His proposals for regulatory reform, which are yet to gain congressional approval, will give new powers to the Treasury and the Federal Reserve.
Systemically important firms will be regulated by the Fed and will be forced to hold higher levels of capital. The proposals say if firms do fail the Treasury will be charged with winding them down.
Determining which firms are “systemically important” will take into account a firm’s size, its links with other institutions and the economic significance of its lending.
An oversight council made up of all the financial regulators will be responsible for overseeing the stability of the financial system as a whole and will be chaired by the Treasury Secretary.