By Rachelle Younglai

WASHINGTON (Reuters) - Democratic nominees to the Securities and Exchange Commission said they support adding regulations and staff to oversee investment banks if needed, according to testimony received by Reuters on Friday.

Elisse Walter and Luis Aguilar, who are being considered to fill the Democratic SEC commissioner spots, said they would support additional rules for firms like Goldman Sachs (GS.N: Quote, Profile, Research) and Lehman Brothers LEH.N, if needed, to protect investors and promote market stability.

Investment banking supervision has been scrutinized and criticized since Bear Stearns nearly collapsed when its liquidity dried up in March. The Federal Reserve opened its discount window to investment banks out of concern that the Bear crisis could lead to a systemic financial failure.

Now the Fed is working with the SEC to ensure that investment banks remain safe and sound.

"The commission should evaluate the risk management and financial stability of investment banks and take the steps necessary to address the systemic issues raised by the events of recent months," said Walter, a former SEC deputy director and now a senior executive at the Financial Industry Regulatory Authority.

Under the SEC's voluntary supervisory program, the agency oversees the country's four largest investment banks -- Goldman Sachs, Lehman Brothers, Merrill Lynch MER.N and Morgan Stanley (MS.N: Quote, Profile, Research) -- for liquidity and capital levels.

The SEC's chairman has urged Congress to decide which regulator should have primary oversight over the investment firms and to make it mandatory.

Aguilar, a partner at McKenna Long & Aldridge, said the SEC should consider working with Congress to review the regulatory framework as there appears to be no regulatory agency with explicit statutory authority over the firms.