U.S. Treasury Secretary Timothy Geithner appeared before Congress Thursday to discuss the Obama administration's plan to overhaul the nation's financial system.  Lawmakers agree on the need for reform, but expressed skepticism about the administration's proposal.

A day after President Barack Obama announced a broad financial regulatory plan, Treasury Secretary Geithner sought support on Capitol Hill.

He testified before the Senate Banking Committtee:

"Our core challenge is to design a system which has the proper balance between innovation and efficiency on the one hand and stability and protection on the other," said Geithner. "We did not get that balance right and it requires substantial reform."

But the plan, which would give the Federal Reserve more powers, consolidate the nation's banking regulators, and create a new agency to protect consumers from financial products, was met by skepticism from lawmakers of both political parties.

Committee chairman Chris Dodd, a Connecticut Democrat, questioned the plan to give the U.S. central bank greater oversight for large financial firms in addition to existing powers to set monetary policy in this exchange with Geithner:

DODD: "Given concerns about the Fed's track record and multiple responsibilities that the Fed already has, why is it your judgment that the Fed should be given additional extraordinary authority and power and could it not conflict with its fundamental responsibility to conduct monetary policy?"
GEITHNER:  "Central banks everywhere around the world, in this country and everywhere else, were vested with the dual responsibility from the beginning for both monetary policy and some role in systemic financial stability.  There is no necessary conflict between the two roles."

But the top Republican on the committee, Senator Richard Shelby of Alabama, was not convinced:

"I do not believe that we can reasonably expect the Fed or any other agency effectively play so many roles," said Shelby.

Senator David Vitter, a Louisiana Republican, expressed concern over an administration proposal that would require the Treasury to approve emergency loans from the Fed to a troubled financial institution.  Currently, the Fed needs no such approval.

"I think that is really crossing the line and a is sort of fundamental change in terms of the nature of the Fed, and I just point that out as a big concern, because all of a sudden the Fed is acting more like a department of the government than an independent bank," said Vitter.

His testimony came as some positive economic reports were released.

A private research group, The Conference Board, said it index of leading economic indicators, designed to forecast activity in the next three to six months, rose 1.2 percent, its largest gain since March 2004.

The Labor Department reported the total number of people collecting long-term unemployment insurance fell by 148,000 to just under 6.7 million in the week ending June 6.  It was the largest drop in more than seven years, and ended a string of 19 straight record-highs.