Crisis governance in the administrative state: 9/11 and the financial meltdown of 2008

University of Chicago Law Review

Volumn 76, Issue 4, 2009, Pages 1613-1681

  Posner, Eric A ^a   Vermeule, Adrian ^b  

^a UNIVERSITY OF CHICAGO LAW SCHOOL   (United States)

^b HARVARD LAW SCHOOL   (United States)

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[No Author keywords available]

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EID: 77950511873     PISSN: 00419494     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (314)

1. Emergency Economic Stabilization Act of 2008 ("EESA"), Pub L No 110-343, 122 Stat 3765
2. See Carl Schmitt, Legality and Legitimacy 83 (Duke 2004) (Jeffrey Seltzer, trans) (originally published 1932)
3. For a full treatment, see generally Eric A. Posner and Adrian Vermeule, Terror in the Balance: Security, Liberty, and the Courts (Oxford 2007) (discussing the legal implications of terrorism and security problems, and arguing that civil liberties must be balanced against the need for security, and that the executive branch should be given deference in handling that balance).
4. Bill Barnhart, Markets Reopen, Plunge, Chi Trib N1 (Sept 17, 2001) (noting that "[t]he Dow Jones industrial average closed down more than 684 points," and that several airlines' stock prices suffered major losses).
5. See Air Transportation Safety and System Stabilization Act, Pub L No 107-142, 115 Stat 230 (2001) ("Providing disaster relief, compensation for losses, and tax benefits to airlines following the 9/11 attacks.").
6. Authorization for Use of Military Force, Pub L No 107-140, 115 Stat 224 (2001) (authorizing the use of force against those responsible for the 9/11 attacks).
7. Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("Patriot Act"), Pub L No 107-156, 115 Stat 272.
8. Detainee Treatment Act of 2005, Pub L No 109-148,119 Stat 2739 (establishing procedures for the detainment and interrogation of persons detained by the Department of Defense).
9. Military Commissions Act of 2006, Pub L No 109-366, 120 Stat 2600 (authorizing the trials of "alien unlawful enemy combatants" by a military commission, and denying the combatants the ability to "invoke the Geneva Conventions as a source of rights").
10. FISA Amendments Act of 2008, Pub L No 110-261, 122 Stat 2436, codified as amended 50 USC 1801 et seq (establishing procedures for authorizing certain acquisitions of foreign intelligence).
11. AUMF §2(b), 115 Stat at 224 (authorizing the president to use all necessary force to punish those responsible for the 9/11 attacks and to prevent future attacks).
12. Hamdi v Rumsfeld, 542 US 507,518 (2004) (plurality).
13. See Letter from Curtis A. Bradley, et al, to Bill Frist, Majority Leader, United States Senate, et al (Jan 9, 2006), online at http://www.fas.org/irp/ agency/doj/fisa/doj-response.pdf (visited Nov 1, 2009) (criticizing the surveillance program and alleging that the administration had failed to identify any legal authority for the program).
14. See, for example, Aya Gruber, Raising the Red Flag: The Continued Relevance of the Japanese Internment in the Post-Hamdi World, 54 Kan L Rev 307, 322 (2006) (comparing the Bush administration's use of "process-less incarceration in the name of national security" to the same tactic as used by the Roosevelt administration).
15. See Adrian Vermeule, Emergency Lawmaking after 9/11 and 7/7, 75 U Chi L Rev 1155, 1155-1164 (2008) (arguing that executives "obtained less than their true preferences" in AUMF, the Patriot Act, and Britain's Terrorism Act of 2006).
16. See North Jersey Media Group, Inc v Ashcroft, 308 F3d 198 (3d Cir 2002), cert denied, 538 US 1056 (2003) (denying cert of newspaper's appeal from a divided Sixth Circuit decision holding that newspapers did not have a First Amendment right of access to deportation proceedings).
17. See Alexander M. Bickel, The Least Dangerous Branch: The Supreme Court at the Bar of Politics 207 (Yale 1962) (describing denial of certiorari as the most passive exercise of judicial power).
18. -542 US 507, 509 (2004) (upholding the president's authority to detain enemy combatants but requiring that the alleged combatants be given a meaningful opportunity to contest the factual basis for their detention).
19. See id at 517.
20. See, for example, Linda Greenhouse, Access to Courts, NY Times A1 (June 29, 2004).
21. See, for example, Hamdi, 542 US at 538 ("There remains the possibility that the standards we have articulated could be met by an appropriately authorized and properly constituted military tribunal.").
22. See Paul Wolfowitz, Order Establishing Combatant Status Review Tribunal, Memorandum for the Secretary of the Navy (July 7, 2004), online at http://www.defenselink.mil/news/Jul2004/d20040707review.pdf (visited Nov 1, 2009) (establishing Combatant Status Review Tribunals).
23. See, for example, Frank Rich, 'We Do Not Torture' and Other Funny Stories, NY Times C12 (Nov 13, 2005).
24. -548 US 557 (2006).
25. Id at 623-635 (holding that the military commissions at Guantanamo Bay denied defendant's several procedural safeguards required by the Uniform Code of Military Justice and the Geneva Conventions).
26. -128 S Ct 2229 (2008).
27. Id at 2277 (holding that the alternative procedures provided to the detainees "are not an adequate and effective substitute for habeas corpus").
28. See id.
29. For a discussion of the various business models that banks employ, see generally Robert De Young and Tara Rice, How Do Banks Make Money? A Variety of Different Business Strategies, Economic 4Q/2004 Perspectives 52, online at http://www.chicagofed.org/publications/economicperspectives/ep-4qtr2004-part4- De Young-Rice.pdf (visited Nov 1, 2009).
30. See Howell E. Jackson and Edward L. Symons, Jr. Regulation of Financial Institutions 117 (West 1999) (explaining that the likelihood of bank runs partially justifies portfolio-shaping regulation of banks).
31. Id at 44 (discussing the origins of the Federal Deposit Insurance Corporation).
32. See id at 117.
33. For an overview of regulation of financial institutions, see generally id.
34. The economic literature contains two theories: one is that panics are random, see Douglas Diamond and Philip H. Dybvig, Bank Runs, Liquidity, and Deposit Insurance, 91 J Polit Econ 401, 409-10 (1983); the other is that they are due to asymmetric information,
35. see Charles W. Calomiris and Gary Gorton, The Origins of Banking Panics: Models, Facts and Bank Regulation, in Glenn Hubbard, ed, Financial Markets and Financial Crises 109, 124-162 (Chicago 1992).
36. See, for example, Tyler Cowen, Three Trends and a Train Wreck, NY Times BU6 (Oct 19, 2008) ("[T]he three fundamental factors behind the crisis have been new wealth, an added willingness to take risk and a blindness to new forms of systematic risk.");
37. Jon Hilsenrath, Serena Ng, and Damian Paletta, Worst Crisis Since '3Os, with No End Yet in Sight, Wall St J A1 (Sept 18, 2008) (identifying deleveraging after a period of excess household debt as the primary contributor, and "innovative financial instruments" as an exacerbating factor).
38. See Cowen, Three Trends, NY Times at BU6 (cited in note 35) (discussing greater risk tolerance of individual and institutional investors).
39. See Hilsenrath, Ng, and Paletta, Worst Crisis since '30s, Wall St J at A1 (cited in note 35) (discussing AIG's role in dealing credit default swaps).
40. "Short selling is the practice of selling a borrowed security with the commitment to repurchase it at an unspecified later date." Jonathan M. Kapoff, Short Selling, in Peter Newman, Murray Milgate, and John Eatwel, eds, The New Palgrave Dictionary of Money and Finance 445 (Macmillan 1992).
41. See generally Gary Gorton, The Panic of 2007 (unpublished manuscript, Aug 2008), online at http://www.nber.org/papers/w14358.pdf (visited Nov 1, 2008) (arguing that the "Panic of 2007" was caused by a loss of information about risks related to subprime mortgages).
42. See Floyd Norris, Out of the Shadows and into the Harsh Light, NY Times C3 (Sept 27, 2008) (describing proposed regulation of the credit default swaps market);
43. Stephen Labaton, S.E.C. Concedes Oversight Flaws Fueled Collapse, NY Times A1 (Sept 27, 2008) (reporting on the SEC chairman's acknowledgment that the SECs failure to supervise investment banks contributed to the financial crisis);
44. Edmund L. Andrews, Michael J. de la Merced, and Mary Williams Walsh, Fed in an $85 Billion Rescue of an Insurer Near Failure, NY Times A1 (Sept 17, 2008) (explaining that credit default swaps are not regulated by the SEC).
