After stepping away to enjoy the pleasures of a summer virus, courtesy of my local one-year-old, I’m back for one last post to finish out my guest-blogging here, which I hope has been edifying or thought-provoking or at least mildly amusing for some readers. (Any and all thoughts, about my posts here or about To the Edge, would be greatly appreciated: pwallach at brookings.edu). For this last post, I want to return to the theme of “So Now What?”—this time not in the sense of policy prescriptions, but for the way we think about the law and how it relates to the legitimacy of crisis actions.

What I was driving at in my second AIG post, and what I explain in a number of contexts in the book, is that when Treasury and Fed officials adopt the role of financial crisis responders, they are unlikely to be subject to our stereotypical notion of the rule of law that centers on judges as the key enforcers of statutory and constitutional restraint. In this sense, I am in agreement with Eric Posner and Adrian Vermeule’s The Executive Unbound—though I reject their further inference that law itself becomes nothing more than a distraction for the nostalgic or naive, for reasons I’ve explained.

I like to think of this as a realist turn of thought: when we think about what the law means in practice, we ought to look at the evidence of what it does rather than starting with any hard and fast interpretive rules. But, like other uses of legal realism, this one is likely to generate backlash. Some of that will come from steadfast practitioners of legal dogmatics, who resent the heresy. But since I have no hopes of ever impressing the Senate Judiciary Committee, that doesn’t worry me much.

But ordinary people have their own reverence for the idea that our government and its instrumentalities are strictly creatures of law (see the fascinating Law’s Quandary, by Steven D. Smith). Their offense at deviation from this norm (perhaps rallied and organized by the professional formalists) is a far more troubling affair. Since the people’s judgment of the legitimacy of government’s actions is the ultimate determinant of legitimacy, that broader impression of lawlessness matters a great deal; indeed, it hangs like a cloud over future crisis responses.

Posner and Vermuele’s view is that in crises, “legality and legitimacy diverge, and legitimacy prevails.” In other words, our government and polity together slide over into a non-legal regime in which direct political checks are the only ones that matter. My contention is that this transition is likely to be much messier than they let on, in part because political channels are ill-defined.

This is especially the case for the Fed. American anxieties about paper money are older than the republic, not to mention fears of the “creature from Jekyll Island.” So the Fed will always face resistance in legitimizing its operations, especially in crises, when it is most visible. The Fed’s imposing presence can be accepted most readily as a valid delegation from Congress—but most such logic relies on confidence in the force of legal bonds. In other words, the Fed must at least seem legally accountable. This is all the more true because of the Fed’s perceived independence from politics. If we think the Fed is rightly insulated from sudden political passions, then we cannot count on direct-to-the-people accountability to substitute for legality.

In short, the central bank must style itself as a more accountable organ of government in some way that convinces at least some portion of skeptics; that is what legitimacy seems to require today. Discussion with Peter Conti-Brown has partially convinced me of the anachronistic nature of this view—but expectations are not necessarily any less influential because they are anachronistic. The political environment of America in 2015 is very different from what it was a century ago, and the Fed’s weirdness has become an obstacle to legitimacy today more than it may have been in the past. Keep America weird…but realize that the American people probably don’t have much patience for weirdness in their key policymaking institutions, and act accordingly. In some ways, Peter’s proposals about normalizing the appointment of the regional Fed presidents (which I’ve shied away from to this point) fit well into this mold.

Well, I could ramble on, but perhaps that charming fever hasn’t left entirely yet and so I’m better off cutting my losses. My sincere thanks to the Conglomerate for providing me an outlet for thinking out loud over the past few weeks, and especially to David for inviting me and engaging with my book. Hope that everyone enjoys the waning days of our crisis-free summer, as long as they last…

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