Such a provision is included in H.R. 4173, the Wall Street Reform and Consumer Protection Act, legislation that will be taken up on the House floor starting tomorrow.

The House bill would authorize creation of a fund of up to $150 billion. In the letter, the trade groups say that to create a $100 billion fund, roughly $13-to-14 billion per year would be needed in the next five-to-six years, "using conservative estimates."

The industry trade groups who signed the letter represent large property and casualty and life insurance companies. They joined trade groups representing securities, brokerage and mutual fund companies in signing the letter, which was sent to the chairman and ranking minority member of the Senate banking panel.

The Senate panel is working to draft bipartisan financial services legislation similar to the House bill. It hopes to have a bill ready for committee consideration before Congress departs for the Christmas recess.

"A new, prefunded systemic fund would threaten the economic recovery by diverting capital from job creation when previous efforts to augment capital are beginning to have an impact," the letter said.

"Further, there is no evidence that the existence of such a fund would deter the creation of new asset bubbles or other market distortions," the letter added.

Those groups signing the letter include the American Council of Life Insurers; the American Insurance Association; the Financial Services Forum; the Financial Services Roundtable the Property Casualty Insurers Association of America; and the Securities Industry and Financial Markets Association.