45. See Floyd Norris, Varied Home Markets Now Share a Slump, NY Times C3 (Dec 29, 2007) (indicating that national prices peaked in July 2006).
46. See Anthony Faiola, Ellen Nakashima, and Jill Drew, What Went Wrong, Wash Post A1 (Oct 15, 2008) (explaining that easy credit helped Americans buy homes they were "ultimately unable to afford").
47. See David Leonhardt, Life Preservers for Underwater Owners, NY Times B1 (Oct 22, 2008).
48. See Joe Nocera, This Time, the Fix Makes Sense, NY Times B1 (Mar 28, 2009) (stating that, due to mark-to-market regulations, "mortgage-backed securities have been marked down to levels that have started to approach reality").
49. See Patrick M. Parkinson, Over-the-Counter Derivatives, Testimony before the Senate Subcommittee on Securities, Insurance, and Investment, Committee on Banking, Housing, and Urban Affairs (July 9, 2008), online at http://www.federalreserve.gov/newsevents/testimony/parkinson20080709a.htm (explaining counterparty credit risk as it relates to credit default swaps) (visited Nov 1, 2009).
50. See Editorial, Time to Act, NY Times A18 (Oct 11, 2008) (claiming that "[b]anks in Europe and the United States have virtually stopped lending to each other" because of uncertainty about mortgage-related assets).
51. See generally Steven M. Davidoff and David Zaring, Regulation by Deal: The Government's Response to the Financial Crisis, 61 Admin L Rev 463 (2009) (outlining "regulation by deal" as the process of striking deals with-and taking stakes in-individual firms in order to influence the firms' behavior).
52. See Floyd Norris, After Weekend Full of Talks, No Sign of a Lending Thaw, NY Times B1 (Oct 13, 2008) (describing banks' unwillingness to lend to each other immediately after the fall of Lehman);
53. Louise Story and Ben White, The. Road to Lehman's Failure Was Littered with Lost Chances, NY Times B1 (Oct 6, 2008) (describing the fallout from Lehman's failure and the Fed's response);
54. Joe Nocera, 36 Hours of Alarm and Action as Crisis Spiraled, NY Times A1 (Oct 2, 2008) (describing Morgan Stanley and Goldman Sachs's efforts to survive in the wake of Lehman's collapse).
55. See Bruce Bartlett, How to Get the Money Moving, NY Times A25 (Dec 24, 2008) (explaining the difficulty of injecting liquidity when the interest rate on Treasury bills nears zero).
56. See Text of Draft Proposal for Bailout Plan, NY Times (Sept 20, 2008) online at http://www.nytimes.com/2008/09/21/business/21draftcnd.html (visited Nov 1, 2009).
57. Consider Ben S. Bernanke, U.S. Financial Markets, Testimony before the Senate Committee on Banking, Housing, and Urban Affairs (Sept 23, 2008), online at http://www.federalreserve.gov/newsevents/testimony/bernanke20080923al.htm (visited Nov 1, 2009) (explaining that the plan would "reduc[e] investor uncertainty about the current value and prospects of financial institutions .. . [and] help to restore confidence in our financial markets and enable banks and other institutions to raise capital").
58. Edmund L. Rose, Federal Reserve and Treasury Offer Congress a Plan for a Vast Bailout, NY Times A1 (Sept 19, 2008) (indicating that the Dow Jones closed up 3.9 percent on the day Paulson's plan was announced, and that international markets rose as well).
59. See Letter from Daron Acemoglu, et al, to the Speaker of the House of Representatives and the President Pro Tempore of the Senate (Sept 24, 2008), online at http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage- protest.htm (visited Nov 1, 2009) (claiming that "[t]he plan is a subsidy to investors at taxpayers' expense").
60. See also David M. Herszenhorn, Stephen Labaton, and Mark Landler, Democrats Set Conditions as Treasury Chief Rallies Support for Bailout, NY Times A1 (Sept 22, 2008) (noting that Democrats demanded "more direct assistance for homeowners" and reporting that Republican Senator Arlen Specter had written, "I think we must take the necessary time to conduct hearings, analyze the administration's proposed legislation, and demonstrate to the American people that any response is thoughtful, thoroughly considered and appropriate").
61. David M. Herzenhorn, Bush Signs Bill, NY Times A1 (Oct 4, 2008).
62. Carl Hulse and Robert Pear, Adding Sweeteners, Senate Pushes Bailout Plan, NY Times A1 (Oct 1, 2008) (noting that the Dow regained much of the loss the following day).
63. See Carl Hulse and Robert Pear, Senate Approves Bailout Proposal by a Wide Margin, NY Times A1 (Oct 2, 2008) (reporting that the bill included $150 billion in tax breaks and "a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation, to $250,000 from $100,000").
64. See Herszenhorn, Bush Signs Bill, NY Times at A1 (cited in note 54);
65. Hulse and Pear, Adding Sweeteners, Senate Pushes Bailout Plan, NY Times at A1 (cited in note 55).
66. See EESA §§ 3,103,122 Stat at 3767, 3770 (listing considerations the Treasury secretary should take into account when exercising the authority granted under the Act).
67. See EESA § 111, 122 Stat at 3776-3777 (prohibiting golden parachutes for executives of firms receiving TARP funds).
68. See EESA § 109,122 Stat at 3774-3775 (declaring that Treasury "shall implement a plan that seeks to maximize assistance for homeowners" and "may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures").
69. EESA § 119,122 Stat at 3787-3788 (providing that "[n]o injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to" the Treasury's actions related to purchasing, insuring, or selling troubled assets, or preventing foreclosure).
70. See EESA § 116,122 Stat at 3783-3786 (granting the comptroller general the authority to oversee and audit the Troubled Asset Relief Program, and demanding that the comptroller submit reports every sixty days).
71. See Department of the Treasury, Treasury Announces TARP Capital Purchase Program Description (Oct 14, 2008), online at http://www.treas.gov/press/ releases/hp1207.htm (visited Sept 22, 2009) (announcing that the Treasury would buy $250 billion in preferred shares from qualifying banks).
72. See Remarks by Secretary Henry M. Paulson, Jr. on Financial Rescue Package and Economic Update (Nov 12, 2008), online at http://www.treasury.gov/ press/releases/hp1265.htm (visited Nov 1, 2009) (announcing that TARP funds will not be used to purchase mortgage-related assets).
73. "The term 'financial institution' means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government." EESA § 3(5), 122 Stat at 3766-3767
74. Deborah Solomon and Damian Paletta, U.S. Bailout Plan Calms Markets, but Struggle Looms over Details, Wall St J A1 (Sept 20, 2008).
75. Id (noting that Treasury made the move in order to fund lending markets while awaiting Congress's approval of the plan to buy distressed assets).
76. Vikas Bajaj and Michael M. Grynbaum, Amid Global Worry, Central Banks Try to Come to Credit Markets' Aid, NY Times A1 (Sept 30, 2008);
77. Solomon and Paletta, U.S. Bailout Plan Calms Markets, Wall St J at A1 (cited in note 66).
78. See FDIC, FDIC Announces Plan to Free up Bank Liquidity (Oct 14, 2008), online at http://www.fdic.gov/news/news/press/2008/pr08100.html (visited Nov 1, 2009).
79. See, for example, Edmund L. Andrews, Plan to Help Homeowners Modify Second Mortgages, NY Times B7 (Apr 29, 2009) (describing Barack Obama's plan to use $50 billion to reduce monthly mortgage payments and the expansion of the plan to cover second mortgages).
80. See American Recovery and Reinvestment Act of 2009, Pub L No 111-115, 123 Stat 115.
81. See Remarks of Secretary Geithner (Feb 10, 2009), online at http://www.treas.gov/press/releases/tg18.htm (visited Nov 1, 2009) (calling for a "stress test" of banking institutions, along with capital support).
82. See id (explaining that the public-private venture will be funded by public capital initially, but will "use private capital and private asset managers to help provide a market mechanism for valuing the assets").
