Collins v. Yellen

141 S. Ct. 1761 (2020)

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Collins v. Yellen

United States Supreme Court
141 S. Ct. 1761 (2020)

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Facts

In the wake of the 2008 financial crisis, Congress enacted the Housing and Economic Recovery Act of 2008 (HERA). One of HERA’s functions was to create the Federal Housing Finance Agency (FHFA), which was tasked with regulating Fannie Mae and Freddie Mac, two of the nation’s leading sources of mortgage financing. FHFA had a single director who could be removed by the United States president, but only for cause. Fannie Mae and Freddie Mac were both in financial trouble, so FHFA put them into conservatorship and negotiated a bailout. Pursuant to the terms of the bailout, the Treasury Department provided each company with up to $100 billion in capital in exchange for senior preferred shares and quarterly fixed-rate dividends. Several years later, the bailout agreement was renegotiated, and the fixed-rate dividend formula was replaced with a variable-rate formula. As a result, the companies transferred large amounts of wealth to the Treasury Department. A group of Fannie Mae and Freddie Mac shareholders (plaintiffs) sued the federal government (defendant), alleging, among other things, that HERA was unconstitutional because its limitation on the president’s ability to remove the FHFA director violated separation of powers. The district court held that FHFA’s structure was constitutional, and the court of appeals reversed. The United States Supreme Court granted certiorari. The government did not defend HERA’s constitutionality. Therefore, the Court appointed an amicus, who argued that the Constitution did not require Congress to grant the president unfettered removal power in this case because the FHFA was small and limited in authority.

Rule of Law

Issue

Holding and Reasoning (Alito, J.)

Concurrence (Gorsuch, J.)

Concurrence (Kagan, J.)

Concurrence (Thomas, J.)

Concurrence/Dissent (Sotomayor, J.)

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