WASHINGTON (Bloomberg) - Timothy Geithner, President Barack Obama's nominee for Treasury secretary, said he believes that the federal government needs to consider the registration of hedge fund managers.

"The financial crisis has highlighted the urgent need to overhaul the oversight of our financial system," he said in written testimony to the Senate Finance Committee. "With an objective of bringing greater transparency and oversight, I believe that we should consider requiring registration of hedge funds."

Mr. Geithner, whose appointment was endorsed today by Senate panel, is the second Obama appointee to support the move toward hedge-fund registration. Last week, Mary Schapiro, slated to become the next head of the US Securities and Exchange Commission (SEC), made similar statements.

"There is a number of senators and congressman who seem to have warmed to the idea of registration," Barry Barbash, former head of the SEC's investment-management division and now a partner at Willkie Farr & Gallagher in Washington.

In 2005, the SEC passed a rule that hedge-fund managers should register with the agency. Registration required them to provide information such as their business address and assets under management and opened them to random audits.

The rule was thrown out by a federal appeals court in 2006 after it was challenged in a suit by Phillip Goldstein, founder and principal of Bulldog Investors in Saddle Brook, New Jersey.

"Given the court's decision in Goldstein, it would seem that legislation would be necessary" to compel fund managers to register, Mr. Barbash said.

Many hedge funds are already registered and some of the biggest managers support it.

Four hedge-fund managers - George Soros of Soros Fund Management LLC, John Paulson of Paulson & Co. and Philip Falcone of Harbinger Capital Partners, all of New York; and James Simons of Renaissance Technologies Corp. in East Setauket, New York - testified before Congress in November that some form of federal oversight was appropriate.

Investors "have a right to know what assets companies have an interest in - whether on or off their balance sheets - and what those assets are really worth", Mr. Falcone said in his testimony. His firm manages $20 billion.

The nomination of Mr. Geithner, 47, current president of the Federal Reserve Bank of New York, next goes before the full Senate for a confirmation vote.

Senator Max Baucus, a Democrat from Montana and the chairman of the Senate Finance Committee, said he wanted to move the Geithner confirmation to the Senate floor for final approval yesterday, while noting such a vote may not be possible.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.