Collins v. Yellen
The Supreme Court ruled that the law protecting the Federal Housing Finance Agency's director from being fired without cause violated the Constitution, extending its year-old precedent that the President must be able to remove single-director independent agency heads at any time.
The Court also blocked shareholders of Fannie Mae and Freddie Mac from challenging the 2012 deal that swept their companies' profits to the Treasury, but left open a narrow path for them to seek damages if they can prove the unconstitutional job protection actually caused their losses.
How it got here: A federal district court ruled for the FHFA on both claims; the Fifth Circuit reversed in part, finding the FHFA's structure unconstitutional but leaving the deal in place; both sides sought and the Court granted review.
The Case in Depth
What happened
When the housing market collapsed in 2008, Congress created the Federal Housing Finance Agency (FHFA) to oversee Fannie Mae and Freddie Mac, placing both companies into conservatorship. In 2012, the FHFA struck a deal with the Treasury Department requiring both companies to hand over nearly all of their profits to the government every quarter — the so-called "net worth sweep." Shareholders of both companies, who received nothing under this arrangement, sued the FHFA, challenging both the legality of the deal and the agency's constitutional structure.
The question before the Court
Did the FHFA's deal requiring Fannie Mae and Freddie Mac to hand over nearly all their profits to the government exceed the agency's legal authority, and was the FHFA director's protection from presidential firing unconstitutional?
The Court's answer
No, on the statutory claim — courts cannot block the FHFA's "net worth sweep" because a federal anti-injunction provision bars court interference with the agency's conservatorship decisions as long as the FHFA acted within its broad powers. Because the law authorized the FHFA to act in the best interests of the public — not just the companies — the sweep was within those powers, and the shareholders' court challenge was barred.
Yes, on the constitutional claim — the law shielding the FHFA director from being fired without cause violated the Constitution's separation of powers. Applying its ruling from the prior term in Seila Law, the Court held that all single-director independent agencies must have leaders the President can remove at any time. Whether shareholders can recover money for their losses depends on whether the unconstitutional job protection actually changed how the agency acted — a question sent back to lower courts.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The ruling means the President can now fire the FHFA director at any time for any reason, giving the White House direct sway over decisions that shape housing finance for millions of homeowners. Fannie Mae and Freddie Mac shareholders who lost money in the profit sweep face a difficult legal fight to recover anything, because they must show the unconstitutional job protection specifically caused their harm.
What changes now
The case returns to the lower courts, which must decide whether the unconstitutional removal restriction actually caused the shareholders any harm — a difficult inquiry into whether the President would have removed a director, or whether a director would have acted differently, absent the job-protection statute. Justice Kagan noted that the Fifth Circuit's prior analysis may already be enough to deny relief. The fourth amendment to the stock agreements, already in place, means no prospective relief is available; the fight is purely over retrospective monetary relief.
What this does not decide
The Court expressly declined to address whether removal protections for other agencies — including the Social Security Administration, the Office of Special Counsel, the Comptroller of the Currency, multi-member commissions, or the Civil Service — are constitutional. It also left the question of whether shareholders are actually entitled to any money entirely for lower courts to resolve.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the majority opinion in full but wrote separately to raise a concern he saw as underexplored: finding an unconstitutional removal restriction does not automatically mean the government acted unlawfully. Because FHFA directors were properly appointed executive officers, the removal restriction — which the Constitution had already displaced — did not strip them of authority to act. He expressed serious doubt that the shareholders can show any director actually violated the Constitution, and therefore whether any remedy is warranted.
Concurrence in part — Justice Kagan
Justice Kagan agreed with the statutory outcome and the remedial analysis (joined by Breyer and Sotomayor as to the remedy section), but concurred only in the judgment on the constitutional question. She accepted that stare decisis from Seila Law compelled finding the removal restriction unconstitutional, but refused to join the majority's reasoning, which she called politically contestable and unnecessarily broad — the majority discarded Seila Law's own 'significant executive power' limit without acknowledging it was doing so.
Concurrence in part — Justice Gorsuch
Justice Gorsuch agreed the removal restriction was unconstitutional but dissented from the majority's remedy framework. He argued that actions by an unconstitutionally insulated officer should be declared void — the same rule that applies to improperly appointed officers — and courts should not speculate about what the President would have done with different removal authority. He called the majority's approach unprecedented, unworkable in practice, and inconsistent with the Court's prior decisions in Bowsher and Seila Law.
Dissent in part — Justice Sotomayor
Justice Sotomayor dissented from the constitutional holding. She argued that Seila Law itself had expressly distinguished the FHFA from the CFPB — noting the FHFA lacks comparable regulatory power and regulates government-affiliated entities rather than private actors — and the majority was now quietly discarding those distinctions. Because the FHFA does not wield 'significant executive power' within the meaning of Seila Law, she would have upheld Congress's authority to protect the FHFA director from at-will removal.
How the Court got there
The legal reasoning, step by step
- The Recovery Act's anti-injunction clause bars courts from interfering with the FHFA's conservatorship actions unless the agency exceeded its authority. Every federal appeals court to address the clause had read it this way, and the Court agreed: if the FHFA acted within its conservatorship powers, judicial relief is off the table.
- The Recovery Act gave the FHFA unusually broad conservatorship powers, including authority to act in the best interests of 'the regulated entity or the Agency' — meaning the FHFA could prioritize public goals over the companies' shareholders. The net worth sweep was designed to protect Treasury's capital and ensure stable housing-finance markets, well within those powers, so the anti-injunction clause blocked the shareholders' statutory challenge.
- For the constitutional question, the Court applied Seila Law LLC v. Consumer Financial Protection Bureau (2020) — the prior-term decision holding that single-director independent agencies must have leaders the President can remove at will. Because the FHFA is led by a single director and its enabling law restricts the President's removal power to 'for cause,' the same constitutional rule applied.
- The Court rejected three proposed distinctions between the FHFA and the CFPB — that the FHFA has narrower authority, that it acts like a private party when serving as conservator, and that it only regulates government-sponsored enterprises rather than purely private actors. None of these differences, the Court said, changes the constitutional principle: presidential supervision over any single-director agency head cannot be blocked by a for-cause removal restriction.
- On remedy, the Court held that the net worth sweep was first adopted by an Acting Director, who is not covered by the removal restriction and serves at the President's pleasure. So there was no constitutional defect in that original action. Even for Senate-confirmed directors who later continued the deal, the removal restriction's unconstitutionality did not void their actions — they were properly appointed with full legal authority to act.
- The Court left open whether shareholders could recover damages if they prove the unconstitutional removal restriction actually caused them harm — for example, if the President would have fired a director to stop the sweep, or if a director would have behaved differently knowing he could be removed at will. That fact-intensive determination must be made by lower courts in the first instance.
Doctrinal impact
Cases affected by this decision
Reaffirms Seila Law LLC v. Consumer Financial Protection Bureau (591 U. S. ___)
Applied and extended to the FHFA: single-director agencies must have leaders removable at will by the President.
Distinguishes Wiener v. United States (357 U. S. 349)
Distinguished because that case involved an adjudicatory body needing independence; the FHFA is not an adjudicatory body.