The US Government is moving closer to creating a single regulator to monitor risks to the entire financial system. The body would oversee America’s existing regulatory patchwork that has been blamed for failing to prevent the financial crisis.

Two additional regulators that protect consumers and investors are also likely to be part of President Obama’s shake-up of the oversight system.

Jen Psaki, a White House spokeswoman, said that Mr Obama was committed to signing a regulatory reform package by the end of the year. “But there is no final proposal in place and any announcement will not be for a couple of weeks,” she said.

Two months ago Timothy Geithner, the Treasury Secretary, announced broad proposals for a systemic risk regulator that would look at large, interconnected financial institutions. The new regulator could take over work done by the Office of the Comptroller of the Currency and the Office of Thrift Supervision, as well as removing some powers held by the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).

The Federal Reserve is seen as the most likely body to house the new regulator, despite criticism of its performance during the credit crunch and recession. The FDIC could be empowered to take control of struggling financial institutions if they threatened the welfare of the financial system.

The Securities and Exchange Commission (SEC) regulates mutual funds but could lose that brief to the new investor protection agency. There is also a possibility that parts of the SEC could be merged with the Commodity Futures Trading Commission to create the new investor regulator.

The SEC may be given new responsibilities, such as that of registering hedge funds and overseeing the over-the-counter derivatives market.

Sheila Bair, the chairman of the FDIC, has opposed the creation of an overarching regulator, citing concerns about an “excessive concentration of power” at any single agency. Changes to the American regulatory system must be approved by Congress.

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