WASHINGTON, July 9 (Reuters) - U.S. Rep. Barney Frank said on Thursday he does not intend to seek limits on the size of financial firms as his committee drafts regulatory reform legislation and restructuring of major mortgage finance sources Fannie Mae (FNM.P: Quote, Profile, Research) and Freddie Mac (FRE.P: Quote, Profile, Research).

Frank, the Massachusetts Democrat chairman of the House Financial Services Committee, told reporters after a hearing that instead of size limits and similar restrictions to limit risk, he would focus on providing authority to wind down failing large financial firms and creating a systemic risk regulator.

"The biggest problem is that we have no option but total failure or a total bailout, like AIG on the one hand and Lehman on the other," he said. Regulators need authority to "go in and fire the bank president and wipe out the debt holders, but in a more orderly way," he said. (Reporting by David Lawder; Editing by James Dalgleish)