WASHINGTON — Senate Banking Committee Chairman Chris Dodd's regulatory reform bill is generally winning praise for provisions giving the government more power to smoothly unwind a large, systemically important firm, but is also raising a host of practical concerns observers say could undermine its effectiveness.

Chief among them are whether the Federal Deposit Insurance Corp. could handle such a failure, if a proposed judicial review would have any impact and if a $50 billion resolution fund would simply spur more bailouts.

Those issues and others are likely to surface this week as Senate Banking begins to debate the Dodd bill today.

"When you read it, it looks like it makes sense, but when you think about how it will work in practice you have to kind of dial your brain back to the Lehman bankruptcy," said Joseph Mason, Louisiana Bankers Association Professor of Finance at Louisiana State University. "This is not clean at all. It is a very messy construct and more thought needs to be devoted to this."

Still, Mason, who has advised Republicans on the provisions, said the latest draft was the most thought-out version of resolution language he's seen so far.

"It is an improvement from the previous bill," he said. "They've gotten off of how to prop firms up and moved to how to shut them down."

The resolution provisions resulted from extensive negotiations between Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., who began grappling with the issue last year and were asked by Dodd to craft a bipartisan agreement.

The provisions are designed to give regulators the tools to conduct an orderly wind-down of a systemically significant financial firm. The provisions would expand the FDIC'S powers to resolve banks and extend them to cover systemically significant holding companies, insurance companies, broker-dealers and hedge funds.

Still, under the bill, the vast majority of firms would see no change. Most holding companies would go through the bankruptcy process in the event of a failure.

The new system would apply only to those firms that the FDIC, Federal Reserve Board and Treasury secretary, in conjunction with the president, determine are systemically important.

Even in that scenario, the Dodd bill would force regulators to first go to a private panel of three judges in Delaware and prove that they have sufficient evidence the firm is insolvent. The judges have 24 hours to object. If a majority of the judges agrees, the FDIC could then act as a receiver, most likely by setting up a bridge institution and selling off the failed company's assets.

But many observers are still scratching their heads at this judicial-review process. For starters, it isn't clear why the Dodd bill selected a Delaware bankruptcy court when most mega institutions are based in New York and regulators are based in Washington.

Others are questioning what the point is, arguing that the judges are unlikely to disagree with the president and regulators who say the failure of a critical firm is imminent.

"It's going to be tough for a couple of judges when the secretary of the Treasury tells them, 'I just got off the phone with the president. We think this company is going to nuke the economy, and if you stop us we are going to talk about you in the State of the Union,' " said Phil Swagel, a professor at Georgetown University and a former Treasury assistant secretary for economic policy in the Bush administration. "It's a speed bump. It's not totally window dressing, because it does force the executive branch to write down its arguments."

Speaking at a Pew Financial Reform Project event Thursday, Corker said that the judicial-review process needs fine-tuning and that he is already taking steps to improve that section of the bill with Senate Judiciary Committee Patrick Leahy, whose panel has jurisdiction over bankruptcy courts. Corker is mainly worried about what happens during the 24 hours that the bankruptcy court has to weigh the question.

"We have a 24-hour period for judicial review now, and candidly there's something we need to resolve," he said. "We're still talking to Treasury and others because there is a gaming period that is a hole, I guess."

But Corker insisted that some type of brake is needed on the executive branch and the regulators.

"What we don't want to have in this country are executive branch agencies who are overzealous and in essence take down companies without some process there to put that in check," he said. "There's some strengthening that needs to take place … but the slant for companies is toward bankruptcy. We've made it such for companies that resolution is really, really painful. If you go into Chapter 11, you can come back out of Chapter 11. If you go into resolution, it is no fun. It is over and done and you are gone."