Study Guide — Judicial Philosophy, Constitutional
Interpretation & 2008 Crisis Actors
Definitions, Significance, Concept Connections, Examples
Bear Stearns
Definition: An investment bank that nearly collapsed early in the 2008 financial crisis due to exposure
to risky mortgage-backed securities.
Why It Matters: Its failure signaled the fragility of the financial sector and triggered emergency
federal intervention.
Concept Connections: Connects to systemic risk, moral hazard, and comparisons with Lehman
Brothers.
Example: Example: The Federal Reserve facilitated JPMorgan Chase’s purchase of Bear Stearns in
March 2008.
AIG
Definition: A massive insurance company that nearly collapsed in 2008 because it insured
mortgage-backed securities it could not cover.
Why It Matters: It highlighted the interconnectedness of global finance and the necessity of federal
intervention.
Concept Connections: Connects to TARP, systemic risk, and government backstopping of private
actors.
Example: Example: The U.S. government provided over $180 billion to prevent AIG’s failure.
Counter-majoritarian Difficulty
Definition: The tension that arises when unelected judges overturn laws passed by democratically
elected representatives.
Why It Matters: It raises questions about whether judicial review is compatible with democratic
governance.
Concept Connections: Connects to judicial review, constitutional interpretation, and legitimacy
debates.
Example: Example: The Supreme Court striking down popular legislation, such as parts of the Voting
Rights Act.
Judicial Review
Definition: The power of courts to declare laws or executive actions unconstitutional.
Interpretation & 2008 Crisis Actors
Definitions, Significance, Concept Connections, Examples
Bear Stearns
Definition: An investment bank that nearly collapsed early in the 2008 financial crisis due to exposure
to risky mortgage-backed securities.
Why It Matters: Its failure signaled the fragility of the financial sector and triggered emergency
federal intervention.
Concept Connections: Connects to systemic risk, moral hazard, and comparisons with Lehman
Brothers.
Example: Example: The Federal Reserve facilitated JPMorgan Chase’s purchase of Bear Stearns in
March 2008.
AIG
Definition: A massive insurance company that nearly collapsed in 2008 because it insured
mortgage-backed securities it could not cover.
Why It Matters: It highlighted the interconnectedness of global finance and the necessity of federal
intervention.
Concept Connections: Connects to TARP, systemic risk, and government backstopping of private
actors.
Example: Example: The U.S. government provided over $180 billion to prevent AIG’s failure.
Counter-majoritarian Difficulty
Definition: The tension that arises when unelected judges overturn laws passed by democratically
elected representatives.
Why It Matters: It raises questions about whether judicial review is compatible with democratic
governance.
Concept Connections: Connects to judicial review, constitutional interpretation, and legitimacy
debates.
Example: Example: The Supreme Court striking down popular legislation, such as parts of the Voting
Rights Act.
Judicial Review
Definition: The power of courts to declare laws or executive actions unconstitutional.
