What is the legal status of the AIG takeover?

I've been wondering and maybe you have been too. Here is one opinion:

I imagine that the legal answer to that question depends on a nice distinction between practice and plain language. Under the plain language of the statute, interpreted imaginatively, the Fed can extend credit, upon the right showing, to any company or individual, and so why not insist on conditions on the loan? Heck, why couldn't EPA, in the name of fishable swimmable rivers (that's Clean Water Act language), ban all pesticides, including dishwasher detergent, or nationalize water users like the steel industry? Maybe it can! Which might be good news for environmental activists.

I thank David Zaring for the pointer to this very interesting analysis (there is a related version of this post up at www.marginalrevolution.com). Do you know more?