By Michael R. Crittenden Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- U.S. House lawmakers are still mulling over a number of key issues on how to deal with the nation's largest financial-services firms, with the goal of passing legislation through the House of Representatives next month, a top Democrat said.

Rep. Barney Frank (D, Mass.), who chairs the House Financial Services Committee, said he anticipates the various pieces of regulatory overhaul legislation that have been proposed will be voted on by the House in December. That includes creation of a new consumer financial protection agency, new regulations for derivatives, and new authority to deal with the largest financial firms.

That measure would then have to be reconciled with similar measures being drafted by the Senate, which Frank said shouldn't be a problem.

"I do not think you're going to have huge differences on this one," Frank told reporters at a press conference.

Still, he acknowledged that a number of important questions remain unanswered and that lawmakers are still trying to determine how to properly address the problem of financial firms that are considered "too big to fail." In the end, however, he predicted the package of reforms would address many of the weaknesses exposed in the last year.

"This is not a one-shot operation. We are beyond the days of the breech-loading musket," Frank said. "This is the automatic rifle, the machine gun" dealing with multiple issues.

He said it is unlikely, as suggested by some lawmakers, that it would be written into law that a new systemic risk council would have to break up the largest financial firms. The council would have the explicit mandate to step in when those firms are deemed to pose a risk to the broader economy and financial system, as well as when they falter. New capital requirements and other prompt corrective action efforts would be at the council's disposal, he said.

Frank also discounted complaints from critics that a new resolution authority would create a permanent Troubled Asset Relief Program, the Treasury Department's $700 billion rescue fund enacted to deal with the financial crisis last year. Any aid provided to a large, failing financial firm will be paid for by industry participants.

"There will be no aid to any institution. Aid to the institution will be the equivalent of the last meal," Frank said.

Policymakers are considering ways to provide liquidity to solvent institutions, rather than those that are facing collapse. Frank cited the Federal Deposit Insurance Corp.'s program to provide debt guarantees to the banking industry as the type of program lawmakers are considering. He said funding and criteria for such a facility remain open questions, but that any program "will not put the U.S. Treasury at risk."

Frank's panel is schedule to begin debate Wednesday on the proposal to create a financial stability council made up of top regulators, as well as authorizing the government to wind-down the largest non-bank financial firms. A final panel vote is unlikely until next week, he said.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com

(END) Dow Jones Newswires

11-03-09 1533ET