Collins v. Yellen
The Supreme Court struck down the federal law protecting the head of the agency that oversees Fannie Mae and Freddie Mac from being fired by the President without cause — but declined to void a 2012 deal that transferred over $200 billion from those companies to the Treasury.
The ruling extends the principle that single-director federal agencies must answer fully to the President, while sharply limiting what shareholders can recover when that principle is violated.
How it got here: Shareholders sued in federal district court in Texas; the district court dismissed; the Fifth Circuit en banc partially reversed; both sides petitioned the Supreme Court, which agreed to hear the consolidated cases.
The Case in Depth
What happened
Fannie Mae and Freddie Mac, the two companies at the center of the U.S. mortgage market, were placed under federal conservatorship during the 2008 financial crisis. The agency overseeing them — the Federal Housing Finance Agency — negotiated a 2012 deal requiring both companies to hand over nearly all of their quarterly net worth to the U.S. Treasury, transferring over $200 billion in total. Shareholders of both companies sued, arguing the deal exceeded the agency's legal authority and that the agency's structure — led by a single director removable only for cause — was unconstitutional.
The question before the Court
Could Congress prevent the President from freely firing the director of the agency overseeing Fannie Mae and Freddie Mac, and do shareholders harmed by that unconstitutional arrangement have any remedy?
The Court's answer
No — and the shareholders largely cannot get their money back. The Court ruled that the for-cause removal protection Congress gave the FHFA director unconstitutionally insulates executive power from presidential control. Following its ruling the prior Term about the Consumer Financial Protection Bureau, the Court held that any single-director agency exercising executive power must be fully subject to the President's removal authority; blocking removal except for cause impermissibly concentrates power in an official the President cannot freely supervise.
On shareholder relief, the outcome was largely against them. A federal anti-lawsuit clause in the Recovery Act bars courts from second-guessing FHFA decisions made within its broad conservatorship authority, so the statutory challenge was dismissed outright. As for the constitutional violation, the Court declined to void the 2012 dividend deal or order Treasury to return billions — the directors who implemented the deal were lawfully appointed and had full legal authority to act. The case returns to lower courts for the narrow question of whether the unconstitutional removal restriction actually caused specific, demonstrable harm.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Shareholders of Fannie Mae and Freddie Mac may still seek some compensation, but they face a steep burden proving the unconstitutional removal protection actually changed specific decisions. More broadly, the ruling signals that other federal agencies led by a single director with for-cause removal protections — potentially including the Social Security Administration — may face similar constitutional challenges.
What changes now
The case returns to lower courts for a narrow and difficult factual inquiry: did the unconstitutional removal restriction concretely affect specific FHFA decisions in a way that harmed shareholders? The Court offered possible examples of provable harm — a thwarted presidential removal attempt or a public presidential statement of displeasure — but acknowledged the inquiry would be hard. If shareholders cannot show such a connection, they may ultimately recover nothing. The 2012 agreement itself remains in place; a fourth amendment replacing its dividend formula was already enacted in January 2021.
What this does not decide
The Court explicitly declined to address whether removal restrictions protecting the Social Security Administration, the Office of Special Counsel, the Comptroller, multi-member agencies whose chairs serve fixed terms, or civil service employees are constitutional. None of those agencies were before the Court.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the full majority opinion but wrote to highlight a deeper problem: finding a removal restriction unconstitutional does not automatically mean government actions under it were unlawful. He argued the Constitution itself displaced the restriction from enactment, so the President always had the power to fire any FHFA director. Because no director defied a removal attempt and none acted without proper appointment, Thomas seriously doubted the shareholders could demonstrate that any agency action was actually unlawful — and without an unlawful act, there is nothing to remedy.
Concurrence in part — Justice Gorsuch
Justice Gorsuch agreed the removal restriction is unconstitutional but would have given shareholders much stronger relief. He argued that officials unconstitutionally shielded from removal — like those unconstitutionally appointed — should have their actions treated as void, subject to traditional remedial principles such as laches. He called the Court's remedy approach 'novel and feeble,' requiring impossible speculation about what the President would have done in an alternate timeline, and said it defied consistent precedents while discouraging Congress from fixing constitutional problems in statutory text.
