WASHINGTON, April 27 (Reuters) - An alternative U.S. financial regulatory reform package crafted by Senate Republicans seeks to draw a brighter line between monetary and fiscal policy, according to a document obtained by Reuters on Tuesday.

In its battle against the financial crisis, the U.S. Federal Reserve used its emergency lending powers to support the housing market and markets for student loans and credit card loans, among others.

A number of top Fed officials, most vocally Philadelphia Federal Reserve Bank President Charles Plosser, have expressed discomfort with allocating credit to specific sectors of the economy, which they see as veering into fiscal policy in a way that could threaten the central bank’s independence.

Senate Republicans blocked a sweeping overhaul of banking rules for a second straight day on Tuesday as they sought to extract more concessions from Democrats eager to crack down on Wall Street.

In a section of their reform proposals titled “End Credit Channeling by the Fed,” Republicans would require the U.S. central bank and Treasury Department to delineate where and when emergency lending would amount to credit channeling.

“This is to address concerns growing out of the recent financial crisis that the Fed chose winners and losers through the choices it made regarding the allocation of credit,” the document said.

The proposals would also require the Fed and Treasury to establish provisions to remove from the Fed’s balance sheet assets the central bank took on during its financial fire-fighting that “are more properly regarded as fiscal policy actions.”

The Republican proposal said the Fed should only act as a lender of last resort to solvent firms against good collateral during short-term liquidity crises. It would tighten current collateral requirements for emergency loans, with detailed requirements on asset quality.

The Fed and Treasury would have to disclose loan recipients and collateral, and any emergency lending would require a sign off from the Treasury secretary and the majority of the Fed’s Washington-based Board of Governors.

Like Democratic Senator Christopher Dodd’s bill, the Republicans would require the president of the New York Fed to become a political appointee. He is currently picked by the bank’s board of directors subject to approval by the Fed’s Board of Governors in Washington.