By Al Yoon and Walden Siew

NEW YORK (Reuters) - Treasury Secretary Timothy Geithner on Tuesday told a packed room of Wall Street dealers and bankers they could not look America in the eye and argue that financial regulation is fine as it is.

Geithner said the financial system was tragically fragile after experiencing the worst crisis since the 1930s, and the government must respond by adding new regulation as well as improving on current ones.

"It's a war of necessity, not a war of choice," he said at the Securities Industry and Financial Markets Association annual meeting in New York. "And it's a just war."

Geithner made the comments at the SIFMA event, where executives including JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned that overregulation could taint the financial sector's ability to aid economic growth. He said that Americans and Congress were behind the U.S.'s efforts, which will strike a balance between innovation and stability.

He also said that the financial industry is showing a strong interest in reform, overall.

"Of course, you will see people fight to preserve what will be in their short-term interests" but it's important that those efforts do not derail reform, he said.

Among reforms underway is a strategy that would make it easier for the government to seize control of institutions deemed "too big to fail" if they present risks to the financial system and the economy. The government would be able to oust managers, wipe out shareholders and restructure a firm's debt, an Obama administration official said on Monday.

JPMorgan's Dimon earlier on Tuesday reiterated his support for a resolution mechanism and systemic risk regulator that could deal with companies that become "too big to fail."

Consumer protection and financial stability are the two biggest areas targeted for major reforms that will go toward winning back confidence of investors and the American public, Geithner said. That will add to the economic stabilization and a broadening of the growth recovery already underway.

"We saw just a colossal loss of confidence ... and we need to fix that," he said.

SECOND STIMULUS PLAN? Continued...