WASHINGTON - U.S. industry is freshening its attack on financial reform, pledging more cash to defeat a new consumer agency and raising concerns over a provision that could force secured creditors to shoulder losses.

The U.S. Chamber of Commerce on Tuesday unveiled a new radio and television advertising campaign that portrays the proposed Consumer Financial Protection Agency as a threat to small business and economic growth.

The push comes just one day before the full U.S. House of Representatives is scheduled to start debating a massive legislative package that would overhaul financial regulation.

The chamber, the nation's largest business lobbying group, said it will spend well more than its original estimate of $2 million to quash plans to create the new agency.

Another controversial proposal that is part of the sweeping reform package is one that would force secured creditors to take a 20 percent loss if a large financial firm fails.

Institutional investors said on Monday they were concerned the haircut provision could sharply increase banks' costs and damage the financial system.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, proposed the idea of such a haircut months ago, saying it would impose market discipline. She also conceded it would be controversial and could influence banks' cost of funding.

The two proposals are part of a massive financial reform bill that the House will begin debating on Wednesday and possibly vote on by the end of the week.

It aims to enhance policing of large financial firms, the over-the-counter derivatives market, hedge funds, credit rating agencies and executive pay, as well as stiffening government safeguards for consumers and investors.

The Obama administration wants dramatic changes to prevent the excessive risk-taking and shoddy consumer protections that led to a virtual meltdown of financial markets last year and hundreds of billions of dollars in taxpayer-funded bailouts.

The reform bill was approved last week by the House Financial Services Committee and heads to the House floor with more than 200 amendments, which could delay its approval.

The Senate has been slower to act, and serious debate on financial reform may not happen there until early next year.

The Chamber of Commerce said it will monitor the House floor debate this week, but will focus its efforts on the Senate, which it hopes will be more responsive to its pleas to pull back on the Consumer Financial Protection Agency (CFPA).

David Hirschmann, president of the chamber's Center for Capital Markets Competitiveness, said the CFPA, as proposed, would drive up costs for consumers and small businesses, and add an onerous new layer of regulation.

On Tuesday the chamber released its proposal for an alternative to the new agency -- a Consumer Financial Protection Council house in the Federal Trade Commission. The FTC chairman would head the council and the federal bank regulators would be members on the council.

Hirschmann said the approach would better coordinate regulators and avoid the costs and burdens of a new agency.

(Editing by Andrea Ricci)