WASHINGTON — The House Financial Services Committee approved 31 to 27 on Wednesday a bill that would give the Federal Reserve Board the power to oversee systemically important firms, and allow the Federal Deposit Insurance Corp. the ability to resolve them if they fail.

The legislation, which passed along party lines, is the last major chunk of the panel's regulatory reform package. House debate on the complete package, which includes other bills to create a consumer protection agency and regulate derivatives, is expected to begin next week.

The committee approved the bill despite the absence of members of the Congressional Black Caucus, who succeeded in delaying the vote before Thanksgiving, citing lingering frustrations with the Obama administration for failing to adequately address how the recession is hitting poor and minority communities.

Committee Chairman Barney Frank said he hopes to have a robust debate on the complete package in the House and consider several amendments starting Wednesday with final passage expected by Friday.

"I want a lot of debate. I want a lot of amendments and full debate we have Wednesday, Thursday and Friday of next week scheduled," the Massachusetts Democrat told reporters after the vote.

In addition to the systemic risk bill and a separate measure approved Wednesday to create an office of insurance information within the Treasury Department, the reform package the House plans to take up includes measures to regulate derivatives, establish a consumer protection agency, enhance investor protections, and reform the credit rating agencies. It would also include previously passed bills to tighten subprime mortgage underwriting and tie executive compensation to performance to reduce incentives for excessive risk taking.

Frank said the overall effort is designed to ensure that bailouts aren't repeated and that in the event of a major firm's collapse the system is insulated to allow its failure without shutting down the credit markets and crashing the economy.

"The package as a whole is this: to make it much less likely that there will be failures of institutions that have become so big and so indebted to so many people that their failure effects not only themselves but the whole economy," Frank said. "If it happens, we will put them out of their misery but we also do things to make it less likely that it will happen by beginning regulation of derivatives, by having a systemic risk council that can tell institutions you are now in trouble and you have to reduce your leverage and raise your capital; you have to sell off this institution."

The systemic risk bill culminates several weeks of contentious partisan debate during which the legislation underwent significant changes, several of which are designed to make it more onerous for large institutions to operate.

It would create an interagency council to monitor and identify firms that pose a risk to the economy, and give the Fed power to raise capital and leverage requirements on those firms. The council would be able to force any systemically important firm to break up if it is deemed a threat based on its size or interconnectivity.

It would also allow the FDIC to unwind a systemically important firm, but prevents it from giving help to an open and operating large institution.

The bill includes a multitude of other provisions. It would alter how deposit insurance premiums are calculated to factor in assets, which would cause many large institutions to pay more than their current assessments.

It would also require systemic risk premiums to be paid in advance to fund the cost of resolving large institutions. The legislation would set up a $150 billion systemic dissolution fund which would assess institutions of $50 billion and greater in assets. The FDIC could borrow from the Treasury until the dissolution fund reaches $150 billion and if more is needed the FDIC could borrow an additional $50 billion pending Congressional approval.

Republicans immediately seized on the committee action, decrying Democrats for indoctrinating bailouts.

"The debate was a clear choice between ending the bailouts and creating a permanent bailout regime. I'm disappointed my Democratic colleagues chose to continue the bailouts rather than make those who took the risks bear the consequences of their actions," said the panel's top Republican Spencer Bachus in a press release.

But Frank flatly rejected the GOP's arguments.

"It's not a bailout," he said. "That's just exactly stupid."

The legislation also includes a controversial amendment that Rep. Ron Paul, R-Tex., pushed for 26 years which would expose the Fed to audits by the Government Accountability Office. The provision was adopted over objections of Frank since the powers could encroach into how monetary policy decisions are made and politicize such actions.

The legislation would also remove the Fed's emergency powers to unilaterally provide assistance to individual firms under 13 (3) although a separate provision in the bill would give the FDIC authority to set up a liquidity facility for solvent firms.

Despite his concern about threatening the independence of monetary policy, Frank said he did not expect the Paul language to change.

"At this point my guess is that it will not be changed," he said.

Another controversial provision adopted by the panel is a provision that would let the FDIC force secured creditors to take a 20% haircut in a resolution of a systemically important institution. The provision would effectively prevent the Federal Home Loan Banks from being able to offer advances to large banks and would significantly raise the cost of banks offering their own secured debt.

Frank said that the amendment's sponsor, Rep.  Brad Miller, D-N.C., was drafting a new amendment to change it but did not elaborate on the details.

"It's being debated," he said. "I expect to see an amendment on that. I voted for it, but it was only 34 to 32. It was narrowly divided and Brad Miller is really talking to a lot of people about that."

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