I think there are three arguments here.

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  1. We can’t claw back the money on a strictly legal basis. But that’s not clear at all; there’s considerable disagreement.

“The testaments to ‘the best and the brightest‘ – here, referring to the people of AIG Financial Products – reflect, I don’t know, either absolute, brazen obscenity, or a world-historical example of making the mistake of believing your own hype. The fact that people on Wall Street believe that they are the best among us is bad enough. The fact that people in Washington are willing to accept it is worse.” – James Kwak

NB: Meanwhile, Newsweek reports that AIG’s theoretically stable insurance business might be just as screwed as the financial products subsidiary.

Naked Capitalism: “It appears that Congress may finally be growing impatient with Obama. If these Congressional initiatives pass (and Speaker Pelosi seems likely to push these through in the next couple of days), they will be a direct rebuke to Geithner’s vision of providing bailout money with minimal strings attached.”