Julia D. Mahoney is the John S. Battle Professor of Law at the University of Virginia School of Law. This post is based on Professor Mahoney’s recent article, Takings, Legitimacy, and Emergency Action: Lessons from the Financial Crisis of 2008, published in the George Mason Law Review.
In times of crisis, governments do things that fall outside—sometimes far outside—the norm and reduce or destroy the value of resources held by firms and individuals. Aggrieved owners may then sue the government, arguing that they are entitled to relief because the public action complained of amounts to a taking of their property. The financial crisis of 2008 and its aftermath have generated a cascade of such lawsuits, including highly publicized ones involving equity holders of Fannie Mae, Freddie Mac and American International Group, Inc.