One interesting thing about this crisis was how powerful the Secretary of the Treasury, the Federal Reserve have been and how weak and passive the President of the United States and the Securities and Exchange Commission. There is a quick reason for this. Money talks. Treasury and the Federal Reserve have money. The President and the SEC don’t. When you have a financial crisis, people care how much money you have, and if you don’t have money, then people don’t care what you think.
This has some interesting implications for the role of Congress in relation to the President. Congress has the power of the purse, and the President has the power of the sword. During most of the twentieth century, power has moved from Congress to the Imperial Presidency, and even for much of this decade, Congress has been very passive in challenging the President even when the President was from an opposition party. I think the financial crisis may change this, because we now are in a realm in which Congress must make certain decisions which are out of the realm of power for the President.
The government has assumed massive liabilities and now the question has to be what to do with them. We have a taxpayer sponsored bailout, but now people are increasingly going to realize that we having quite decided “which taxpayers” pay the bill. These questions are Congressional questions and not Presidential ones, and so I think we may see a massive shift in power from the Presidency to Congress as these questions are debated.