WASHINGTON - Senator Bernie Sanders on Friday introduced legislation that would make the U.S. Treasury Department identify and break up financial institutions that are too big to fail.

Sanders, an independent, in a statement said: If an institution is too big to fail, it is too big to exist ... We should break them up so they are no longer in a position to bring down the entire economy.

The Sanders bill came at a time when Democrats in the U.S. House of Representatives were considering similar legislation.

Representative Paul Kanjorski, chairman of the House capital markets subcommittee is working on an amendment to give a proposed systemic risk regulator more power to regulate the size of firms whose failure could threaten the economy.

Sanders said: We should end the concentration of ownership that has resulted in just four huge financial institutions holding half the mortgages in America, controlling two-thirds of the credit cards, and amassing 40 percent of all deposits.

Sanders' legislation would give Treasury Secretary Timothy Geithner 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that he deems too big to fail.

That would mean any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance, the statement said.

(Reporting by Kevin Drawbaugh; Editing by Andrew Hay)