Large financial institutions may need to make significant and potentially costly structural changes to comply with new U.S. “living will” requirements, bank regulator Sheila Bair said on Monday.

As part of last year’s Dodd-Frank financial reform law, large financial institutions must submit to regulators a plan for their orderly liquidation, a plan the U.S. government could use if a firm’s insolvency threatens the stability of the financial system.

Bair, chairman of the Federal Deposit Insurance Corp, told the Reuters Future Face of Finance Summit that financial firms will likely submit their living wills to her agency by the end of the year.

She said some large banks will probably have to make structural changes so that regulators can break them up if they are failing and seized by the government.

“If they can’t show they can be resolved in a bankruptcy like process.. then they should be downsized now,” she said.

“There is no reason in the world why they should get some special treatment backstop that other businesses in this country don’t have,” Bair told the summit in the Washington office of Reuters.

“Far too many of them, they manage their businesses along business lines as opposed to legal entity.”

Bair said her concern is directed at multinational institutions and that these firms may have to create more subsidiaries abroad to make it easier for regulators to liquidate them.

“The burden is on them initially to show us that they don’t think they need subsidiarization,” she said. “They need to give us a plan on how they can be resolved on an international basis without it.”

Bair said she was not advocating that some large banks be broken up now, but said they need to make changes so that they could be broken up if they begin to fail.

She argued banks could benefit from the process because it will give them a better understanding of the risk they face.

“They need to know what is in their bank,” she said.