A House Financial Services Committee amendment that passed this week would empower federal regulators to dismantle financial firms considered “too big to fail.” The amendment, authored by House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises chair Paul Kanjorski (D-PA), was included to the Financial Stability Improvement Act with a vote of 38-29. The amendment would allow the dismantling of large firms whose collapse would put the US economy in risk, even if those firms appear to be well capitalized and healthy. “Today’s passage of my amendment marks a crucial step for the American people and for the protection of our financial system,” Kanjorski said in a statement. “I remember the dire situation we faced last fall, and we want to do everything we can to avoid such a situation in the future." Kanjorski added: "Looking forward, we have the capabilities to try to act in a preventative manner for the sake of every American and our economy. Most of us yearn for the day when the phrase ‘too big to fail’ is no longer a part of our vocabulary. Through responsible action advocated in this amendment, we can make that a reality.” The Financial Services Oversight Council would have oversight of any dismantling and would be responsible for evaluating firms. The council could not dismantle a firm without first consulting with the president. In other actions, a measure that would call for the first-ever audit of the Federal Reserve monetary policy passed the committee. HR 1207, authored by Reps. Ron Paul (R-TX) and Alan Grayson (D-FL), passed by a vote of 43-26. It removes the blanket restrictions of Government Accountability Office (GAO) audits of the Fed, but retains limited audit exemption on unreleased transcripts and minutes. It also sets a 180-day time lag before details of Fed's market actions may be released. “This is a major victory for Federal Reserve transparency and government accountability," Paul said in a statement. Write to Austin Kilgore.