By Karey Wutkowski and Rachelle Younglai

WASHINGTON (Reuters) - Top U.S. regulators, blamed for failing to uncover accused swindler Bernard Madoff, said they are exploring ways to boost oversight of broker-dealers and investment advisors to avoid an embarrassing repeat.

At a Senate Banking Committee hearing held on Tuesday to probe why regulators missed Madoff's alleged $50 billion fraud, a Securities and Exchange Commission official said the agency was considering how frequently to examine investment advisors.

Madoff registered as an investment advisor with the SEC in 2006, but the SEC did not examine those operations.

The explosive growth in the investment advice industry has overwhelmed the SEC and it is only able to examine about 10 percent of the registered advisors every three years.

Lori Richards, the SEC's director of compliance, inspections and examinations, said the agency is determining whether advisors should disclose more risk-related information, such as the identity of auditors and performance returns.

The SEC's director of enforcement, Linda Chatman Thomsen, said requiring third-party custody of customer assets should be considered along with more streamlined rules for broker-dealers and investment advisors.

The SEC has been criticized for not thoroughly following up on tips from one of Madoff's competitors and missing red flags, such as Madoff's ability to generate steady returns in all types of market environments.

"I am troubled by the sheer magnitude of the warning that the SEC received," said Robert Menendez a Democrat from New Jersey, who during one exchange with Thomsen asked if Madoff was smarter than the regulators.