Financial Regulation: too much or much needed

I was debating whether to discuss my views on financial regulation or healthcare. Seems to me that the healthcare debate is going to be in the spotlight for a while, so I chose to blog about financial regulation. Not the flashiest topic but one that has had some big news in the recent days. Starting with the news from the great pay czar Ken Feinberg, who is planning to restrict the bonuses that execs can receive most notably from AIG. It is important that the moves are not industry wide only pertaining to companies that received bailout money. I feel this is a huge mistake. Now competitors that are able to lure not only potential talent from AIG but also the talent that AIG currently has. If AIG can not offer competitive pay packages, they will most seriously see a decline in talent, productivity and profitability. This does not really help the US taxpayers get their money back. Why do we not just make AIG back what they owe, with interest? That seems to me the more logical thing to do.