Financial companies with more than 10 billion dollars in assets will have to pay for rivals’ failures or rescues under draft legislation released by the US Treasury and lawmakers.

The plan to address systemic risk in the financial sector will wind down failing institutions and end “too big to fail” bailouts that have been borne by taxpayers, the Treasury and the House of Representatives Financial Services Committee said.

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The proposed Financial Stability Improvement Act “provides for the orderly wind-down of failing firms and ends ‘too big to fail’ to ensure that industry and shareholders absorb the risks and costs of failure, not taxpayers,” they said in a statement.

The measure would be a cornerstone of President Barack Obama’s commitment to reform financial regulation and avert costly taxpayer bailouts of banks and other financial firms.

“The Financial Services Committee and the Obama administration are committed to ensuring that the taxpayers are never again called upon to take responsibility for Wall Street?s business decisions,” the sponsors said.

The 253-page draft legislation would create a federal resource fund to deal with failures or rescues that would recover expended funds that had not been recouped by imposing assessments on firms with more than 100 billion dollars in assets.

The bill would set up an interagency council to monitor and oversee stability of the financial system and address threats to that stability.

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It also would give the Federal Reserve and other federal financial agencies greater authority to “regulate for financial stability purposes” and quickly address potential problems.

Among its other provisions, the bill would subject thrift holding companies to Fed supervision and give the Federal Deposit Insurance Corporation, which insures bank deposits, the ability to unwind a failing firm.

“Costs to resolve a failing firm will be repaid first from the assets of the failed firm at the expense of shareholders and creditors, and to the extent of any shortfall, from assessments on all large financial firms. In this instance we follow the ‘polluter pays’ model where the financial industry has to pay for their mistakes — not taxpayers.”