UPDATE 1-U.S. financial system in better shape -OCC's Dugan

(Adds Dugan comments on CRA, background)

WASHINGTON, Nov 19 (Reuters) - A top banking regulator said on Wednesday that the U.S. financial system, though still having problems providing credit to consumers, was in better shape than several weeks ago.

"Although we have many challenges ahead, important steps have been taken to assure financial stability, and the financial system is definitely in better shape than it was six weeks ago," U.S. Comptroller of the Currency John Dugan said.

In a prepared speech for a conference in Baltimore held by a nonprofit housing group, Dugan said regulators were focused on reinforcing financial stability, improving availability of credit and reducing foreclosures.

Dugan, whose agency regulates many big banks like Citi (C.N), Wells Fargo (WFC.N) and JPMorgan Chase (JPM.N), lashed out at critics who blamed a decades-old law requiring banks and thrifts to provide loans and services in underserved neighborhoods as the cause for the subprime mortgage problem.

"I categorically disagree," Dugan said in defense of the Community Reinvestment Act. "CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace."

Dugan said many lenders associated with subprime lending abuses and high rates of foreclosures are not subject to CRA requirements. (Reporting by John Poirier; Editing by Lisa Von Ahn and Matthew Lewis)