Policy Responses to the Financial Crisis of 2008 and the Rule of Law

Abstract:     
During the Financial Crisis of 2008, executive officials pushed the boundaries of their legal powers as well as successfully demanding broad, open-ended delegations of new powers. This paper closely analyzes the legal bases of the U.S. policy responses to the financial crisis, yielding insights into the practical functioning of the rule of law, both in terms of its limitations and its likely operation in the future. It argues that assertions of formal compliance mean little, rendering the appearance of legality insufficient to deliver the benefits of the rule of law. As a result, assessing the rule of law requires thinking about what opportunities for oversight and enforcement exist, and how exactly these are able to secure a government of limited and predictable powers during and after crisis situations.

Number of Pages in PDF File: 28

Keywords: executive branch, financial crisis, TARP, Federal Reserve, rule of law

JEL Classification: E58, K10

working papers series