Democratic Sen. Chris Dodd is proposing a new plan to regulate the country's largest banks and financial institutions.
The bill expands the power of the Federal Reserve by allowing it restrict the size of financial companies.
The legislation would also allow the government to break up institutions perceived to pose a threat to the economy and would create a new independent consumer protection agency.
Dodd, who is chairman of the Senate Banking Committee, hopes the legislation will help avoid another financial crisis.
"We must restore confidence and optimism in our economy, accountability in our markets and stability to our middle class," Dodd said. "The point of this reform bill is not to punish the financial services industry."
Many Republicans argue the bill gives the government too much power. If passed, it would be largest overhaul of regulations since the New Deal.