83. See Amit R. Paley and David Cho, Administration Seeks an Out on Bailout Rules for Firms; Officials Worry Constraints Set by Congress Deter Participation, Wash Post A1 (Apr 4, 2009) (reporting that this mechanism is being used to sidestep congressional restrictions, which the administration believes "should not apply in at least three of the five initiatives funded by the rescue package").
84. See Andrew Ross Sorkin, F.D.I. C.'s Novel View of Risk, NY Times B1 (Apr 7, 2009).
85. See Andrews, de la Merced, and Walsh, Fed in an $85 Billion Rescue of an Insurer Near Failure, NY Times at A1 (cited in note 40).
86. See Jackson and Symons, Jr, Regulation of Financial Institutions at 44 (cited in note 30) (describing FDIC insurance).
87. See Jon Hilsenrath, Diya Gullapalli, and Randall Smith, Fed Will Lend Directly to Corporations, Wall St J A1 (Oct 8, 2008) (reporting that the Fed had not lent directly to corporations since the Great Depression).
88. Federal Reserve Act, Pub L No 63-43 § 13(3), 38 Stat 251,263 (1913), codified at 12 USC § 343 (allowing for such measures in times of "unusual and exigent circumstances").
89. Federal Reserve Board, Press Release (Sept 16, 2008), online at http://www.federalreserve.gov/newsevents/press/other/20080916a.htm (visited Nov 1, 2009).
90. See Credit Agreement between American International Group, Inc. and Federal Reserve Bank of New York § 1.01 (Sept 22, 2008), online at http://www.sec.gov/Archives/edgar/data/5272/000095012308011496/y71452exv99w1. htm (visited Nov 1, 2009).
91. See also Hugh Son, AIG Falls on Concern U.S. Loan Will Force. Liquidation, B1oomberg (Sept 24, 2008), online at http://www.bloomberg.com/apps/ news?pid=newsarchive&sid=aiJOvupYlCQ4 (visited Nov 1, 2009) (outlining the terms of the credit agreement).
92. See Credit Agreement at §§ 1.01, 2.06.
93. Id at Exhibit B, § 3 (securing the loan with "(i) all Accounts;
94. (ii) all Chattel Paper;
95. (iii) all cash and Deposit Accounts ...").
96. Id at Exhibit D.
97. See Son, AIG Falls on Concern U.S. Loan Will Force Liquidation (cited in note 81) (noting that the US had appointed AIG's new CEO, Edward Liddy).
98. United States v Mead Corp, 533 US 218, 228 (2001).
99. See also Chevron USA. Inc v NRDC, 467 US 837, 843 n 9 (1984) (introducing a presumption that when Congress creates an agency with authority to act with the force of law, it delegates the authority to resolve legal questions that cannot be resolved by "traditional tools of statutory interpretation") . For deference to Treasury on questions of law, and Treasury's legal position within the standard framework of administrative law and the Administrative Procedure Act,
100. see generally Kristin E. Hickman, Coloring outside the Lines: Examining Treasury's (Lack of) Compliance with Administrative Procedure Act Rulemaking Requirements, 82 Notre Dame L Rev 1727 (2007).
101. See Whitman v American Trucking Associations, 531 US 457, 472-73 (2001) (holding Congress's delegation of authority under part of the Clean Air Act to be valid, since Congress constrained the EPA's actions by means of "an intelligible principle").
102. Consider Mistretta v United States, 488 US 361, 428 (1989) (Scalia dissenting) (arguing that the majority was wrong to uphold a delegation of sentencing power to a sentencing commission). In an alternative formulation, the forbidden line is crossed, not when Congress entrusts the executive with any legislative power at all, but when Congress entrusts the executive with legislative power that is not adequately cabined.
103. Whitman, 531 US at 487-490 (Stevens concurring in part and concurring in the judgment). This difference is strictly semantic and makes no difference for our purposes.
104. See Panama Refining Co v Ryan, 293 US 388, 419 (1935) (holding that a delegation to the president of the authority to prohibit interstate and foreign transport of oil products that were produced beyond set quotas is unconstitutional, because Congress placed no restriction on the president's choice of whether or not to impose the prohibition);
105. A.L.A. Schechter Poultry Corp v United States, 295 US 495, 521-22, 537-42 (1935) (holding that the "Live Poultry Code," which authorized the president to enforce fair trade in the New York City poultry industry, was unconstitutional, since it did not properly define the scope of the president's authority).
106. See FDA v Brown & Williamson Tobacco Corp, 529 US 120, 133, 160-61 (2000) (holding that Congress did not delegate to the FDA the authority to regulate tobacco, noting that Chevron presumption of delegation is not definitive in extraordinary cases, such as those where the unprovided for issue is a major one);
107. Industrial Union Department, AFL-CIO v American Petroleum Institute, 448 US 607, 646 (1980) (plurality) (favoring a narrow construction of the statute that avoids the nondelegation issue).
108. See also John F. Manning, The Nondelegation Doctrine as a Canon of Avoidance, 2000 S Ct Rev 223, 223 (arguing that the Court often construes statutes narrowly to avoid conferring unconstitutionally excessive agency discretion);
109. Cass R. Sunstein, Nondelegation Canons, 67 U Chi L Rev 315, 316 (2000) (arguing that the constitutional nondelegation doctrine is not dead, but has been replaced by nondelegation canons of statutory construction).
110. John Schwartz, Some Ask if Bailout is Unconstitutional, NY Times A16 (Jan 15, 2009) (discussing threatened lawsuit by Freedom Works Foundation).
111. Schechter, 295 US at 541-42. However, another theme in Schecter was that the NIRA in effect delegated lawmaking power to private parties,
112. see id at 537, and that claim has no obvious parallel in the EESA.
113. The secretary can draw on a maximum of $700 billion at any one time, but the total might be more. See EESA §115(a)(3), 122 Stat at 3780.
114. -531 US 457 (2001).
115. Id at 475.
116. EESA §2, 122 Stat at 3766.
117. EESA §103, 122 Stat at 3770 (listing considerations such as protecting taxpayer interests and providing stability to financial markets).
118. See Amalgamated Meat Cutters v Connolly, 337 F Supp 737, 757 (DDC 1971) (reading the Economic Stabilization Act of 1970 to contain an implicit "duty to take whatever action is required in the interest of broad fairness and avoidance of gross inequity").
119. NBC v United States, 319 US 190, 198 (1943) (holding that the purpose and context of the Communications Act of 1934, along with the requirements imposed, make "in the public interest" sufficiently restrictive).
120. -531 US at 472-476 (holding that the Clean Air Act was a proper delegation to the EPA).
121. See, for example, Fred Lucas, For Auto Bailout to Be Legal, Automakers Must Now Be Considered 'Financial Institutions,' Cybercast News Service (Dec 19, 2008), online at http://www.cnsnews.com/public/content/article.aspx7RsrcID- 41124 (visited Nov 1, 2009) (quoting a Heritage Foundation regulatory expert as having called TARP, "a personal slush fund for the president").
122. See American Trucking, 531 US at 472-73.
123. In this discussion, the Court was rejecting the lower court's idea that the agency could avoid a nondelegation challenge by declining to exercise part of its statutory authority, whereas in the case of the EESA, the critics are arguing that the agency has triggered or at least exacerbated a nondelegation problem by choosing to exercise part of its statutory authority. The analysis is identical in either case: The constitutional question is judged as of the time of the statute's enactment and on the statute's face. Just as an agency's "voluntary self-denial" does not eliminate the agency's discretion, and thus cannot cure a nondelegation problem, see id at 473, so too an agency's exercise of authority cannot expand the agency's lawful discretion, and so cannot create a nondelegation problem that would not otherwise exist.
124. See EESA §3(9)(B). 122 Stat at 3767 (defining the "troubled assets" that the secretary has authority to purchase under §101 as including "any other financial instrument that the secretary ... determines the purchase of which is necessary to promote financial market stability," subject to consultation with the Fed Chair and written notice to congressional committees).
125. For a complete definition of "financial institution," see note 65.
126. See United States v Philip Morris USA, Inc, 396 F3d 1190, 1200 (DC Cir 2005).
127. The Court has no consistent approach to such problems, however. Compare generally Solid Waste Agency v Army Corps of Engineers, 531 US 159 (2001)
128. (brushing aside arguments based on rejected legislative proposals) with FDA v Brown & Williamson Tobacco Corp, 529 US 120 (2000) (relying heavily upon such arguments). These examples are discussed in
129. William N. Eskridge, Jr, Philip P. Frickey, and Elizabeth Garrett, Cases and Materials on Legislation: Statutes and the Creation of Public Policy 1022-1026 (Thomson West 4th ed 2007).
