The panel overseeing the government's bailout efforts released a report Thursday blaming the financial crisis on deregulation.

The Congressional Oversight Panel for the Troubled Relief Asset Program endorsed the idea of creating a systemic risk regulator; a receivership process for nonbank institutions; supervision of hedge funds and private-equity firms; and a single federal consumer credit regulator. Its 108-page report also advocated reforming the credit rating process,

"This is not an insolvable problem," Elizabeth Warren, who chairs the panel, told reporters. "This happened because we made deliberate choices as the finance world innovated not to adjust regulation and respond."

The two Republicans on the five-member panel — Rep. Jeb Hensarling of Texas and former Sen. John Sununu of New Hampshire — dissented. "What the panel report suggested is that a systemic risk manager identify the systemically important firms and impose special capital standards or regulations on them," Mr. Sununu said in an interview. "The markets are going to look at that and assume that those firms are going to be given special treatment during times of financial stress. That creates enormous moral hazard.

The panel's report recommends a systemic risk regulator be created in a new or existing agency, such as the Federal Reserve Board. It also suggested current regulators could coordinate to impose strict capital and liquidity requirements for systemically significant institutions, and establish a receivership process for systemically important nonbank institutions.

A blueprint released by the Bush administration last March also called for the creation of a systemic risk regulator.

"If companies that are now deemed 'too big to fail' had been better regulated, either to diminish their systemic impact or to curtail the risks they took, then these companies could have been allowed to fail or to reorganize without taxpayer bailouts," according to the report. "The creation of any new implicit government guarantee of high-risk business activities could have been avoided."

The oversight panel also recommended eliminating preemption of state consumer protection laws while also creating a single federal regulator for consumer credit products. It called for reform of executive compensation standards and credit rating agencies by establishing a regulator and limiting how much agencies can earn from issuers to prevent conflicts of interest.

It also suggested closer regulation of the "shadow financial system," including derivatives and hedge funds.

The Republican dissent suggested rechartering Fannie Mae and Freddie Mac as mortgage guarantors only and prohibiting them from maintaining large investment portfolios. They also backed simplifying mortgage disclosures, consolidating regulators (including a single federal bank regulator), and establishing a clearing house for credit-default swaps.

The Oct. 3 law creating Tarp authorized the oversight panel to issue monthly reports tracking its implementation. The panel's two previous reports criticized the program's lack of transparency and the Treasury's refusal to use it to implement a foreclosure mitigation plan.

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