Collins v. Mnuchin

(1) Whether the Federal Housing Finance Agency’s (FHFA) structure violates the separation of powers; and (2) whether the courts must set aside a final agency action that FHFA took when it was unconstitutionally structured and strike down the statutory provisions that make FHFA independent.

Petitioners owned shares in Freddie Mac and Fannie Mae, which are regulated by FHFA. FHFA placed them under conservatorship, and received financing from the Treasury to keep them afloat. Respondents adopted a Third Amendment to the financial agreements which provided Respondents a majority of the share’s quarterly net worth. Petitioners sued Respondents and argued that adopting the Third Amendment surpassed the FHFA’s various statutory powers and that FHFA did not have the authority to adopt it because the President cannot remove its Director. The district court granted a motion to dismiss Petitioner’s statutory authority claims, and summary judgment in favor of Respondents. Upon appeal, the Fifth Circuit reversed and remanded in part, and affirmed in part, the judgment of the district court. The Fifth Circuit held that FHFA exceeded their statutory authority because, when interpreting the Housing and Economic Recovery Act's ("HERA") conservator and receiver scheme, the FHFA’s generally held powers should not leave specific ones meaningless. The Fifth Circuit also held that Respondents did not exceed their securities-purchase authority, nor was the adoption of the net worth sweep arbitrary and capricious, because Congress granted the purchase security "authority to protect markets, consumers, and taxpayers, not" stakeholders. The Fifth Circuit lastly held that FHFA violated Article Two of the Constitution because HERA’s for-cause removal protection limited the President’s removal power and falls outside the exception for independent agencies. Petitioners argue that lower court erred and the decision below conflicts with other circuits.