130. See Cass R. Sunstein, Chevron Step Zero, 92 Va L Rev 187, 231-247 (2006).
131. See Rick Pildes, Update: Revising the Powers of the. Secretary of the Treasury, Balkinization (Sept 28, 2008), online at http://balkin.blogspot.com/ 2008/09/update-revising-powers-of-secretary-ofhtml (arguing that leaving ambiguity in the statute was a wise decision).
132. See EESA §119(a)(2), 122 Stat at 3787.
133. See, for example, Amalgamated Meat Cutters, 337 F Supp at 746 (noting that courts can hold agencies accountable for arbitrary decisions).
134. See County of El Paso v Chertoff, 2008 WL 4372693, *4-6 (WD Tex) (holding that judicial review is not required to satisfy the intelligible principle standard).
135. See generally Defenders of Wildlife v Chertoff, 527 F Supp 2d 119 (DDC 2007) (upholding against a nondelegation challenge, a statute giving the secretary of Homeland Security unreviewable authority to waive multiple federal statutes in order to speed up the building of a fence along the US-Mexico border), cert denied, 128 S Ct 2962 (2008).
136. See Steve Coll, Ghost Wars 222-223 (Penguin 2004) (describing bin Laden's disappointing meeting with Prince Sultan, Saudi Arabia's defense minister).
137. See Part I.B.1.
138. This could well have been rational. See generally Anup Malani and Albert Choi, Rational Crises (unpublished manuscript, 2008), online at http://works.bepress.com/cgi/viewcontent.cgi? article=1003&context=anup- malani (visited Nov 1, 2009) (proposing a model that shows that governments use crises to distinguish between credible and noncredible assertions that a government response is needed for a problem).
139. See Posner and Vermeide, Terror in the Balance 23 (cited in note 3) (describing the registration of aliens from Muslim nations and various forms of ethnic profiling);
140. Laurence Zuckerman, A Day of Terror: The Airlines, NY Times A19 (Sept 12, 2001) (reporting that airspace over US and Canada was shut down immediately after the attacks).
141. See Memorandum for Alberto R, Gonzales, Counsel to the President, Re: Standards of Conduct for Interrogation under 18 U.S.C. §§2340-2340A *31-39 (Aug 1, 2002), online at http://news.findlaw.com/hdocs/docs/doj/ bybee80102mem.pdf (visited Nov 1, 2009) (arguing that even if certain interrogation methods violate statutes prohibiting torture, the statutes should be construed so as not to infringe upon the commander-in-chief power).
142. See Richard W. Stephenson and Adam Liptak, Cheney Defends Eavesdropping without Warrants, NY Times A36 (Dec 21, 2005).
143. See Part I.A.
144. We note, however, that the Fannie Mae bailout was done pursuant to authority under § 1117 of the Housing and Economic Recovery Act of 2008, Pub L No 110-289, 122 Stat 2654 (providing "Temporary Authority for Purchase of Obligations of Regulated Entities by Secretary of Treasury").
145. Examples include the TED spread and the VIX. See Edmund L. Andrews, As Economy Weakens, Federal Reserve Officials Consider Lowering Rates, NY Times C4 (Oct 3, 2008) (noting that the "biggest obstacle" to economic recovery was the unwillingness of banks to lend and pointing out that the TED spread-the difference between the overnight lending rate among banks and the yield on Treasury bills-reached a record high);
146. Sarah Lueck, Damia-n Paletta, and Greg Hitt, Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis, Wall St J Al (Sept 30, 2008) (reporting that the VIX index, a measure of market volatility known as the "fear index," reached its highest level in its twenty-eight-year history).
147. The classic example involves Abraham Lincoln's actions during the early stages of the Civil War, many of which were either clearly illegal or of dubious legality. Congress both ratified those actions after the fact, and also delegated large new powers to the president. See David P. Currie, The. Civil War Congress, 73 U Chi L Rev 1131, 1132-1141 (2006).
148. See, for example, Jeffrey Seltzer and Christopher Thornhill, Introduction, in Carl Schmitt, Constitutional Theory 1, 13-14 (Duke 2008) (Jeffrey Seltzer, trans and ed) ("[Schmitt] sees positivism as a doctrine that aims to provide an analysis of law in order to restrict the arbitrary use of state power, but that cannot avoid positing the state as the origin of all law.").
149. Carl Schmitt, Political Theology: Four Chapters on the Concept of Sovereignty 5 (MIT 1985) (George Schwab, trans) (originally published 1922). Compare Carl Schmitt, Die Diktatur: Von den Anfängen des Modernen Souveränitätsgedankens bis zum Proletarischen Klassenkampf (Duncker & Humblot 1928) (originally published 1921). For an overview of these two works and their place in Schmitt's school of thought,
150. see John P. McCormick, The Dilemmas of Dictatorship: Carl Schmitt and Constitutional Emergency Powers, in David Dyzenhaus, ed, Law as Politics: Carl Schmitt's Critique of Liberalism 217, 217-251 (Duke 1998) (examining the shift in Schmitt's views on dictatorship: first as a short-term necessity in emergency situations, and later a long-term necessity to save society from a "corrupted," liberal political order).
151. See Carl Schmitt, The Crisis of Parliamentary Democracy 33-50 (MIT 1988) (Ellen Kennedy, trans);
152. Schmitt, Legality and Legitimacy at 67-83 (cited in note 2) (analyzing the emerging power of the administrative state and decline of the legislature under the Weimar Constitution).
153. See also William E. Scheuerman, The Economic State of Emergency, 21 Cardozo L Rev 1869, 1882-1891 (2000) (pointing out that according to Schmitt, the need for emergency powers in times of economic crisis demonstrates the failure of liberal democracy);
154. William E. Scheuerman, Between the Norm and the Exception: The Frankfurt School and the Rule of Law 67-79 (MIT 1994) (noting that extensive activity in social and economic life has rendered classical liberalism an anachronism, according to Schmitt).
155. Scheuerman, 21 Cardozo L Rev at 1887 (cited in note 124) (emphasis omitted). The description of the government's course of conduct, especially before enactment of the EESA, as "regulation by deal,"
156. see generally Davidoff and Zaring, Regulation by Deal (cited in note 47), fits our account perfectly. The authors seem to think that so long as the government "us[ed] its authority to sometimes stretch but never truly break" the law, id at 463, the Schmittian view is refuted. Schmitt's basic idea about crisis government in the administrative state, however, was that under conditions of economic emergency, government could no longer proceed through the idealized liberal pattern in which legislatures frame general rules of law that the executive and courts then apply to particular cases; rather, the executive improvises ad hoc measures, specific to particular persons and circumstances, under broad and vague statutory delegations.
157. See Schmitt, Legality and Legitimacy at 69-83 (cited in note 2). Ad hoc regulation by deal, under vague statutory authority, thus exemplifies the Schmittian view rather than refuting it.
158. Scheuerman, 21 Cardozo L Rev at 1888 (cited in note 124).
159. For a comparison of the AUMF with the United Kingdom's Terrorism Act 2006, finding substantial similarities in the political processes that generated the two statutes, see generally Vermeule, 75 U Chi L Rev 1155 (cited in note 15).
160. For a Madisonian view of the Senate's effect on legislation, see Federalist 62 (Madison), in The Federalist Papers 376 (Mentor 1961) (Clinton Rossiter, ed) (arguing that the equal representation of the states in the Senate is an "additional impediment" to legislation).
161. For a clear statement of this view, see Jules Lobel, Emergency Power and the Decline of Liberalism, 98 Yale L J 1385, 1424-40 (1989) (stating that, according to this view, the executive may be forced to openly act against the Constitution; the executive would then seek ratification by Congress immediately thereafter).
