U.S. House Republicans won't back an Obama Administration proposal to give the government power to wind down non-bank financial firms.

Republican lawmakers advocate beefing up bankruptcy laws so that large, complex financial institutions can be resolved through that system rather than by a federal regulator that might use discretion to spread the costs of the failure, according to a summary of the GOP position obtained by Dow Jones Newswires.

Investors and counterparties will be more wary about risks if they don't believe the government will step in to prop up firms to prevent a disorderly collapse, Republicans argue in the document.

"Without this firm commitment to ending bailouts, too-big-to-fail financial institutions and those who do business with them have every incentive to pursue short-term gains, knowing that the costs will ultimately be borne by others if things go wrong," according to the document.

House Republicans, who are trumped by the Democratic majority in the lower chamber, prepared the document ahead of congressional hearings on financial regulatory reform set to begin Thursday.

Aside from the so-called resolution authority, Republicans are planning to reject other ideas offered by Democrats.

They said they won't support establishing the Federal Reserve as a systemic risk regulator, for example. Rather, they back the creation of a board chaired by the Treasury secretary and made up of bank regulators and outside experts to spot risks to the financial system. The board would have no power to impose capital standards or leverage ratios, but would periodically report its recommendations on these matters to Congress and regulators.

The Republican plan would end the government's conservatorship of Fannie Mae (FNM) and Freddie Mac (FRE) within two years. At that point, the mortgage giants would be put into receivership or spun out as purely private companies. Democrats haven't yet offered a plan for Fannie and Freddie, but are unlikely to support an end to all government involvement in the mortgage market.

The Republican plan supports one proposal thought to be backed by the administration that would create a single regulator for the banking system. The proposal, however, is unlikely to gain traction because it has been rejected by House Financial Services Chairman Barney Frank, D-Mass.

-Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com