UPDATE 3-U.S. SEC nominee seeks to reinvigorate agency

(Adds further quotes and detail from hearing)

By Rachelle Younglai and John Poirier

WASHINGTON, Jan 15 (Reuters) - President-elect Barack Obama's pick to head the U.S. Securities and Exchange Commission told lawmakers she would reinvigorate an agency beset by regulatory missteps and blamed for missing one of the biggest investment frauds in history.

Mary Schapiro, a veteran regulator, was greeted warmly on Thursday by members of the Senate Banking Committee, which is expected to swiftly approve her nomination.

If confirmed by the full Senate, she would be chairman of an agency criticized for not helping to prevent the worst financial crisis in decades and for failing to uncover Bernard Madoff's alleged $50 billion fraud until his sons told authorities he had confessed.

"One of the first things I will do will be to try to take the handcuffs off the enforcement division," Schapiro told the committee. "I think the agency has to have a laser-like focus on fraud and investor protection."

The 53-year old Schapiro has spent more than two decades regulating financial markets with a resume that includes chairing the Commodity Futures Trading Commission and six years as an SEC commissioner.

With investor confidence shaken to the core, Schapiro said it is imperative that the SEC be given the resources and the support it needs to investigate and go after those who cut corners and break the law.

HEDGE FUNDS, CREDIT RATERS

After a year in which U.S. markets lost trillions of dollars and the federal government was forced to bail out large financial services firms, Obama and the new Congress are eager to revamp the country's regulatory structure.

It is unclear whether the SEC, now entering its 75th year, will stay in its current form or be dismantled. Schapiro said she would make sure that any regulatory overhaul preserved the SEC's commitments to investor protection, transparency, accountability and disclosure.

Schapiro appeared to embrace more regulation, saying complex financial instruments like credit default swaps and unregulated entities like hedge funds needed oversight.

She said she would boost the agency's office of risk assessment and raised the possibility of placing SEC examiners at credit rating agencies like Moody's Corp (MCO.N) and Standard & Poor's (MHP.N).

Schapiro looks likely to try and roll back some of the initiatives of departing SEC Chairman Christopher Cox.

She said the SEC needed to "step back" and look at the entire area of short-selling, including reinstating the "uptick rule" that forced short sellers to sell at a price higher than the previous trade.

Schapiro was also skeptical about the quality of international accounting standards that some U.S. companies would have to use by 2014 under a current SEC proposal.