162. See also Harold Koh, Why the President (Almost) Always Wins in Foreign Affairs: Lessons of the Iron-Contra Affair, 97 Yale L J 1255, 1318-42 (1988) (proposing that the president's foreign policy initiatives should be subject to "adversarial review" both inside and outside the executive branch);
163. John Hart Ely, Suppose Congress Wanted a War Powers Act that Worked, 88 Colum L Rev 1379, 1400-21 (1988) (proposing that the federal judiciary help initiate the clock-starting process of the War Powers Resolution, forcing Congress to authorize or prohibit war). For more recent versions of this position,
164. see David Cole, Judging the Next Emergency: Judicial Review and Individual Rights in Times of Crisis, 101 Mich L Rev 2565, 2585-94 (2003) (stating that the judiciary is often the only option for victims of executive emergency measures to safeguard their civil liberties);
165. Oren Gross, Chaos and Rules: Should Responses to Violent Crises Always Be Constitutional?, 112 Yale L J 1011, 1099-1134 (2003) (proposing a process that provides for popular ex post ratification of executive activities that go beyond the Constitution). Some Madisonians put less emphasis on judicial review to ensure that the executive complies with constitutional norms, but insist on congressional involvement.
166. See, for example, Samuel Issacharoff and Richard H. Pildes, Between Civil Libertarianism and Executive Unilateralism: An Institutional Process Approach to Rights during Wartime, 5 Theoretical Inq L 1, 35-43 (2004) (positing that courts focus on whether there has been "bilateral institutional endorsement" from Congress and the executive branch for actions taken by the president during emergencies);
167. Cass R. Sunstein, Minimalism at War, 2004 S Ct Rev 47, 50-56, 75-99 (advocating that courts require clear congressional authorization of executive actions that intrude on individual liberties).
168. See, for example, Sanford Levinson, Our Undemocratic Constitution: Where the Constitution Goes Wrong (And How We the People Can Correct It) 101-12, 167-80 (Oxford 2006) (critiquing many aspects of the Constitution, including the structure of the Senate, life tenure for federal judges, and excessive presidential powers);
169. Mark Tushnet, Controlling Executive Power in the. War on Terrorism, 118 Harv L Rev 2673, 2677-2682 (2005) (stating that separation of powers and judicial review cannot adequately ensure that the executive acts responsibly, and suggesting a new institution that supervises military power).
170. See generally Adrian Vermeule, Mechanisms of Democracy: Institutional Design Writ Small (Oxford 2007) (suggesting reforms that would promote impartiality, accountability, transparency, and deliberation in the legislative process).
171. Lobel, 98 Yale L J at 1407-1409 (cited in note 129) (noting that "in most of the emergency legislation [by the 1970s], vague terms triggered executive power for unspecified lengths of time").
172. See, for example, the War Powers Resolution of 1973, Pub L No 93-148, 87 Stat 555, codified at 50 USC §§1541-48 (restricting the executive's ability to maintain forces without a congressional declaration of war, and imposing disclosure requirements when forces are deployed);
173. the Privacy Act of 1974, Pub L No 93-579, 88 Stat 1986 (granting an individual the right to see government agency records about himself); the Government in the Sunshine Act of 1976, Pub L No 94-409, 90 Stat 1241 (providing the public with "fullest practicable information regarding the decisionmaking processes of the Federal Government");
174. the National Emergencies Act of 1976, Pub L No 94-412, 90 Stat 1255 (ending all currently declared states of emergency and limiting future states of emergency to a maximum length of two years). See also Andrew Rudalevige, The New Imperial Presidency: Renewing Presidential Power after Watergate 101-138 (Michigan 2005) (discussing the intricate statutory regime enacted to curb executive power after the Nixon Presidency).
175. Adrian Vermeule, Posner on Security and Liberty: Alliance to End Repression v. City of Chicago, 120 Harv L Rev 1251, 1254-55 (2007) (noting that Congress has failed to impose ex post punishment of executive violations of the War Powers Resolution);
176. Rudalevige, The New Imperial Presidency at 261-285 (cited in note 133) (observing that legislators fail to check executive authority partly because they want to take credit for empowering the president and to avoid the blame when things turn out badly).
177. See, for example, Letter from Professor Daron Acemoglu, et al (cited in note 53) (asking "Congress not to rush" to enact Paulson's plan because it is unfair to taxpayers, is unclear in its mission, and has important long-term effects).
178. See Joe Nocera and Edmund L. Andrews, Running a Step behind as a Crisis Raged, NY Times Al (Oct 23, 2008) (reporting that Paulson and Bernanke were "criticized for squandering precious time and political capital with their original $700 billion bailout plan").
179. Robert F. Bruner and Sean D. Carr, Lessons from the Financial Crisis of 1907, 19 J Applied Corp Fin 115, 120 (Fall 2007) (pointing out that one such safety buffer is the regulator's monitoring function over banks).
180. Scheuerman, 21 Cardozo L Rev at 1887 (cited in note 124).
181. Trading with the Enemy Act of 1917, Pub L No 65-91, 40 Stat 411, codified in 12 USC §95a.
182. See Michal R. Belknap, The New Deal and the Emergency Powers Doctrine, 62 Tex L Rev 67, 71-73 (1983) (noting that, under the Act, Roosevelt proclaimed a national bank holiday and authorized measures to protect the currency system).
183. See text accompanying note 74.
184. International Emergency Economic Powers Act, Pub L No 95-223, 91 Stat 1626 (1977), codified at 50 USC §§1701-07.
185. See Note, The International Emergency Economic Powers Act: A Congressional Attempt to Control Presidential Emergency Power, 96 Harv L Rev 1102, 1105-1120 (1983).
186. The following discussion draws on Vermeule, 75 U Chi L Rev 1155 (cited in note 15) (responding to the standard critique that emergency lawmaking systemically gives more power to the executive beyond what a rational legislature would give).
187. See id at 1183 (describing the Bush administration's proposal that the AUMF include an "open-ended grant of authority to fight terrorism both domestically and abroad" as an example of this type of overreach).
188. In all crises, as in the financial crisis of 2008, critics argue that the government is acting too quickly, while the government argues that it must act quickly. See, for example, Ben S. Bernanke, Stabilizing the Financial Markets and the Economy (Oct 15, 2008), online at http://www.federalreserve.gov/ newsevents/speech/bernanke20081015a.htm (visited Nov 1, 2009) (stating in a speech to the Economic Club of New York that "[w]aiting too long to respond" during past crises led to much greater costs than the intervention itself).
189. See David Abramowitz, The President, the Congress, and Use of Force: Legal and Political Considerations in Authorizing Use of Force against International Terrorism, 43 Harv Intl L J 71, 73 & n 7 (2002) (referring to a "Draft Joint Resolution Authorizing the Use of Force").
190. Id at 74-75 (noting that this approach was consistent with longstanding US policy that held countries responsible for harboring terrorist organizations).
191. See Beryl A. Howell, Seven Weeks: The Making of the USA PATRIOT Act, 72 Geo Wash L Rev 1145, 1172-1178 (2004) (noting that the original Senate version did not contain a sunset provision limiting the new surveillance activities).
192. See Text of Draft Proposal for Bailout Plan, NY Times (cited in note 50) (reporting that section 8 of the bill provided: "[d]ecisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency").
193. See id (reporting that the proposed bill would have demanded only that Treasury work to provide stability to the markets and protect taxpayers).
194. See Carl Hulse and David M. Herszenhorn, Defiant House Rejects Huge Bailout; Next Step Uncertain, NY Times A1 (Sept 30, 2008) (reporting that one-third of Republicans and 60 percent of Democrats voted for the bill).
195. See notes 58-64 and accompanying text.
196. See EESA §115, 12 Stat at 3780 (providing that Congress can prohibit the use of the second half of the $700 billion by enacting a "joint resolution of disapproval").
197. See Greg Hitt and Sarah Lueck, Senate Vote. Gives Bailout Plan New LifePassage. Gets Boost from Tax Breaks; Back to the House, Wall St J Al (Oct 2, 2008) (stating that certain tax proposals, including changes to the alternative minimum and research-and-development tax credits, were designed to secure Republican support).
198. See Doyle McManus, Fear and Caution Ruled on the. Hill; Voters Vented Fury at House Members Jittery about Their Jobs. Even Supporters Were Tepid., LA Times A1 (Sept 30, 2008) (quoting Representative Paul D. Ryan from Wisconsin who voted for the plan).
199. See Daryl J. Levinson and Richard H. Pildes, Separation of Parties, Not Powers, 119 Harv L Rev 2311, 2312-2316 (2006) (emphasizing that competition between the legislative and executive branches may disappear if the House, Senate, and presidency are united by political ideology).
