WASHINGTON — Bank regulators taking one of their first steps to implement sweeping financial overhaul legislation expressed concern Tuesday that some requirements could cause more harm than good.

The Federal Deposit Insurance Corp.'s five-member board approved an initial step to replace the use of private credit ratings when reviewing bank capital levels. But not before regulators suggested the move, which is required under the Dodd-Frank bill enacted last month, could have its pitfalls.

"I do worry there is a little bit of throwing out the baby with the bath water," said Comptroller of the Currency John Dugan, who is scheduled to step down from his post at the end of the week.

FDIC Chairman Sheila Bair also signaled some reservations. While she described poor credit ratings as a "key contributing factor" to the financial crisis, Bair said decades of experience show that they can be useful in evaluating issues such as corporate debt.

"The task of replacing credit ratings with a better substitute will not be simple," Bair said.

Tuesday's comments highlight the imposing task facing regulators who must implement the 2,300-plus page bill, frequently in a short amount of time. The review of the use of credit ratings must be completed within a year, and is already delaying other regulatory efforts.

U.S. bank regulators were weeks away from finalizing their long-running effort to impose risk-based capital requirements for smaller institutions, but that process has now been delayed indefinitely due to the uncertainty regarding the use of credit ratings.

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