The letter was sent in support of Amendment 3754 to S. 3217, the "Restoring American Financial Stability Act."

The amendment is sponsored by Sen. Patty Murray, D-Wash., and Susan Collins, R-Maine. It would provide for non-voting membership for state banking, insurance and securities regulators on the Financial Stability Oversight Council that would be created if the law is enacted.

"State regulators are uniquely positioned on the front lines of financial regulation and offer critically important perspective, expertise and regulatory data necessary to assess systemic risk," Ms. Cline said.

The joint letter from leaders of the three regulatory groups stated, "In all financial sectors, state regulators gather and act upon large amounts of information from industry participants and from investors."

The letter added that state regulators would bring to the FSOC the insights of a team of 'first responders' who see trends developing at the state level, which have the potential to impact the larger financial system."

Consequently, the letter said, "they serve as an early warning system identifying practices and risk-related trends that are substantial contributing factors to systemic risk."

Debate on the bill is expected to wrap up on Wednesday. One possibility is that such an amendment would be included in a bipartisan manager's amendment now being crafted by Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, and Sen. Richard Shelby, R-Ala., ranking minority member of the panel.