200. Consider Hulse and Herszenhorn, Defiant House Rejects Huge Bailout, NY Times at Al (cited in note 152) (reporting that public sentiment against the proposal was strong, that fears of the upcoming election played a major role in the outcome, and that a majority of Democrats voted for the proposal).
201. See Lobel, 98 Yale L J at 1407-1418 (cited in note 129) (noting that Congress has failed to review declarations of emergency by the president under several emergency statutes).
202. See John Schwartz, Path to Justice, but Bumpy, for Terrorists, NY Times A9 (May 2,2009) (reporting the plea deal between the Justice Department and Ali Saleh Kahlah al-Marri, an al Qaeda member who was detained as an enemy combatant under Bush, but transferred to the criminal system under Obama).
203. See Editorial, The Bank Rescue, NY Times A26 (Mar 24, 2009) (discussing Obama's plan to use $500 billion to finance the (mostly private) purchase of troubled assets).
204. Michael Kranish and Bryan Bender, A Wait to See. If Tax Breaks Will Swing Bailout Vote, Boston Globe A1 (Oct 3, 2008) (reporting that the economic rescue package had grown to include more than $100 billion in tax breaks).
205. See Hitt and Lueck, Senate Vote Gives Bailout Plan New Life, Wall St J at A1 (cited in note 155) ("Senate leaders took up the bill, which had stronger support in that chamber, with the aim of putting pressure on the House.").
206. Lauros Grant McConachie, Congressional Committees: A Study of the Origins and Development of Our National and Local Legislative Methods 72-79 (Crowell 1898) (describing the nineteenth-century system of private bills, handled by congressional committees, for pensions and appropriations).
207. Such an emergency statute has been proposed by Bruce Ackerman. See Bruce Ackerman, The Emergency Constitution, 113 Yale L J 1029, 1045-1077 (2004) (proposing a system of checks and balances that would include giving members of opposition parties a majority of seats on oversight committees and requiring the president to provide committees with complete access to documents).
208. See Posner and Vermeule, Terror in the Balance at 240-246 (cited in note 3).
209. See, for example, Rescue Army v Municipal Court of Los Angeles, 331 US 549, 583-585 (1947) (refusing to decide a legal issue until the issue had been tried in a concrete case, despite the fact that this refusal "will subject the petitioner [ ] to the burden of undergoing a third trial").
210. See David Dyzenhaus, The Constitution of Law: Legality in a Time of Emergency 27 (Cambridge 2006) ("[J]udicial lip service to the rule of law in exceptional situations has consequences for the way judges deal with ordinary situations.");
211. Cole, 101 Mich L Rev at 2575-76 (cited in note 129) (stating that courts "bring more perspective" when they evaluate the constitutionality of emergency measures long after they have been adopted).
212. See also Korematsu v United States, 323 US 214, 242-248 (1944) (Jackson dissenting) ("A military commander may overstep the bounds of constitutionality, and it is an incident. But if we review and approve, that passing incident becomes the doctrine of the Constitution.").
213. For skepticism about these and related possibilities, see Posner and Vermeule, Terror in the Balance at 131-156 (cited in note 3).
214. See Part I.B.2.b
215. Although we cannot document the assertion here, for a full treatment, see Posner and Vermeule, Terror in the Balance at 272 (cited in note 3) (arguing that prior to Hamdan, courts properly deferred to President Bush on questions relating to the Geneva Convention, and that "[o]n this view, Hamdan is just a typical reassertion of judicial muscle after an emergency has run its course").
216. See Adrian Vermeule, Our Schmittian Administrative Law, 122 Harv L Rev 1095, 1106-1131 (2009) (reviewing several instances in which the federal courts exclude administrative action related to war and emergencies from the ambit of the APA).
217. Scheuerman, 21 Cardozo L Rev at 1884-1885 (cited in note 124) (noting that according to Schmitt, courts in liberal democracies would be called on to define the exact limits of broad executive authority delegated by the legislature).
218. Administrative Procedure Act, Pub L No 79-404, 60 Stat 237 (1946), codified at 5 USC § 706(2)(a).
219. Dyzenhaus, The Constitution of Law at 3 (cited in note 168).
220. Cass Sunstein finds that in the aggregate judges deciding administrative law cases after 9/11 are highly deferential to the executive, and that although there are clear partisan differences in this regard, the differences are less pronounced than in other areas of judicial review of administrative action.
221. See Cass Sunstein, Judging National Security Post-9/11: An Empirical Investigation *9-10 (The University of Chicago Law & Economics Olin Working Paper No 411, Nov 2008), online at http://papers.ssrn.com/sol3/papers. cim7abstract-id-1297287 (visited Nov 1,2009).
222. Sunstein makes this point for DC Circuit review of presidential decisions in security matters.
223. See Cass R. Sunstein, National Security, Liberty, and the D.C. Circuit, 73 Geo Wash L Rev 693, 697-700 (2005) (stating that since September 11, every "serious challenge" mounted against the power of the president failed in the DC Circuit).
224. In the most recent comparable case - the savings and loan bailout of the 1980s-Congress established the Resolution Trust Corporation to take control of failed S&Ls and sell off their assets. Congress provided for greatly limited review (see 12 USC §1821(j), which prohibited certain forms of injunctive relief) - no doubt because of skepticism about courts' ability to evaluate the RTCs sales decisions - and courts complied, even though there was no emergency as severe as 9/11 or the 2008 financial crisis.
225. See, for example, Ward v Resolution Trust Corp, 996 F2d 99, 104 (5th Cir 1993) (per curiam) (holding that the district court had no jurisdiction to enjoin the RTCs sale of a failed institution's assets, even though the price may have been inadequate).
226. See Stephen G. Breyer, et al, Administrative Law and Regulatory Policy: Problems, Text, and Cases 222-228 (Aspen 6th ed 2006).
227. Dyzenhaus, The Constitution of Law at 47 (cited in note 168).
228. See Schmitt, Legality and Legitimacy at 67-83 (cited in note 2) ("For the extraordinary lawmaker ... the distinction between statute and statutory application, legislative and executive, is neither legally nor factually an obstacle. The extraordinary lawmaker combines both in his person.").
229. See Patriot Act §224, 115 Stat at 295 (providing that certain sections cease to have effect on December 13,2005);
230. EESA §120, 122 Stat at 3788 (allowing the Treasury secretary to extend the authority provided under the Act not later than two years from the Act's enactment).
231. Jacob E. Gersen, Temporary Legislation, 74 U Chi L Rev 247, 261-286 (2007) (noting that temporary legislation "gives greater power to Congress as an institution relative to the bureaucracy").
232. See Sheryl Gay Stolberg, Postponing Debate, Congress Extends Terror Law 5 Weeks, NY Times Al (Dec 23, 2005) (reporting that the Patriot Act was set to expire on December 31, and that the extension came after "a six-day game of brinksmanship between President Bush and Senate Democrats [ ] joined by a handful of Republicans").
233. See Brian T. Yeh and Charles Doyle, USA PATRIOT Improvement and Reauthorization Act of 2005: A Legal Analysis (Congressional Research Service, Dec 21, 2006), online at http://www.fas.org/sgp/crs/intel/RL33332.pdf (visited Nov 1, 2009) (noting that fourteen of the sixteen expiring provisions were made permanent).
234. See also Sheryl Gay Stolberg, Senate Passes Legislation to Renew Patriot Act, NY Times A14 (Mar 3, 2006) (reporting that the legislation passed the Senate by a vote of eighty-nine to ten).
235. EESA §115(c), 122 Stat at 3780.
236. See Deborah Solomon and Greg Hitt, TARP Funds' Second Half Set for Release as Senate Signs Off on Request, Wall St J A3 (Jan 16, 2009) (reporting that the Senate voted fiftytwo to forty-two to block the disapproval bill).
237. National Emergencies Act § 202, 90 Stat at 1255-1257 (allowing Congress to end any state of emergency by a concurrent resolution; also requiring Congress to meet within six months of a declaration of emergency to consider such a resolution).
238. see Vermeule, 120 Harv L Rev at 1254-1255 (cited in note 134) (stating that the failure of Congress to enforce these national security acts demonstrates a dismantling of the postWatergate framework, which sought to limit executive power).
