Frank: Rewrite Law That Let AIG Get Direct Bailout

Rep. Barney Frank says Congress should rewrite a Depression-era law that the Federal Reserve used to give American International Group its initial government bailout.

Frank said Congress had no say in the decision last fall to plow $85 billion in taxpayers money into the insurance giant, and said that because of that no conditions were attached to the deal to limit or restrain the payment of executive bonuses.

The Massachusetts Democrat, interviewed Wednesday on CBS's "The Early Show," said lawmakers have since "gotten tougher on conditions." He said "it is my hope" that Congress will amend the statute that enabled the Fed to make the direct loan to AIG.

Frank is chairman of the House Financial Services Committee. Edward Liddy, the chairman and CEO of American International Group Inc., will appear later Wednesday before a Financial Services panel on Capitol Hill.