Fed could break up big banks posing "grave threat" to U.S.

The Federal Reserve would gain power to break up financial firms with $50 billion or more in assets under legislation unveiled Monday by Sen. Chris Dodd (D-Conn.).

If the Fed's Board of Governors determine that a company poses a "grave threat to the financial stability of the United States," the central bank could take steps to limit the risk. A new systemic risk council of financial regulators would need to vote two-thirds in favor of taking action against a firm.

The legislation includes provisions that the Fed could force firms to end certain activities as well as possibly sell parts of a company.