Congressional approval of an Obama administration plan to create a systemic risk regulator for the U.S. economy looks more likely after lawmakers noted a change in tone by the Federal Reserve on Thursday.

We're on a course now to perhaps put together something that can be accomplished, said Democratic Representative Paul Kanjorski at a House of Representatives committee hearing where Fed Chairman Ben Bernanke testified on the issue.

In remarks to the House Financial Services Committee, Bernanke emphasized that a new council of financial regulators, not just the Fed, should monitor systemic risk to the economy. The Fed chairman said that this position was not new.

But lawmakers detected a shift in tone that could help the administration's financial reform program move forward on Capitol Hill, where it has been overshadowed recently by other issues such as healthcare reform.

There were some, myself included, who earlier this year thought that the Federal Reserve would have a larger role in this. Now it looks like it will be part of a conciliar structure, said committee Chairman Barney Frank.

The comments from Kanjorski, Frank and Bernanke came amid growing skepticism in Congress about the administration's proposal to give the Fed the lead role in policing systemic risk, albeit in coordination with an inter-agency council.

Bernanke told the committee the Fed is well suited to supervise major financial institutions of systemic importance, and he said those firms should answer to a consolidated regulator, whether or not the firms own banks.

But an inter-agency council should be used to monitor the very broadest sorts of risk, he said, underscoring an idea embraced by increasingly vocal critics of the Fed.

While the administration has backed the idea of creating an inter-agency council to work with the Fed, it has been firm on its determination to place the most power in the Fed.

We have never supported, and the administration has never supported, a situation in which the Fed would be some kind of untrammeled super-regulator, Bernanke added.

That has never been contemplated. The original administration proposal proposes a council and we support the council. We think it has a very valuable role to play.

GLOBAL REFORM PUSH

In the aftermath of the worst financial crisis in generations, President Barack Obama and other world leaders are trying to tighten regulation of banks and capital markets.

The effort got a boost from the Group of 20 summit meeting in Pittsburgh last week, where leaders urged major changes. But in the United States, banks are resisting proposed reforms, including one to create a financial consumer watchdog agency.

Bernanke said part of the origin of that proposal is disappointment with Fed's consumer protection performance.

We have not done what we should have done in this area, he said, adding that Congress must decide what to do next.

On another topic, Bernanke said he doubted hedge funds and private equity firms, hammered by the recession and the only recently reversed stock market slump, would rise to the level of being considered systemic economic threats.

I would not think any hedge fund or private equity fund would become a systemically critical firm individually, he said. However it would be important for the systemic risk council to pay attention to the industry as a whole.

The administration wants these firms to register with regulators and disclose more about their businesses.

Bernanke also highlighted the importance of another administration proposal -- creating a new resolution authority for the government to deal with failing, large financial firms that are not banks.

Lawmakers want to avoid further on-the-fly bailouts like those undertaken in 2008 by the Bush administration of firms such as AIG and Citigroup , while avoiding shocks to the system like last year's collapse of Lehman Brothers.

BETWEEN BAILOUT AND BANKRUPTCY

The push for a new approach, somewhere between bailout and bankruptcy, has raised concerns about a too big to fail culture that might encourage further excessive risk-taking.

That has to be eliminated and fixed, Bernanke said, adding he would not be happy with a resolution mechanism that did not impose losses on shareholders and creditors.

Some critics point to the failures of the Fed, along with other regulators, to spot the threat to the financial system posed by banks' exposure to the housing bubble that helped cause the credit crisis and push the world into a recession.

World Bank President Robert Zoellick on Monday sounded a cautionary note about granting greater regulatory power to the Fed, saying there had been lapses by central banks in monitoring risks in the run-up to the crisis.

Bernanke said it was a good idea for one single regulator to be responsible for supervising individual firms.

However, the broader task of monitoring and addressing systemic risks that might arise from the interaction of different types of financial institutions and markets -- both regulated and unregulated -- may exceed the capacity of any individual supervisor, he said.

Instead, we should seek to marshal the collective expertise and information of all financial supervisors to identify and respond to developments that threaten the stability of the system as a whole.

The comments appeared to represent a change of tone. Bernanke told a congressional committee on July 24 that taking on responsibility for the broad health of the financial system would be a natural outgrowth of the Fed's existing duties.

SHIFT UNSURPRISING

A shift in emphasis by the Fed chairman would not be surprising, said Joe Engelhard, policy analyst at investment research firm Capital Alpha Partners in Washington.

A key to the final outcome of the debate will be if the Fed gets clear power to intervene when systemic risk is detected.

Frank still wants the Fed to have all the authority it needs to address a future AIG or a future Lehman Brothers ... They're perfectly willing to beef up the oversight council because at the end of the day, as long as the Fed's got the authority, it can do what it has to do, he said.

On another front, Bernanke said the government needs a plan soon to redefine the role of bailed-out mortgage finance giants Fannie Mae and Freddie Mac . I hope in the very near future we'll have some proposals on that, Bernanke said.

(Reporting by Kevin Drawbaugh, Mark Felsenthal, Glenn Somerville, Karey Wutkowski and Rachelle Younglai)

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