House lawmakers are readying a stricter version of the administration’s proposed “resolution authority,” which would allow the government to seize non-bank financial institutions and dismantle them, wiping out the shareholders and imposing losses on bondholders.

The new version, due to be released early this week, will contain a more specific list of just what the government can do, the Wall Street Journal reported.

The new authority, similar to the existing authority of the FDIC to seize banks and wind them down, is designed to avoid the situation last year when the government had the unpleasant choice of either letting a financial institution fail, as it did with Lehman Brothers, or to mount a megabillion-dollar rescue, as it did with American International Group (AIG).

The House Financial Services Committee will hold hearings on the legislation Thursday and plans to take action on it next week. The Senate is expected to come up with its own version within a few weeks.

The House legislation, while allowing the government to wipe out shareholders, could give authorities the option of lending to a failing institution, the Journal reported. It could also place new limits on capital and debt at large financial institutions.

The new authority is designed to help the government prevent future market crises and to deal with companies perceived as too big to fail.

The revised proposal is also expected to set a trigger that would require large firms to boost their capital holdings if they run into trouble – the concept of contingent capital that Federal Reserve officials have touted in recent speeches.

According to other news reports, the banks themselves will have to bear the cost of winding down a failed systemically-important financial company. However, payment may come in the form of a levy after the fact, rather than an insurance premium ahead of a crisis.

“The principle ‘polluter pays’ is still in, but it’s just a matter of when,” one person involved in the legislation told the Financial Times.