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The Obama administration on Tuesday mounted a full-scale push for government authority to shut down troubled institutions like insurer AIG to avoid the need for future bailouts.

U.S. Treasury Secretary Timothy Geithner, testifying before lawmakers still fuming about big bonuses for executives at bailout recipient AIG, called on Congress for new powers to take over big non-bank financial firms that run amok.

Federal Reserve Chairman Ben Bernanke strongly backed Geithner in testimony before the same committee, and President Barack Obama took the case public during a televised news conference on Tuesday evening.

“Keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse,” Obama said. “We should’ve obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system, we can handle, and we can do it in an orderly fashion that quarantines it from other institutions.”

When asked which agency should be given the authority to wind down major non-banks, Obama said the Federal Deposit Insurance Corp has a good model.

“If you look at how the FDIC has handled a situation like IndyBank for example, it actually does these kinds of resolutions effectively when it’s got the tools to do it. We don’t have the tools right now,” Obama said.

The FDIC has the power to resolve failed banks like IndyMac Bank, but does not have the power to wind down other types of financial firms.

AIG ran a global insurance company but also had a division dealing in derivatives contracts that has been likened to a hedge fund paydayloans.com. That unit took a big hit when the U.S. housing sector imploded, putting the entire firm at risk of a collapse that could have endangered the whole financial system.

Geithner said the government needed the same types of tools to deal with failing non-bank institutions that it already has to deal with struggling banks. Under his proposal, the Treasury chief would determine whether emergency action was needed in consultation with the Fed and the relevant regulator.

“As we have seen with AIG, distress at large, interconnected, non-depository financial institutions can pose systemic risks just as distress at banks can,” he told the House of Representatives Financial Services Committee.

Congress has already begun working on a revamp of financial regulations that is expected to include authority to wind down non-bank firms. Aides at the House panel said on Monday the committee would likely vote on a bill as soon as March 31.

House Republican leader John Boehner told reporters the Treasury’s request for authority to shutter non-banks sounded like “an unprecedented grab of power.”

But other lawmakers were more supportive.

“I welcome it,” Senate Banking Committee Chairman Christopher Dodd told reporters. “We’ve got to figure out a way to deal with this.”

AIG POSTER CHILD FOR WIND DOWN AUTHORITY 

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