FDIC head: House bill could 'end the bailouts'

Provisions in House legislation to reform the U.S. financial system would "end the bailouts," the chairwoman of the FDIC said Monday.

Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation (FDIC), told CNBC, said that proposals in a bill by House Financial Services Chairman Barney Frank (D-Mass.) to address so-called "too big to fail" institutions could bring an end to the government support for large institutions teetering on the brink of failure.

"It'll create a legal mechanism so that if a large financial organization can't stand on their feet anymore -- they can't fund themselves anymore, they become insolvent -- instead of the government putting money into them to prop them up, they're put into a receivership and then unwound in an orderly way," Bair said during a brief interview by CNBC.

"It really is to end the bailouts, and come up with a mechanism to deal with large institutions if they cannot stand on their own two feet anymore," she added.

The FDIC has authority to wind down smaller financial institutions right now, but would need authorization to be able to take over larger firms at risk for failure.