For a second time in as many days, U.S. Senate Republicans mustered enough votes on Tuesday to block debate of a Democratic bill that would bring the biggest overhaul of financial regulation since the 1930s.

President Barack Obama and the Democrats want tighter rules on banks and capital markets to prevent a repeat of the 2008-2009 financial crisis, which tipped the economy into a deep recession and unleashed reform efforts worldwide.

Many Republicans say they see a need for reform, but oppose the Democrats' bill as an overreach by government.

Senate Republicans voted unanimously on Monday to block formal debate on the bill. They were joined then, and on Tuesday, by a Democrat who broke ranks, Senator Ben Nelson.

There were 57 votes in favor of starting formal debate, three short of the 60 needed, and 41 votes against.

I had hoped that the vote today would have allowed the Senate to move to consideration of Wall Street reform in a bipartisan manner, said Democratic Senator Tim Johnson.

Instead, the minority has decided it's better to delay another day. The Republicans also have yet to put forth their proposal on this because they don't want the American public to know if it's tilted in favor of Wall Street.

The Democrats' bill would set up an orderly liquidation process for dismantling large financial firms in distress, aiming to prevent more taxpayer bailouts like that of insurer AIG in 2008 and avert bankruptcies like the shocking collapse of Lehman Brothers in the same year, which paralyzed markets.

The bill would create a new financial consumer protection watchdog inside the Federal Reserve; impose regulations on the unpoliced $450-trillion over-the-counter derivatives markets; curb risky trading by banks; force hedge funds to register with the government; and crack down on debt securitization.

(Reporting by Kevin Drawbaugh; Editing by Dan Grebler)