Fed is ‘throwing money in the wrong place,' says Sheila Bair, former top banking regulator

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While preventing the implosion of big banks and the American auto industry were an immediate focus of rescue programs more than a decade ago, relief was less comprehensive and slower to reach U.S. households, which the Brookings Institution estimates led to the loss of 8.7 million jobs, more than 8 million home foreclosures and the shuttering of more than 500 community banks.

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"Forget this 2008 financial crisis playbook," Bair said. "We never focused enough on the real problem in 2008, which was homeowners," she said, adding that she "loves the idea" of recent proposals that aim to get cash straight into the hands of households who are grappling with shuttered schools, businesses and more.

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Specifically, the Fed can invoke section 13-3 of the Federal Reserve Act, she said, which covers emergency lending programs, and was revised under the 2010 Dodd-Frank Act to make sure that the government targets relief toward industries, not individual companies, threatened by collapse.