"I don't want the federal taxpayer to be at risk for their bad debt and then the guy who incurred the debt gets tens of millions of dollars on the way out the door," Frank said on CBS's "Face the Nation."
Frank would like to include executive compensation limits in Treasury's $700 billion plan to buy up distressed mortgage-related assets.
Treasury Secretary Henry Paulson and congressional Republicans, in the hopes of preserving GOP support for the measure, would like the bill to remain as clean as possible.
"We have a difference on what's clean," Frank said. "Some private-sector people made irresponsible decisions because there wasn't adequate regulation. We'll deal with the regulation next year. It would be a grave mistake to say that we're going to buy up a bad debt that resulted from the bad decisions of these people and then allow them to get millions of dollars on the way out. The American people don't want that to happen, and it shouldn't happen."
Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee who appeared opposite Frank on CBS Sunday, reiterated his position that board members — not Congress — should determine executive compensation. But he makes an exception for government-sponsored entities, like mortgage giants Fannie Mae and Freddie Mac. Congress passed a housing bill over the summer that creates an independent regulator with the authority to set executive pay.