Washington  - President Barack Obama's administration, in a massive overhaul of the US financial regulatory system, is seeking the power to keep watch on all types of financial firms and to seize failing companies integral to the health of the system.

US Treasury Secretary Timothy Geithner unveiled the plans in congressional testimony on Thursday, arguing that the current financial turmoil has proven the system is "too unstable and fragile" to be allowed to manage itself.

"To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game," he said in testimony before the Financial Services Committee of the House of Representatives.

The Obama administration wants to task a single government regulator with broad oversight over the entire financial industry, including over derivatives markets and major non-banking financial firms such as hedge funds and insurance firms that have effectively remained outside the reach of government.

Geithner did not say which regulator would take on the task of monitoring the financial industry. Many have suggested the Federal Reserve, the US central bank, is best suited for the job.

The regulatory overhaul marks the latest element of Obama's efforts to stabilize a financial industry that has led the United States and wider world into recession.

It also fulfils a key demand of other governments, especially in Europe, who have pushed the United States to outline its regulatory reforms ahead of a summit of the Group of 20 (G20) nations on Tuesday in London.

Geithner said the US would be pushing for a "common approach" to regulation across governments during the G20 summit. One of the suggestions on the table includes a so-called college of supervisors that could monitor the largest multinational firms.

But many US lawmakers in both political parties are uneasy about granting the government broad new control over major financial firms, fearing that too much regulation could choke off innovation and growth of the US economy.

"It is important that as we rush to save our economy that we do not suffocate our economy," said David Scott, a Democratic congressman from Georgia.

A number of major US financial firms have failed since September and others have been given hundreds of billions of dollars in emergency government loans to preserve the stability of the US financial system.

The financial collapse has been blamed on unnecessary risks taken by Wall Street firms in the US mortgage market, but also on government regulators who failed to warn of an impending crisis.

"This crisis has made clear that certain large, interconnected firms and markets need to be under a more consistent, and more conservative regulatory regime," Geithner said. (dpa)