A key Democratic lawmaker has outlined his plans to use legislation the U.S. Congress would approve in coming months to impose greater controls on financial firms to protect investors and help avoid another financial system collapse. Republicans stepped up pressure on Democrats over financial issues.

In his most extensive remarks yet on reform plans, House Financial Services Committee Chairman Barney Frank detailed steps he says are needed to reduce systemic risk through increased regulation, and new restrictions on financial institutions.

A key to avoiding a repeat of the U.S. financial meltdown, says Frank, is to discourage excessive risk taking, a task he believes will likely fall to the U.S. Federal Reserve. 

"There is an emerging consensus I believe that probably the Federal Reserve will be given the power to do systemic risk regulation, covering all forms of financial activity and it will have some flexibility as to what the reach is." he said.

Frank says it remains to be seen how much reach, or regulatory authority, this would entail, adding he hopes Congress will have a general outline by April.

New authorities, he adds, should not weaken the capabilities of existing bodies such as the Securities and Exchange Commission.

Among other steps, Representative Frank is looking at establishing a commission to assess the reliability of investment products, which grew sharply in number before the financial crisis.

Others include tougher restrictions on sub-prime loans, and government action to make rental housing more affordable.

Frank refers to what he calls deeply-rooted anger among average Americans about unfairness in the financial system, something he says banks and institutions must address.

"You cannot get credit restored without doing something that will be of benefit to the existing group of people. As I said to a couple of the bankers, here is the problem, people really hate you, and they are starting to hate us for hanging out with you and you have to help us deal with that. For example, you have to avoid being stupid," he said.

In explanation, Frank refers to billions of dollars in bonuses banks and other institutions paid out to executives even as companies received government bail out money.

Assuring accountability for how government funds are spent will be a key focus for lawmakers.

Next week, eight financial institution executives testify before Frank's committee on implementation of the much-criticized $700 billion Troubled Assets Relief Program, or TARP.

Frank's remarks came as House Republicans launched a new stage of pressure on majority Democrats and President Obama over that program.

In a letter to Treasury Secretary Timothy Geithner and National Economic Council chief Lawrence Summers, the Republicans ask the administration to provide an exit strategy from the TARP and what they call the government's sweeping involvement in financial markets.

President Obama and Geithner are expected to unveil details next week about new accountability and transparency rules for banks receiving government aid, amid reports the administration is preparing yet another financial institution support plan.