After the U.S. government used hundreds of billions of taxpayer dollars to bail out various financial firms that failed because of poor investment decisions in 2007, outcry has come from legislators and citizens alike.

Now, according to Reuters, the Senate is considering a bill that would change the way financial firms are regulated when in economic difficulties.

Here’s an overview of what the bill, in its current revision, would do:

• Grant power to the FDIC: In one version of the bill, the Federal Deposit Insurance Corporation would have the power to dissolve or dismantle financial firms in significant financial trouble. The FDIC would then play a role in guaranteeing debts held by such firms.
• Introduce a preference for bankruptcy: The bill would also steer troubled finance firms more firmly toward filing for bankruptcy in times of crisis. Should a bankruptcy filing fail, the bill would create an alternative option for regulating the companies.

Details about the bill have been kept quiet, as the legislation is still in its early stages and will likely face several revisions and alterations as it proceeds through the Senate and the House of Representatives.

So Would It Help?

The theory behind the bill, it seems, is that taxpayers shouldn’t have to pay for the mistakes made by executives and directors of financial firms (something few Americans are likely to disagree with). By making bankruptcy more difficult to avoid for struggling firms, the law would (in theory) render decision-makers in financial firms more accountable for their policies.

In addition to guiding troubled firms toward bankruptcy, the bill could introduce other regulations, such as limits on executive pay. Perhaps unsurprisingly, Republican senators are reportedly less than thrilled about the prospect of some of the bill’s terms.

Whether or not this bit of legislation will pass into law is difficult to say at this early time: between the varied legislator concerns and the needs of the country’s financial systems, a final version of the bill could look very different from this one.