The Government's Economic Response to the COVID Crisis

Abstract

The Federal Reserve Board (the “Fed”) and Treasury Department, along with a host of other administrative agencies, have undertaken massive, unprecedented action to respond to the COVID crisis. This action far exceeds the steps taken by these actors during the 2008 financial crisis, despite the legal limitations put in place after that crisis to limit their conduct and ensure Congressional oversight and gatekeeping. Not only has Congress failed to check the Fed’s intervention, but in quick legislative action taken as the COVID pandemic spread, Congress expanded the law to allow for Fed response. I argue in this Article that the consequence of this action and Congressional action (and inaction) is the creation of a new procyclical, economic agency untethered from its core mission, though the case for the legality of the action is better, if stretched.