On June 23, the Supreme Court issued a decision in Collins v. Yellen, a case which concerned the Federal Housing Finance Agency (“FHFA”) and the two government sponsored enterprises (“GSEs”) which the FHFA regulates and currently holds in conservatorship—the Federal National Mortgage Association (“Fannie Mae” or “Fannie”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “Freddie”). The case presented a challenge by a group of Fannie and Freddie shareholders to a provision of the conservatorship which has effectively precluded the GSEs from paying dividends to shareholders. Among other things, the plaintiffs targeted the constitutionality of the protection from removal enjoyed by the FHFA’s Director, which allowed the President to remove the Director only “for cause.” This provision mirrored the removal protection provided to the Director of the Consumer Financial Protection Bureau (“CFPB”) and which the Court invalidated in Seila Law.
The Supreme Court declined to strike down the challenged provision of the conservatorship, but it did invalidate the FHFA Director’s “for cause” removal protection. Not only does this decision have clear ramifications for the FHFA and GSEs, but it also may preview issues relating to the legal status of decisions rendered by CFPB Directors during the period in which they were unconstitutionally protected from removal from office.
Continue Reading Supreme Court Finds FHFA For-Cause Removal Structure Unconstitutional; Decision May Have Implications for CFPB