WASHINGTON — The White House and congressional Republicans clashed Wednesday over how to protect taxpayers against “too big to fail” financial institutions, sharply disagreeing on whether legislation backed by President Obama would leave the government on the hook for bailing out firms whose failure might threaten the economy.

Obama, meeting with House and Senate leaders of both parties, insisted on a tough bill, specifically singling out oversight of previously unregulated financial instruments. How to regulate these products, known as derivatives, has become the latest point of friction between Democrats and Republicans.

But as the Senate prepares to begin debate in less than two weeks on legislation revamping regulation of the financial industry, the question of bailouts has elevated the sharp partisan differences over how to respond to the 2008 crisis that caused a near meltdown on Wall Street.

Both sides were testing populist messages, seizing on public disdain for big financial institutions. The White House argued that opposition to the bill amounted to support for Wall Street banks; Republicans said the Obama-backed bill would perpetuate bailouts of Wall Street firms rather than end them.

Obama, speaking briefly to reporters before the closed meeting, said he was “absolutely confident that the bill that emerges is going to be a bill that prevents bailouts. That’s the goal.”

Treasury Secretary Timothy Geithner later said that the cost of taking down large failing financial institutions will be borne by big banks, not taxpayers.

The House and Senate bills call for funds, financed by large financial institutions, to cover the costs of liquidating firms deemed too large to go through bankruptcy proceedings. Republicans have argued that the funds would not be sufficient and that taxpayers could still be on the hook to pay to deal with giant failures. They also argue that emergency loan authority by the Federal Reserve could also amount to a financial bailout.

The give-and-take, which officials said was more heated in public than in private, set the terms for the final debate on yet another of Obama’s priorities.

The president is hoping the Senate acts quickly and passes a bill that can be easily reconciled with legislation that passed the House in December. But Democrats need at least one Republican to overcome procedural hurdles, and the looming question was whether the administration and Senate Majority Leader Harry Reid would simply seek to pick off Republican senators or build a coalition through bipartisan negotiations.

Reid signaled Wednesday that he was ready to go to the floor and let Republicans offer amendments, rather than continue to bargain.

White House economist Austan Goolsbee dismissed the GOP objections as “totally disingenuous.”

“Bailouts are forbidden,” he said in an interview. “There will only be wipeouts. They (the banks) will clean up the messes. If somebody fails, they’re done. They’re toast. The management is fired. They’re broken up or sold off or liquidated.”

The White House says GOP lawmakers are using campaign strategist talking points to label the legislation as a bank bailout, regardless of the truth.