The Supreme Court decides that the director of the Federal Housing Finance Agency can be removed at will; Calabria Licentiate – Finance and Banking


United States: The Supreme Court decides that the director of the Federal Housing Finance Agency can be removed at will; Calabria dismissed

To print this article, simply register or connect to Mondaq.com.

The United States Supreme Court ruled yesterday in Collins vs. Yellin that a restriction on the president’s power to dismiss at will the director of the Federal Housing Finance Agency is unconstitutional as a violation of the doctrine of the separation of powers. This decision came as no surprise, the Court having ruled in Seila Law LLC v. Consumer Financial Protection Bureau that a similar restriction on the president’s power to dismiss the director of the CFPB at will was unconstitutional. The Court rejected a number of arguments that the Collinscase differed from Seila case, specifying that:

  • Congress had no more leeway to restrict the president’s power of impeachment with respect to the director of the FHFA than to restrict the president’s power of impeachment with respect to the director of the CFPB;
  • The authority available to the director of the FHFA to replace the regulated entities (that is to say., Fannie Mae and Freddie Mac) and acting as a private party does not give Congress greater authority to limit the president’s impeachment power;
  • The fact that the director of the FHFA regulates government-sponsored entities (again, Fannie Mae and Freddie Mac) does not give Congress greater authority to limit the president’s impeachment power;
  • The argument that the director of the FHFA is only offered “modest” land protection is untenable, because even “modest” protection violates the doctrine of the separation of powers.

The plaintiffs had also challenged the dividend payment formula by Fannie Mae and Freddie Mac which had been promulgated by law on the grounds that the FHFA had exceeded its authority as a conservative by accepting the formula. The Court ruled that this statutory request should be dismissed. The plaintiffs also demanded that all dividends paid under the new formula be returned to Fannie Mae and Freddie Mac. This request was returned to the lower court for further consideration based on the court ruling on the constitutional issue.

Following the announcement of the court’s decision, President Biden fired Mark Calabria as director of the FHFA and appointed Sandra Thompson as interim director. Ms. Thompson has served as the deputy director of the agency’s Housing Mission and Goals division since 2013.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

POPULAR ARTICLES ON: United States Finance and Banking

Are Revenue Sharing Agreements Loans? CFPB says yes

Sheppard Mullin Richter & Hampton

Last month, we wrote a blog about a consent order the California Department of Financial Protection and Innovation (DFPI) made with a manager of revenue sharing agreements.

LIBOR Transition: BSBY Out Of The Gates First

Duane Morris LLP

With all the regulator and market focus on SOFR as the replacement of choice for LIBOR, it’s easy to forget that there are other replacement rates vying for market attention.


Louis R. Hancock

Leave a Reply

Your email address will not be published.