Treasury plans to prevent bankers receiving "ludicrous bonuses" are receiving a mixed welcome ahead of the Queen's Speech.
The government is expected to introduce legislation giving the Financial Services Authority (FSA) power to tear up contractual agreements which allow bankers significant bonuses.
Chancellor Alistair Darling has said the City watchdog will be allowed to fine banks and stop bankers from receiving payments if doing so undermines the financial system.
He told the Sunday Telegraph: "Bonuses have been a symptom of the excessive behaviour of some banks over the last few years and even over the last few months," he said.
"[We will be] giving the FSA powers, if necessary, to tear up contracts that would result in payments being made that would cause instability.
"I've always been clear that I'm not against people being rewarded for hard work. What has gone wrong is where people were paid to take excessive risk and they were rewarded to do things that ultimately brought the banking system crashing down."
Treasury committee chairman John McFall said he welcomed the "radical measures" being taken.
"All serious commentators are saying the financial services system has, in terms of the rules governing it, broken down," he told the Today programme.
"It is putting the FSA on the front foot, whereas for a number of years it has been on the back foot."
But ex-RBS chairman Sir George Mathewson told the same programme the Treasury's ongoing persecution of the banks seemed unfair.
"The FSA probably has enough tools already in order to ensure that bonus systems which could be said to threaten the system should not exist," he said.
"I think it's somewhat sad that as we're moving out of the recession it is still seen as a political move to threaten the banks because actually we need the banks in order to get out of this situation satisfactorily."
Mr McFall pressed: "What we have to do is ensure they're run properly, where they weren't being run properly [before]."