The U.S. government has started down the path to regulate many large financial firms outside the banking industry just like banks, and that's not a good thing, says Peter Wallison, a senior fellow at the American Enterprise Institute.

"Since the financial crisis in 2008, central bankers and bank regulators worldwide have repeatedly called for controls on shadow banking," he writes in The Wall Street Journal.

"But if bank regulators get their way, much of the U.S. financial system will lose its capacity for risk-taking as well as its dynamism, innovativeness and flexibility. And the U.S. economy would not be any safer."

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The regulators are eager to go after all participants in the capital markets and the securities business that aren't already subject to the restrictions on risk-taking and capital requirements required of banks, Wallison says.

Those institutions include securities broker dealers, finance companies, asset managers and investment funds, including hedge funds.

Congress must step in to prevent regulatory overreach, Wallison, says. "If nothing is done by Congress, and soon, we can expect that . . . these institutions will disappear into the welcoming arms of the Fed."

U.S. mutual fund companies argue against the idea that they should be designated as systemically important financial institutions (SIFI) and thus regulated like banks.

"New costs and new regulations applied selectively will distort the competitive landscape of our industry," Paul Schott Stevens, president of the Investment Company Institute, the fund industry’s trade association, said in a speech last month, Bloomberg reports.

 "The consequences of SIFI designation could significantly impair fund investing."

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