals of compromise.

The biggest obstacle to a Senate deal is President Barack Obama's proposed U.S. Consumer Financial Protection Agency.

Democrats want a powerful, independent financial consumer watchdog, saying it is needed to shield Americans from predatory mortgages and abusive credit cards.

Republicans want to block the CFPA or weaken it, an objective shared by the financial industry, whose profits would be directly threatened by the proposed agency.

Two disputes remain on the CFPA proposal. One is whether it will be an independent agency, or a division of some larger regulatory body. Another is how much power it will have, either as a stand-alone organization or as a unit of something else.

"The elements of this ... have to include the independent authority of a CFPA," Gibbs told reporters at a briefing.

"Whether it's housed some place, I think, is one thing. But does that -- does the office of the CFPA have the independent authority to act without the permission of wherever that is housed?" he said.

After the worst banking and capital market crisis since the 1930s, Obama in mid-2009 proposed the CFPA. The House of Representatives endorsed the idea, reducing its scope somewhat, in December as part of a sweeping financial reform bill.

DODD-CORKER BILL IMMINENT

Senate Banking Committee Chairman Christopher Dodd, a Democrat, is working closely with Republican Senator Bob Corker, a committee member, on a broad financial reform agreement. Its release is expected within days.

At the same time, Senator Richard Shelby is leading other Republican banking committee colleagues on drafting substitute legislation. That proposal and whatever Dodd and Corker produce are expected to collide in early March at a committee working session that will likely lead to a decisive vote.

"It's unclear whether the proposal will include language on enhanced consumer protection, although Shelby's alternative bill -- which Dodd may ultimately have to steer close to -- will almost certainly reject the notion of creating an independent" CFPA, said policy analyst Charles Gabriel at investment advisory group Capital Alpha Partners.

Treasury Secretary Timothy Geithner said on Monday the administration is still fighting "to consolidate the fragmented authority of seven separate agencies into a single, independent and accountable Consumer Financial Protection Agency."

His remarks came in a statement marking implementation on Monday of new rules for the credit card industry, signed into law last year by Obama as his first financial reform victory.

As originally proposed, the CFPA would centralize consumer protection laws and staffs now located and managed within the Federal Reserve, the Federal Deposit Insurance Corp and other agencies criticized for doing a poor job ahead of the crisis.

Seeking compromise, Dodd in recent weeks has discussed multiple options with Republicans, but has not struck a deal.

OPTION STILL ON TABLE

The only compromise proposal still in play, aides said, is one that would make the CFPA a unit of a new bank super-cop that Dodd favors, the Financial Institutions Regulatory Administration (FIRA). Still disputed, however, is how much autonomy and rule-writing power to give the CFPA director.

Corker has said that failure to work out the CFPA issue could prevent Congress from producing any reform bill.

On another issue, the Dodd-Corker bill was expected to call for formation of an inter-agency council of regulators to monitor financial risk to the stability of the economy. Its chairman would be the Treasury secretary, with the head of the Fed as vice-chairman. Other details are being worked out.

"Dodd has endorsed the idea of a systemic risk council chaired by the Secretary of the Treasury, with the Fed chairman serving as vice chair," said Dodd spokeswoman Kirstin Brost.

The same approach was backed by the House in December. In a similar approach, Dodd had initially proposed forming a new agency governed by a council to oversee systemic risk.

Substantive disagreement remains among lawmakers over the council's powers, said Senate aides.

Dodd initially proposed allowing the council to mandate existing regulators to take specific policy actions.

Some Republicans agree that the Treasury should chair the council, but want to limit its power to issuing recommendations regulators could reject, subject to congressional oversight.

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