July 16 (Bloomberg) — Democratic and Republican lawmakers are cooperating on legislation that would lift some of the secrecy around the U.S. council that decides which companies pose the biggest risks to the financial system.

The proposed legislation, drafted with help from the main lobbying group for mutual funds, would require the Financial Stability Oversight Council to give firms early notice that they could be designated systemically important — a status that puts them under Federal Reserve oversight in an effort to dispel any perception they are "too big to fail."

The measure, which could be introduced as soon as this week, has raised concerns at the Treasury Department, in part because it is the first bipartisan drive to limit the powers of the council, a centerpiece of the 2010 Dodd-Frank Act. Top agency officials have been working to tamp down the effort, people familiar with the matter said.