It is not Washington's duty to regulate bonuses and executive pay, despite the fact that we now all own AIG. If we don't like what they are getting, then we can attend a shareholders meeting, and I will of course have the concession on old eggs and tomahtoes, and vote accordingly.
I think executive compensation and the compensation system for Wall Street scriveners has gotten so far out of hand that the free market and unrestrained capitalism has been dysfunctional in this area. This area needs thoughtful and insightful regulation, if taxpayer funds are involved.
Washington and some of its financial regulators have been attempting to regulate one distorted aspect of executive compensation for the last few years: "golden parachutes" in government-sponsored enterprises like Fannie and Freddie, and these arrangements essentially get wiped out for banking executives in "failing depository institutions" where the taxpayer is indirectly on the hook.