Concurrence in part — Justice Kagan
Justice Kagan concurred in the judgment that the removal restriction is unconstitutional — compelled, she said, by stare decisis from Seila Law, which she had dissented from and still believes was wrong. She objected to two aspects of the majority: its sweeping theory that at-will removal is essential to democratic accountability (which she sharply disputed), and its unnecessary broadening of Seila Law beyond the 'significant executive power' limit that ruling expressly imposed. Justices Breyer and Sotomayor joined her separate analysis of the remedy question, which agreed with the majority that relief requires showing the removal restriction actually affected specific decisions.
Dissent in part — Justice Sotomayor
Justice Sotomayor dissented from the constitutional holding, arguing the FHFA does not wield 'significant executive power' as Seila Law required for at-will removal to be constitutionally compelled. Unlike the CFPB, the FHFA regulates only 13 government-sponsored enterprises — not millions of private businesses — lacks broad rulemaking authority, and has never fined any of its regulated entities. She argued the majority ignored its own methodology from Seila Law and improperly encroached on Congress's authority to design independent agencies.
How the Court got there
The legal reasoning, step by step
- The Recovery Act contains an 'anti-injunction clause' barring courts from interfering with FHFA decisions made in its conservatorship role — unless the agency stepped entirely outside that role. The statute authorized the FHFA to act in the best interests of 'the regulated entity or the Agency,' meaning it could prioritize market stability over the companies' own interests. Because the 2012 variable-dividend deal was designed to eliminate the risk that dividend payments would deplete Treasury's capital commitment — a goal within the FHFA's conservatorship mandate — the anti-injunction clause blocked the shareholders' statutory challenge.
- The shareholders had standing to pursue their constitutional claim because they suffered a concrete financial loss — the value of their shares was swept to Treasury — traceable to the FHFA's actions. The claim was not moot even after a fourth amendment eliminated the variable dividend formula, because the shareholders still sought compensation for past harm, preserving a live stake in the case. The Court also held that the Recovery Act's 'succession clause,' which transfers shareholders' rights to the FHFA as conservator, did not strip shareholders of the right to challenge the removal restriction — that right belongs to all citizens, not just company shareholders.
- On the constitutional merits, the Court applied Seila Law LLC v. Consumer Financial Protection Bureau, its 2020 ruling striking down a similar for-cause removal protection for the CFPB Director. Seila Law established that Congress cannot insulate a single-director agency's head from presidential removal — the President must be able to fire such officials for any reason, or the chain of accountability to the voting public is broken. Because the FHFA is likewise led by a single director exercising executive power, the Recovery Act's for-cause restriction failed for the same reasons.
- The Court rejected the argument that the FHFA's more limited scope — it regulates only government-sponsored enterprises, not the vast private market the CFPB oversees — made the removal restriction permissible. The President's removal authority serves accountability purposes regardless of an agency's size, and courts are poorly positioned to rank agencies by importance. The majority also held that even 'modest' for-cause restrictions on removing a single-director agency head are unconstitutional; the President must be able to fire not just officers who disobey orders but also those whose judgment or policy views he finds wanting.
- On remedy, the Court held that the 2012 deal was not automatically void. All FHFA directors who implemented it were properly appointed — the constitutional flaw was only in how securely they were protected from firing, not in whether they held office at all. This differs from Appointments Clause cases, where a defective appointment strips an official of all authority to act; here, the directors had full legal authority to exercise their powers. The Court sent the case back to lower courts to determine whether the removal restriction actually caused measurable harm — for instance, by preventing a presidential removal attempt or causing a director to act differently because he believed he was shielded.
Doctrinal impact
Cases affected by this decision
Reaffirms Seila Law LLC v. Consumer Financial Protection Bureau (591 U.S. ___)
The Court applied Seila Law directly to strike down the FHFA's nearly identical single-director removal restriction.
Distinguishes Bowsher v. Synar (478 U.S. 714)
Unlike Bowsher's legislative officer wielding executive power, FHFA's director is an executive officer lawfully exercising executive authority.