Takings, Legitimacy, and Emergency Action: Lessons from the Financial Crisis of 2008

Abstract

Government actions taken during and in the wake of the Financial Crisis of 2008 have generated lawsuits that, somewhat unexpectedly, have made takings law a key vehicle for assessing the government’s response to the crisis. This Essay examines these developments and offers three observations. First, these suits have already served an important public purpose by uncovering information that might not otherwise have come to light about how and why the government chose to do what it did. Second, the prospect of relief for takings claims can bolster the legitimacy of emergency action. This insight leads to this Essay’s final point, which concerns the political economy of public measures to contain financial and economic crises. Government choices regarding who gets help, how much, and with what strings attached inevitably yield winners and losers. Insulating these decisions from review can facilitate the use of crisis to subvert government for private ends. Particularly at a time when anxieties about “crony capitalism” and the outsize influence of elites are running high, these are the wrong incentives to create.