239. EESA §125, 122 Stat at 3791-3793
240. See, for example, Accountability for the Troubled Asset Relief Program, The Second Report of the Congressional Oversight Panel 4-5 (Jan 9, 2009), online at http://cop.senate.gov/documents/cop-010909-report.pdf (visited Nov 1, 2009) (calling into question Treasury's choice not to directly respond to the foreclosure crisis).
241. EESA §104(b), 122 Stat at 3771.
242. See 12 USC § 242 (providing that the chairman of the Federal Reserve Board "shall... serve for a term of four years"); Housing and Economic Recovery Act of 2008 §1312(b)(2), Pub L No 110-289,122 Stat 2654, 2662 (providing that the director of the Federal Housing Finance Agency "shall serve for a term of 5 years, unless removed before the end of such term for cause by the President").
243. See also Humphrey's Executor v United States, 295 US 602, 629 (1935) (holding that the president cannot remove a principal of an agency at-will, but only for reaso ns Congress has provided).
244. Free. Enterprise Fund νPublic Company Accounting Oversight Board, 537 F3d 667, 679-680 & 8 (DC Cir 2008) (noting that the Supreme Court has interpreted very broadly the president's power to remove commissioners for "inefficiency, neglect of duty, or malfeasance in office") (citation omitted).
245. EESA §104(a), (e), (g), 122 Stat at 3770-3771
246. Pildes, Update: Revising the Powers of the Secretary of the Treasury (cited in note 107) (noting that the new provisions delineating the Board's oversight of the secretary are much more ambiguous than in the previous draft).
247. See, for example, Morrison ν Olson, 487 US 654, 659-669 (1988) (upholding the appointment of an independent counsel by a court of law to investigate high-ranking government officials, and upholding restrictions on the president's ability to remove the independent counsel).
248. The Board "has no staff of its own, and few expect that policymakers can conduct oversight of themselves. 'It's sort of a joke in terms of oversight,' a congressional aide said."
249. Amit R. Paley, Bailout Lacks Oversight Despite Billions Pledged, Wash Post A1 (Nov 13, 2008) (reporting that the Government Accountability Office is also supposed to conduct oversight).
250. Neal Devins and David E. Lewis, Not-so Independent Agencies: Party Polarization and the. Limits of Institutional Design, 88 BU L Rev 459, 477-491 (2008) (stating that presidents have strong incentives to appoint loyalists to agencies when the parties are polarized and the White House and Congress are divided).
251. Donald F. Kettl, The Savings-and-loan Bailout: The Mismatch between the Headlines and the. Issues, 24 PS: Polit Sci & Politics 441, 442 (1991) (explaining that the Board is chaired by the secretary of the Treasury, and consists of the secretary of Housing and Urban Development, the Fed chairman, and two private citizens).
252. Id at 444.
253. David Brooks, Revolt of the Nihilists, NY Times A27 (Sept 30,2008) (arguing that the House Republicans who blocked the bailout plan exacerbated the lack of confidence in the markets).
254. See, for example, Geoffrey Stone, Perilous Times: Free Speech in Wartime from the Sedition Act of 1798 to the War on Terrorism 12-13, 527-30 (Norton 2004) (stating that leaders exploited public fears in times of crisis, resulting in excessive sacrifice of civil liberties);
255. Cole, 101 Mich L Rev at 2591-92 (cited in note 129) (noting that Congress cannot be counted on to protect civil liberties during emergencies, and pointing to several instances of congressional acquiescence to executive power);
256. Ackerman, 113 Yale L J at 1032-1037 (cited in note 165) (suggesting that Americans are succumbing to the "paranoid style of political leadership" after 9/11).
257. See Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States: 1867-1960 418 (Princeton 1963) ("The detailed story of every banking crisis in our history shows how much depends on the presence of one or more outstanding individuals willing to assume responsibility and leadership.").
258. In the financial crisis of 2008, the Fed, for the first time ever, placed hard-to-value, questionable assets on its balance sheet. See Board of Governors of the Federal Reserve System, Press Release (Dec 16, 2008), online at http://www.federalreserve.gov/newsevents/press/monetary/2008126b.htm (visited Nov 1, 2008).
259. See also Paul Krugman, Overfed?, NY Times (Sept 30, 2008), online at http://krugman.blogs.nytimes.com/2008/09/30/overfed (visited Nov 1, 2009).
260. See Memorandum for Alberto R. Gonzales, Re: Standards of Conduct for Interrogation at * 31-39 (cited in note 116);
261. Department of Justice, Legal Authorities Supporting the Activities of the National Security Agency Described by the President *30-31 (Jan 19, 2006), online at http://www.usdoj.gov/opa/whitepaperormsalegalauthorities.pdf (visited Nov 1, 2009) (arguing that the Vesting Clause empowers the president to use electronic eavesdropping to combat terrorism, and that FISA should be read to allow such eavesdropping by the executive).
262. See Memorandum for Alberto R. Gonzales, Re: Standards of Conduct for Interrogation at *31-39 (cited in note 116);
263. Department of Justice, Legal Authorities Supporting the Activities of the National Security Agency at * 30-31 (Jan 19, 2006) (cited in note 206).
264. See Part I.B.2.a.
265. See President Signs Authorization for Use of Military Force Bill (Sept 18, 2001), online at http://georgewbush-whitehouse.archives.gov/news/releases/ 2001/09/20010918-10.html (visited Nov 1, 2009) ("I maintain the longstanding position of the executive branch regarding the President's constitutional authority to use force, including the Armed Forces of the United States and regarding the constitutionality of the War Powers Resolution.").
266. Consider Federal Reserve Act §13(3), 38 Stat at 263 (authorizing the Fed "to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal reserve bank...").
267. US Const Art I, §9, cl 2.
268. See, for example, Hamdi, 542 US at 525 (noting that habeas had not been suspended).
269. See Posner and Vermeule, Terror in the Balance at 3 (cited in note 3) (noting such examples, from the Sedition Act during the first Adams administration, up to the post-9/11 response).
270. See John Yoo, War by Other Means: An Insider's Account of the War on Terror 119-120 (Atlantic Monthly 2006) (stating that over time, the presidency has gained the leading role in national security matters because of its superior ability over Congress to respond quickly to emergencies).
271. Franklin D. Roosevelt, First Inaugural Address (Mar 4, 1933), in 2 The Public Papers and Addresses of Franklin D. Roosevelt 15 (Random House 1938) ("In their need [the people of the United States] have registered a mandate that they want direct, vigorous action.").
272. For a literary illustration of the hardships that people faced in the Great Depression, particularly those affected by the Dust Bowl, see generally John Steinbeck, The Grapes of Wrath (Viking 1964).
273. One recent example of this is the government's bailout of Long Term Capital Management in the late 1990s.
274. See Richard W. Stevenson, Fallen Star: The. Regulators; Officials Assess Impact of a Fed-brokered Deal, NY Times C4 (Sept 24, 1998).
275. See Lobel, 98 Yale L J at 1412-1418 (cited in note 129) (explaining that emergency statutes enacted in the 1970s have failed to successfully limit executive emergency authority).
276. For cost estimates with respect to 9/11, see, for example, GAO, September 11: Recent Estimates of Fiscal Impact of 2001 Terrorist Attack on New York 2-8 (Mar 2005), online at http://www.gao.gov/new.items/d05269.pdf(visited Apr 12, 2009) (finding that New York City and New York State lost a total of up to $5.8 billion in tax revenue from 2002-2003);
277. Andrew H. Chen and Thomas F. Siems, The Effects of Terrorism on Global Capital Markets, 20 Eur J Pol Econ 349, 357-60 (2004) (finding that the Dow stock prices remained below pre-attack levels for forty trading days after 9/11);
278. Gail Makinen, The Economic Effects of 9/11: A Retrospective Assessment 2-10 (Congressional Research Service, Sept 27, 2002), online at http://www.fas.org/irp/crs/RL31617.pdf (visited Apr 12, 2009) (finding that nearly eighteen thousand businesses were destroyed or disrupted by the 9/11 attacks);
279. Patrick Lenain, Marcos Bonturi, and Vincent Koen, The. Economic Consequences of Terrorism *4-27 (OECD Economics Department Working Papers No 334, July 2002) (noting that airfreight rates were roughly 10 percent higher in late 2001 than before 9/11).
