- Court: Oregon Supreme Court
- Area(s) of Law: Constitutional Law
- Date Filed: 06-23-2021
- Case #: 19-422
- Judge(s)/Court Below: ALITO, J., delivered the opinion of the Court. THOMAS, J. filed a concurring opinion. KAGAN, J. with whom BREYER, J. and SOTOMAYOR, J. join as to Part II, filed a concurrence in part and concurring in the judgment. GORSUCH, J. filed a concurrence in part. SOTOMAYOR, J., with whom BREYER, J. joined, concurring in part and dissenting in part.
- Full Text Opinion
The Federal Housing Finance Agency (FHFA) was created by Congress to oversee Fannie Mae and Freddie Mac, which are government-sponsored enterprises (GSEs) that purchase and guarantee numerous mortgages in the United States. As the conservator of Freddie and Fannie, FHFA entered into agreements with the Department of Treasury requiring the Treasury to invest billions of dollars in the GSEs in exchange for fixed dividends. Because the dividend liability exceeded the GSE’s total earnings, causing the GSEs to require more funds from the Treasury, the agreement was amended. The new agreement replaced the fixed dividend obligation with a variable quarterly dividend based upon the GSE’s net worth and a specified capital reserve. Further, FHFA’s director may be fired by the President “for cause.”
Petitioner, Collins and others, are Freddie and Fannie shareholders who claimed that the structure of FHFA violates separation of powers and that FHFA exceeded its authority under federal law when it obliterated shareholder ownership interests with the new agreement.
The district court granted the government’s motion for summary judgment on the constitutional claim but dismissed the statutory claims, but the Fifth Circuit reversed the judgment on the constitutional claim, invalidating the FHFA director removal provision. The Fifth Circuit then reheard the case en banc, affirming one of the statutory claims and reversing the other. It further held that FHFA’s structure was unconstitutional and invalidated the removal provision.
On appeal, the Supreme Court held that the shareholders were barred from bringing the statutory claims because FHFA did not exceed its authority as conservator of Freddie and Fannie. Additionally, the Court affirmed the Fifth Circuit’s judgment on the constitutional claim, finding that FHFA’s structure violates separation of powers because it restricts the President’s authority to remove the FHFA Director. However, the unconstitutional structure did not invalidate the new FHFA/Treasury agreement. Thus, the Court remanded the case to determine a proper remedy for the shareholders.
Affirmed in part. Reversed and remanded in part.