The Federal Reserve and the 2020 Economic and Financial Crisis

The Federal Reserve and the 2020 Economic and Financial Crisis

Lev Menand

Series number :

Serial Number: 

Date posted :

May 21 2020

Last revised :

May 10 2021
SSRN Share


  • Central Banking • 
  • Money • 
  • banking • 
  • lender of last resort • 
  • Monetary Policy • 
  • CARES Act • 
  • Federal Reserve • 
  • 13(3) • 
  • repo • 
  • Swap Lines • 
  • Emergency Lending • 
  • ESF • 
  • Shadow Banking • 
  • Eurodollars

This Article provides a comprehensive legal analysis of the Federal Reserve’s response to the 2020 economic and financial crisis. First, it examines sixteen ad hoc lending facilities established by the Fed to fight the crisis and sorts them into two categories. Six advance the Fed’s monetary mission and were designed to halt a run on financial institutions.

Ten go beyond the Fed’s traditional role and are designed to directly support financial markets and the real economy. Second, it maps these programs onto the statutory framework for money and banking. It shows that Congress’s signature crisis legislation, the CARES Act, suspended several existing restrictions on Fed lending sub silentio. And it reveals how the Fed’s lending to securities dealers and foreign central banks, a practice dating back more than fifty years, has never been expressly authorized by Congress. Third, it argues that these tensions reflect deficiencies in our contemporary economic and financial architecture. Finally, it suggests statutory reforms targeted at improving the government’s response to future economic and financial emergencies.

Published in

Published in: 
Publication Title: 
Stanford Journal of Law, Business, and Finance, Vol.24,2021 (Forthcoming)


Real name:
Lev Menand
Columbia Law School