U.S. lawmaker mulls asking Madoff to testify

WASHINGTON (Reuters) - The chairman of a U.S. House of Representatives subcommittee said on Friday he would like to call on accused swindler Bernard Madoff to testify at a congressional hearing.

U.S. lawmakers are already set to take their first look on Monday at financier Madoff's alleged $50 billion fraud and why the Securities and Exchange Commission failed to discover the scandal.

Members of the House Financial Services Committee will be looking at the Madoff situation as a case study for regulatory reform of the financial markets.

"I think this will allow us to examine how it happened. There are obviously voids in the regulatory process," said Rep. Paul Kanjorski, a Pennsylvania Democrat and chairman of the House Financial Services subcommittee on capital markets.

Madoff is accused of running a fraud that ensnared investors and charities around the world. The SEC has been criticized for failing to uncover the scandal until Madoff's sons went to authorities and told them he confessed to the fraud.

The SEC's inspector general, David Kotz, who is heading up an investigation into the SEC's conduct in the Madoff case, is scheduled to testify on Monday.

Harry Markopolos, the former chief investment officer at Rampart Investment Management, who said he repeatedly tried to persuade the SEC to investigate Madoff, was supposed to testify on Monday. He is no longer able to attend as he is not feeling well, Kanjorski told Reuters in an interview.

Kanjorski said he would like to call on Madoff himself and said he would also like to hear from former SEC Chairman Arthur Levitt, who was at the helm of the SEC from 1993 to 2001.

"I would like to (call on Madoff) if we have that possibility," Kanjorski said.

Congress is getting ready to rewrite rules that govern financial markets and institutions after a tumultuous year in which stock markets lost trillions of dollars and the federal government had to bail out a number of financial services firms.

Everything is on the table, including the future of the SEC, the Commodity Futures Trading Commission and banking regulators like the Office of Thrift Supervision, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

"We need a major, major piece of legislation for regulatory reform in the United States," Kanjorski said.

Kanjorski said the SEC will certainly be a major player, but not the only player. "We have to look at the FDIC, we have to look at the Federal Reserve, the futures regulator. We have to look at all these areas," he said.

On Monday, the president of the Securities Investor Protection Corp, which was set up by Congress to maintain reserves to help investors at failed brokerage firms, will also testify.

(Reporting by Rachelle Younglai; Editing by Tim Dobbyn and Matthew Lewis)