The heads of both Congressional financial services panels pledged to finish legislation reforming the regulatory system this year.

House Financial Services Committee Chairman Barney Frank, D-Mass., and Senate Banking Committee Chairman Chris Dodd, D-Conn., told President Obama in a letter Monday that they will join forces to quickly overhaul a system whose cracks have been amplified by the financial crisis.

The administration has already proposed broad reform of financial services oversight, including the establishment of a systemic risk regulator, higher capital levels for systemically risky firms and stronger regulation of hedge funds and derivatives.

"We agree on the core principles for modernizing the financial regulatory system that you" and Treasury Secretary Timothy Geithner "have articulated, including providing for systemic risk regulation, strengthening consumer and investor protection, streamlining prudential supervision and addressing gaps in regulation," the letter said.

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