American banks should refinance their riskier investment banking operations and the United States should adopt more stringent banking regulations, the departing director of the Federal Deposit Insurance Corp. (FDIC) told the Financial Times.

“(For) the very largest ones, we will need to see some structural changes,” said Sheila Bair, who will leave her post as chairman of the FDIC in a few weeks.

She warned that regulators now had the authority to demand that U.S. banks break themselves into smaller parts — and it “could and should be used.”

Bair is making a final push to end the concept that some banks are “too big to fail” by reaching international agreements on how to break up large financial groups and by pressing for further structural reform.

The FDIC will publish a report today showing how it would use new powers to wind down a company that is important for the financial system.

But for those powers to work, financial groups would need to be “resolvable” — capable of being wound down. Bair said regulators should have the capability to separate  a depository institution’s investment banking division.

Large banks, such as Bank of America Corp., would have to prepare a “living will” describing how they could be broken up in the event of collapse. See Ticker for related story.