The systemic risk regulator envisaged under a U.S. overhaul of financial regulations should not add an unnecessary layer of hands-on supervision, the U.S. Chamber of Commerce said on Tuesday.

The Chamber, the nation's largest business lobbying group, said it does not oppose a systemic risk regulator, but said it should take a bird's eye view of policing risk across the economy and not duplicate the work of other regulators.

It's a very different thing to have the authority to identify risk than to have a regulator that's second guessing business, said David Hirschmann, president of the chamber's Center for Capital Markets Competitiveness.

The chamber laid out its views on reforms a day ahead of the Obama administration's planned announcement of its proposals on Wednesday.

Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers outlined the plan in the Washington Post on Monday, advocating stronger consumer and investor protections, new systemic risk policing powers for the Federal Reserve, and increased capital standards for financial firms.

Hirschmann said the chamber supports plans to require hedge funds to register with regulators, to add more transparency to the clearing of over-the-counter derivatives, and to increase the coordination of regulators.

But the chamber would not support the creation of a resolution authority that has broad power to unwind a troubled systemic financial firm or the creation of a financial products safety commission that cannibalizes current regulatory expertise, Hirschmann said.

He also reiterated the chamber's long-standing view that it opposes proxy access, a proposal moving its way through the U.S. Securities and Exchange Commission that would give shareholders greater say in nominating directors to public companies.

Regarding the systemic risk regulator, Hirschmann said the chamber likes the idea of a council of regulators with the Federal Reserve possibly leading the council, but does not want the body to duplicate the activities of other regulators.

We need to overhaul the system, Hirschmann said. We hope the administration is not listening to people who only want to tinker at the edges.

The chamber's views hold significant sway with Congress, which is hoping to pass sweeping legislation by the end of the year. But the overhaul faces many uphill battles, especially if lawmakers attempt to restructure regulatory agencies and strip responsibilities from them.

The administration has said it supports streamlining bank regulators, which could mean merging the Office of Thrift Supervision, which mainly regulates mortgage lenders, with the Office of the Comptroller of the Currency, which regulates some of the nation's largest banks.

It is less clear what will happen with the Securities and Exchange Commission and the Commodity Futures Trading Commission, which potentially have overlapping responsibilities, especially in the derivatives markets.

Hirschmann said lawmakers need to first fix the regulators by giving them more access to the markets and firms they regulate, but said fewer regulators makes more sense than more.

(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)

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