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Supreme Court of the United States
December 9, 2020, Argued; June 23, 20211, Decided
Nos. 19-422 and 19-563.
Justice Alito delivered the opinion of the Court.
Fannie Mae and Freddie Mac are two of the Nation’s leading sources of mortgage financing. When the housing crisis hit in 2008, the companies suffered significant losses, and many feared that their troubling financial condition would imperil the national economy. To address that concern, Congress enacted the Housing and Economic Recovery Act of 2008 (Recovery Act), 122 Stat. 2654, 12 U. S. C. §4501 et seq. Among other things, that law created the Federal Housing Finance Agency (FHFA), “an independent agency” tasked with regulating the companies and, if necessary, stepping in as their conservator or receiver. §§4511, 4617. At its head, Congress installed a single Director, whom the President could remove only “for cause.” §§4512(a), (b)(2).
Shortly after the FHFA came into existence, it placed Fannie Mae and Freddie Mac into conservatorship and negotiated agreements for the companies with [*15] the Department of Treasury. Under those agreements, Treasury committed to providing each company with up to $100 billion in capital, and in exchange received, among other things, senior preferred shares and quarterly fixed-rate dividends. Four years later, the FHFA and Treasury amended the agreements and replaced the fixed-rate dividend formula with a variable one that required the companies to make quarterly payments consisting of their entire net worth minus a small specified capital reserve. This deal, which the parties refer to as the “third amendment” or “net worth sweep,” caused the companies to transfer enormous amounts of wealth to Treasury. It also resulted in a slew of lawsuits, including the one before us today.
A group of Fannie Mae’s and Freddie Mac’s shareholders challenged the third amendment on statutory and constitutional grounds. With respect to their statutory claim, the shareholders contended that the Agency exceeded its authority as a conservator under the Recovery Act when it agreed to a variable dividend formula that would transfer nearly all of the companies’ net worth to the Federal Government. And with respect to their constitutional claim, the shareholders [*16] argued that the FHFA’s structure violates the separation of powers because the Agency is led by a single Director who may be removed by the President only “for cause.” §4512(b)(2). They sought declaratory and injunctive relief, including an order requiring Treasury either to return the variable dividend payments or to re-characterize those payments as a pay down on Treasury’s investment.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2021 U.S. LEXIS 3397 *
PATRICK J. COLLINS, ET AL., PETITIONERS v. JANET L. YELLEN, SECRETARY OF THE TREASURY, ET AL.; JANET L. YELLEN, SECRETARY OF THE TREASURY, ET AL., PETITIONERS v. PATRICK J. COLLINS, ET AL.
Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.
Subsequent History: As Revised June 23, 2021.
Prior History: [*1] ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Collins v. Mnuchin, 938 F.3d 553, 2019 U.S. App. LEXIS 27001, 2019 WL 4233612 (5th Cir. Tex., Sept. 6, 2019)
Disposition: 938 F. 3d 553, affirmed in part, reversed in part, vacated in part, and remanded.
FHFA, removal, shareholders, regulated, third amendment, executive power, appointed, Seila Law, dividend, Recovery Act, parties, powers, acting director, Presidential, power to remove, mortgage, entity, cases, amicus, decisions, confirmed, billion, separation of powers, lower court, net worth, conservatorship, receiver, formula, tenure, independent agency
Business & Corporate Law, Dissolution & Receivership, Receiverships, Appointment of Receivers, Real Property Law, Financing, Federal Regulations, Estate, Gift & Trust Law, Estate Administration, Conservators & Guardians, Civil Procedure, Justiciability, Standing, Injury in Fact, Constitutional Law, Case or Controversy, Elements, Business & Corporate Compliance, Business & Corporate Law, Corporations, Corporate Finance, Secondary Mortgage Market, Federal Home Loan Mortgage Corporation, Separation of Powers, Governments, Federal Government, Executive Offices, Legislation, Interpretation, Civil Rights Law, Contractual Relations & Housing, Fair Housing Rights, Fair Housing Act, Courts, Authority to Adjudicate, Administrative Law, Scope of Authority, Methods of Investigation, Subpoenas, Banking Law, Banking & Finance, Guidelines & Best Practices, Supervision of Troubled or Failing Financial Institutions, Conservators & Guardians, Conservators, Appointment, The Presidency, Removal of Officials, Preliminary Considerations, Standing, The Judiciary, Constitutionality of Legislation