What Legal Authority Does the Fed Need During a Financial Crisis?

By Eric A. Posner. Full text here.

The financial crisis of 2007–08 revealed gaps in the laws that authorize federal agencies to provide emergency liquidity support. On numerous occasions the Fed, FDIC, and Treasury acted without legal authorization, exposing them to criticism from Congress and the U.S. government to legal liability. I propose reforms that would make possible a unified and strong government response to financial crises, and I criticize the Dodd-Frank Act for weakening, rather than strengthening, the crisis response agencies.