Academic

If you take the way the Fed has used its discount window so far as legal, then you wouldn't think that Treasury and the Fed would need to go to the Hill for authority for a massive bailout of everyone else.  I guess the institutions are beginning to run out of money, though.  I'd like to see a few more collapses before there is a superbailout, but do admit that the way each rescue has been done so far hasn't really contributed to moral hazard too much; the shareholders at Bear and AIG, and management at Frannie, have essentially lost everything by going under government protection.  Anyway, more skepticism about the use of the authority so far from Eric Posner, and don't miss this post by Steven Davidoff.

If I were the Fed, I'd get a retroactive blessing for the AIG takeover and for Bear too, for that matter, along with prospective bailout legislation.  The retroactive blessing wouldn't make the takeovers okay when they were done, but it would probably moot any efforts to undo those arrangements (if a plaintiff could figure out a way to get standing, and noting that courts don't usually supervise bailouts, etc).