(Bloomberg) -- The Federal Deposit Insurance Corp. would create a division to take over and shut non-bank financial companies as part of the overhaul of U.S. regulations, Chairman Sheila Bair said.

Treasury Secretary Timothy Geithner suggested the FDIC get power to close failing non-bank institutions when he testified at a House Financial Services Committee hearing on March 26. Bair said the agency is ready to take on the added authority.

“If Congress did give it to us, we should consider perhaps a separate unit under the FDIC board or a separately branded name to deal with the non-bank institutions,” Bair said at an American Bankers Association meeting in Washington. “Legally separate and separately branded might be the way to go.”

The U.S. Treasury and the FDIC would be the main agencies to handle the closing of systemically important financial companies that aren’t banks. The plan follows procedures used by the FDIC on bank failures, without tapping the agency’s insurance fund. A new funding mechanism would be used, the Treasury has said.

Actions by government and the banking industry have been effective in helping to stem further declines in the financial industry, Bair said. The Obama administration unveiled a plan March 23 to remove devalued assets from bank’s balance sheets using as much as $100 billion remaining in the federal bailout program. The FDIC will auction the assets and guarantee purchases of illiquid real-estate assets to help start lending.

“I’m optimistic that it will help many banks clean their balance sheets and attract new private capital, and help give the government an exit strategy from their own capital investment program,” Bair said. “We are going to be doing it on a very measured and very transparent basis.”

The FDIC also is considering options to help banks “have adequate capital buffers” to absorb losses spurred by the worst financial crisis in seven decades, Bair said.

“We need to impose higher capital requirements,” Bair said. The agency is also raising its standards for deposit applications to ensure there remains a safety net of funds to cover bank failures, she said.