UPDATE 3-US House speaker wants product safety chief to go

(Recasts; adds lawmaker and White House comments)

By Kevin Drawbaugh and Diane Bartz

WASHINGTON, Oct 30 (Reuters) - The top Democrat in the U.S. House of Representatives called on Tuesday for the nation's chief product safety regulator to resign, following a wave of recalls this year of millions of lead-tainted toys made in China.

As the White House and business groups criticized legislation meant to beef up safety oversight, House Speaker Nancy Pelosi and other Democrats urged the ouster of Consumer Product Safety Commission (CPSC) Acting Chairman Nancy Nord.

A bill approved by the Senate Commerce Committee on Tuesday, like other proposals in the House, would give the the safety agency more money and staff. The small agency has about 420 employees, less than half its workforce in the 1980s.

The safety agency, criticized at a September hearing for having just one employee testing toys, has come under intense scrutiny amid the flurry of recalls.

In early October alone, recalls ranged from Cub Scout badges to play blocks and Halloween candy buckets.

"Any commission chair who ... says we don't need any more authority or any more resources to do our job does not understand the gravity of the situation," Pelosi said.

"I would join my colleagues ... in calling upon the president of the United States to ask for the resignation."

Three other Democrats -- Ohio Sen. Sherrod Brown, Connecticut Rep. Rosa DeLauro and Illinois Rep. Bobby Rush -- also called for Nord to step down.

"She needs to resign," said Rush, chairman of the House consumer protection subcommittee. "The Consumer Product Safety Commission has been out of commission for a long time."

A CPSC spokeswoman could not immediately be reached for comment.

The lawmakers said Nord did too little in the wake of recalls of millions of lead-tainted toys imported by Mattel Inc MAT.N, RC2 Corp (RCRC.O) and other companies. High levels of lead are linked to brain damage in children, and even death.

Nord has criticized parts of the Senate bill that would boost funding and staff for her agency and make other reforms.

The Bush administration said that, like Nord, it opposed some parts of the bill, including a proposal to require that whistle-blowers get 15 to 25 percent of any civil penalty imposed in a product safety case.

BILL BOOSTS PENALTIES

The bill would also boost the maximum penalty in consumer product safety cases to $100 million from $1.25 million. This would raise the potential for meritless claims by "bounty hunters," Allan Hubbard, the president's economic adviser, in a letter to Senate Commerce Committee Chairman Daniel Inouye, a Hawaii Democrat.

The White House also opposed a measure to delegate some product safety enforcement to state attorneys general, in addition to the federal safety agency.

The White House concerns are shared by the National Association of Manufacturers, the National Retail Federation, and several other industry groups.

Hubbard said the administration recently launched a working group on import safety that is looking at many of the same issues as the Democrats' bill and that it will develop an "action plan."

At a briefing with reporters, White House spokeswoman Dana Perino said: "There's never going to be any way that we will have enough people to inspect every single item that comes into this country that's going to be sold ... But you can have better systems, and that's what we're trying to work towards."

The bill approved by the Senate Commerce Committee included the provisions criticized by the White House. It would also require third-party laboratory testing of children's products and raise agency staffing to at least 500 by 2013. (Additional reporting by Julie Vorman)