Economic crises can reverberate in the legal system long after they end. One potential echo from the last recession involves Takings Clause challenges to the federal government’s rescue of several failing companies. As I explain in a recent essay, Resetting the Baseline of Ownership: Takings and Investor Expectations After the Bailouts, perhaps the most significant aspect of these cases is what they signal for investors going forward: the federal government has tremendous latitude to respond to economic crises, a power it may well deploy in the next economic crisis. As I explain in the essay and summarize below, the iterative nature of “regulatory” takings law means that a court’s assessment of an investor’s reasonable expectations will reflect government actions; when the government responds as it did, this may well serve as notice to investors about the potential for a similar response the next time around.
Posted by Nestor M. Davidson, Fordham Law School, on Friday, May 6, 2016
Editor's Note: Nestor M. Davidson is Professor of Law at Fordham Urban Law Center. This post is based on Professor Davidson’s recent article, available here.