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SCOTUS rules structure of agency overseeing mortgage companies is unconstitutional

Supreme Court
Posted at 10:49 AM, Jun 23, 2021
and last updated 2021-06-23 11:11:44-04

WASHINGTON (AP) — The Supreme Court has ruled that the structure of the agency that oversees mortgage giants Fannie Mae and Freddie Mac violates the separation of powers principles in the Constitution.

The opinion in Collins v. Yellen was delivered by Justice Samuel Alito on Wednesday.

In the ruling, the justices sent the case involving Federal Housing Finance Agency (FHFA) back to a lower court for additional proceedings.

That agency oversees Fannie Mae and Freddie Mac and was created as part of the Recovery Act in response to the 2008 financial crisis.

Shareholders of the two companies had argued that the FHFA’s structure was unconstitutional and that the justices should set aside an agreement under which the companies have paid the government billions.

That money is compensation for the taxpayer bailout that Fannie Mae and Freddie Mac received following the financial crisis.

The court’s ruling is expected to give President Joe Biden and future commander in chiefs the authority to remove the head of the FHFA at any time. The current director of the agency was appointed by former President Donald Trump.