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House Financial Services Chairman Barney Frank (D-Mass.) called for the government to formally take control of American International Group and sue employees who received bonuses.

Frank said it’s “time for us to take over the company.—

Although taxpayers have an 80 percent stake in the firm, Frank said covenants added during the federal bailouts limited government influence over the its operations. It’s time to exercise that ownership stake, he said.

“We own it,— Frank said.

The government should sue to get the $165 million in AIG bonuses back and would be in a better position if it owned AIG outright rather than simply as a lender and shareholder in AIG, Frank said.

He said he isn’t worried that talented derivatives traders could leave AIG without the bonuses.

“These are the people who caused the problem,— Frank said, adding that replacing them with qualified financial workers shouldn’t be hard. “It is hardly a tough market in hiring people with financial expertise,— he said.

Frank, who on Monday said heads should roll at the firm, said it is premature to know whether legislation would be needed to stop the bonuses, and he declined to comment on proposals to tax them at rates up to 100 percent, noting that is an issue for the Ways and Means Committee.

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