Last Resort: The Financial Crisis and the Future of Bailouts

For nonlawyers seeking a closely argued, technical attack on the mechanics of recent federal bailouts, this work by Posner (Kirkland & Ellis Distinguished Service Professor of Law, Univ. of Chicago Law Sch.; The Twilight of Human Rights Law) is the top choice. Heavily footnoted, with extensive references, it provides the legal and policy underpinnings for claims made by Posner's former client, Starr International, against the United States. The case, and one fourth of the book, concern the government bailout of insurer AIG. Starr was its leading shareholder; Posner argues that the government, in extracting a large ownership stake from AIG in return for financing, violated the U.S. Constitution. Posner wants the government to be a lender of last resort, but thinks that the laws must be fixed because the old bailouts were illegal. Whether Congress will entertain his prescriptions is another matter. Starr won at trial but received no damages. It lost on appeal and is now asking the Supreme Court for review.