280. Vermeule, 75 U Chi L Rev at 1155-56 (cited in note 15);
281. Posner and Vermeule, Terror in the Balance at 59-68 (cited in note 3) ("The panic thesis holds that citizens and officials respond to terrorism and war in the same way that an individual in the jungle responds to a tiger or a snake.").
282. For discussions of overreaction as a result of fear, see Eric A. Posner, Law and the Emotions, 89 Georgetown L J 1977, 2002-04 (2001) (explaining that fear, regarded as an evolutionariIy adaptive mechanism, enables an individual to respond quickly to a threat, but it also causes the individual to overestimate the threat);
283. Posner and Vermeule, Terror in the Balance at 59-68 (cited in note 3);
284. Gross, 112 Yale L J at 1038-1042 (cited in note 129) (positing that an individual's cognitive biases, triggered by fear, magnify the perceived risk of future terrorist attacks).
285. For one of countless descriptions of the sense of fear during the financial crisis, see Bryan Caplan, Panic Puzzle, EconLog (Oct 12, 2008), online at http://econlog.econlib.Org//archives/2008/10/panic-puzzle.html (visited Apr 12, 2008) (questioning whether the financial panic would have been prevented had people not sold their investments out of pure fear).
286. See Vermeule, 75 U Chi L Rev at 1169 (cited in note 15).
287. PollingReport.com, President Bush: Job Ratings, online at http://www.pollingreport.com/BushJobl.htm (visited Nov 1, 2009) (noting that President Bush's approval ratings were lowest from October 8-11 ,2008, according to polls conducted by ABC News and the Washington Post).
288. In July 2001, more than 60 percent of Americans viewed Bush as "honest and trustworthy"; by January 2007, that figure had dropped to 40 percent. See Washington Post-ABC News Poll, Wash Post (Jan 20, 2007), online at http://www.washingtonpost.com/wp-srv/politics/polls/postpoll-012007.htm (visited Nov 1,2009).
289. For congressional hearings on signing statements, see Presidential Signing Statements, Hearing before the Senate Committee on the Judiciary, 109th Cong, 2d Sess (June 27, 2006), online at http://judiciary.senate.gov/hearings/ hearing.cfm7id-1969 (visited Nov 1, 2009) (recording Senator Patrick Leahy's sharp criticism of President Bush's excessive use of signing statements);
290. Presidential Signing Statements under the. Bush Administration: A Threat to Checks and Balances and the Rule, of Law?, Hearing before the House Committee on the Judiciary, 110th Cong, 1st Sess (Jan 31, 2007) (focusing on the president's use of signing statements on issues of surveillance, privacy, torture, enemy combatants, and rendition). For judicial reaction,
291. see, for example, Hamdan, 548 US at 567 (finding that the administration did not have inherent authority to disregard congressional limitations on military commissions).
292. Mark Memmott and Jill Lawrence, Gallup: Approval Rating for Congress Matches Lowest Ever Recorded, USA Today (Aug 21, 2007), online at http://blogs.usatoday.com/onpolitics/2007/08/gallup-approval.html (visited Apr 12, 2009) (noting that Congress's approval rating was even lower than President Bush's).
293. The 9/1l report allocated blame liberally; our point is one of public perception. See National Commission on Terrorist Attacks upon the United States, The 9/11 Commission Report 339-360 (2004) (concluding that the 9/11 attacks revealed failures in imagination, policy, capabilities, and management).
294. See Americans Unfamiliar with Bernanke, Rasmussen Reports (June 21, 2001), online at http://www.rasmussenreports.com/public-content/business/ general-business/june-2006/americans-unfamiliar-with-bernanke (visited Nov 1, 2009).
295. See Part I.B.I.
296. Alex Cukierman and Mariano Tommasi, When Does It Take a Nixon to Go to China?, 88 Am Econ Rev 180, 180, 192-193 (1998) (identifying conditions under which important policy shifts are more likely to be implemented by policymakers whose expected position was contrary to those policies).
297. Robert E. Goodin, Voting through the. Looking Glass, 11 Am Pol Sci Rev 420, 420-422 (1983) (proposing that "politicians' possibilities vary inversely with their declared positions").
298. See, for example, Stephen Slivinski, The. Grand Old Spending Party: How Republicans Became Big Spenders (May 3, 2005), online at http://www.cato.org/ pub-display.php?pub-id=3750 (visited July 27, 2009) ("President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson.").
299. A draft version of this legislation was reported in the press. See Discussion Draft, online at http://www.politico.com/static/PPM41-ayo08b28.html (visited Nov 1, 2009).
300. See Neil MacFarquhar, US Muslims Say Terror Fears Hamper Their Right to Travel, NY Times Al (June 1, 2006) (interviewing US Muslims who have filed complaints with the Department of Homeland Security).
301. The Paulson plan initially included foreign banks in its provisions, and a brief populist backlash arose against policies that helped foreigners. See Mark Landler, Financial Chill May Hit Developing Countries, NY Times C9 (Sept 26, 2008) ("Treasury Secretary Henry M. Paulson Jr. has resisted efforts by Congress to make foreign banks ineligible for the plan.");
302. Nelson D. Schwartz and Carter Dougherty, Foreign Banks Hope an American Bailout Will Be Global, NY Times Cl (Sept 22, 2008) (reporting Paulson's comment that a bailout plan which included foreign banks and one that did not was a "distinction without a difference").
303. See Eric A. Posner and Adrian Vermeule, The. Credible Executive, 74 U Chi L Rev 865, 868, 894-913 (2007) (suggesting that the president can send signals of credibility by committing himself to policies that only a well-motivated president would adopt).
304. See Posner and Vermeule, Terror in the Balance at 43, 273 (cited in note 3) (noting legislatures' willingness to authorize "sweeping power" in emergencies; observing that "judges who are aware of their limited capacity to evaluate the executive's claims will usually defer");
305. Clinton Rossiter, Constitutional Dictatorship: Crisis Government in the Modern Democracies 3-14, 209-87 (Princeton 1948) (examining the experiences of emergency government in the United States, Great Britain, France, and the German Republic).
306. See generally William H. Rehnquist, All the Laws but One: Civil Liberties in Wartime. (Knopf 1998) (providing a history of the government's management of various security matters during the Civil War, as well as during the World Wars).
307. See Frederic S. Mishkin and Eugene N. White, U.S. Stock Market Crashes and Their Aftermath: Implications for Monetary Policy, in William C. Hunter, George G. Kaufman, and Michael Pomerleano, eds, Asset Price Bubbles 53, 55 (MIT 2003) (discussing severe stock market declines and counting fifteen stock market crashes). There have been other crises, including currency runs and the collapse of financial institutions.
308. See, for example, Richard J. Herring, The Collapse of Continental Illinois National Bank and Trust Company: The Implications for Risk Management and Regulation (The Wharton School, Financial Institutions Center), online at http://fic.wharton.upenn.edu/fic/case%20studies/continental%20full.pdf (visited July 28, 2009).
309. For accounts, see Bruner and Carr, 19 J Applied Corp Fin at 120-22 (cited in note 137) (observing that in the period before the creation of the Federal Reserve, liquidity of the financial system was a constant cause of concern);
310. Robert F. Bruner and Sean D. Carr, The Panic of 1907 143-46 (John Wiley & Sons 2007) (describing a series of legislative acts, which eventually led to the creation of the Federal Reserve);
311. Jon R. Moen and Ellis W Tallman, Why Didn't the United States Establish a Central Bank until after the Panic of 1907 1-2, 11-24 (Federal Reserve Bank of Atlanta Working Paper, Nov 1999) (positing that the Federal Reserve was created after 1907 because the panic primarily hit New York City trust companies and because the attitudes of the New York banking community towards a centralized system changed).
312. See Arthur M. Schlesinger, Jr, The. Coming of the. New Deal 6-10 (Houghton Mifflin 2003).
313. Consider Friedman and Schwartz, A Monetary History of the. United States at 543-545 (cited in note 204) (observing the positive correlation between the money stock and US economic growth during FDR's first two terms, with the consequence that the Federal Reserve's monetary policy played an "important role" in the 1937-1938 contraction).
314. Arthur M. Schlesinger, Jr, The Imperial Presidency 146-147 (Houghton Mifflin 1973) (stating that the New Deal was based on congressional delegation of power, as opposed to inherent presidential power).