Federal Reserve Chairman Ben Bernanke said on Tuesday the September rescue of American International Group was warranted to avoid a potential 1930's style meltdown, but showed new rules were essential.

AIG highlights the urgent need for new resolution procedures for systemically important nonbank financial firms, Bernanke said in prepared testimony to the House of Representatives Committee on Financial Services.

(Reporting by Alister Bull; Editing by Theodore d'Afflisio)