This Article maps financial crisis containment—extraordinary measures to stop the spread of financial distress—as a category of legal and policy choice. I make three claims.
First, containment is distinct from financial regulation, crisis prevention and resolution. Containment is brief; it targets the immediate term. It involves claims of emergency, rule-breaking, time inconsistency and moral hazard. In contrast, regulation, prevention and resolution seek to establish sound incentives for the long term. Second, containment decisions deviate from non-crisis norms in predictable ways, and are consistent across diverse countries and crises. Containment invariably entails three kinds of choices: choices between wholesale and case-by-case response to financial distress, choices about whether to enforce private contracts and government regulations, and choices about distributing losses from crisis. [. . . .]