Collins v. Yellen
The Supreme Court ruled that Congress violated the Constitution by shielding the head of the Federal Housing Finance Agency — the regulator overseeing Fannie Mae and Freddie Mac — from being freely fired by the President, extending its 2020 ruling on the Consumer Financial Protection Bureau to this second single-director agency.
The decision cements a growing constitutional rule that the President must be able to remove any single director of a federal agency at will, though the Court left it to lower courts to decide whether the affected shareholders can recover any money for losses they suffered under the now-invalidated arrangement.
How it got here: Shareholders sued in federal district court in Texas; the court dismissed; the Fifth Circuit reversed in part, finding the FHFA's structure unconstitutional but declining to vacate the 2012 deal; both sides sought Supreme Court review.
The Case in Depth
What happened
Fannie Mae and Freddie Mac, the nation's dominant mortgage-financing companies, were placed under federal conservatorship during the 2008 housing crisis. The Federal Housing Finance Agency, acting as conservator, struck a deal with the Treasury Department in 2012 that required the companies to send nearly all their profits to the government each quarter, leaving nothing for private shareholders. A group of shareholders sued, arguing the deal was both illegal under the agency's governing statute and the product of an unconstitutionally structured agency whose director could not be freely fired by the President.
The question before the Court
After the 2008 financial crisis, did Congress violate the Constitution by protecting the head of a major federal housing regulator from being fired by the President without cause — and did that agency exceed its legal authority when it restructured a government investment deal that drained profits from Fannie Mae and Freddie Mac?
The Court's answer
The shareholders lost on their statutory claim. The Housing and Economic Recovery Act's anti-injunction clause bars courts from interfering with FHFA actions taken within its conservator authority, and the 2012 dividend restructuring — however harmful to shareholders — fell within that authority, because the Act lets the FHFA prioritize housing-market stability over the interests of private shareholders.
On the constitutional question, yes — Congress cannot shield the FHFA Director from at-will presidential removal. Following its 2020 ruling in Seila Law, the Court held that an independent agency led by a single director concentrates executive power without sufficient presidential oversight, violating the separation of powers. As for what shareholders can actually recover, the Court sent that question back: the agency's actions were not automatically void, because the Directors were properly appointed even if the removal restriction was unconstitutional. Lower courts must first determine whether the unconstitutional removal protection actually caused the shareholders any harm the President might otherwise have prevented.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The President can now fire the FHFA Director at any time for any reason, ending the agency's formal independence from White House control. Fannie Mae and Freddie Mac shareholders still have a chance to seek compensation in lower courts. The ruling also raises unresolved questions about other single-director agencies — such as the Social Security Administration — that have similar removal protections.
What changes now
The case returns to the lower courts to determine whether shareholders can recover any compensation by showing the unconstitutional removal restriction actually caused their losses — a difficult showing that requires demonstrating the President would have intervened to change the 2012 dividend deal. The FHFA Director is now removable by the President at will. Questions about similar removal protections at other single-director agencies were explicitly left for future cases.
What this does not decide
The Court explicitly declined to address the constitutionality of removal protections at other agencies not before it, including the Social Security Administration, the Office of Special Counsel, the Comptroller of the Currency, multi-member commissions, and the Civil Service. It also did not decide whether the 2012 dividend restructuring was wise policy — only whether it exceeded the FHFA's legal authority.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the majority in full but wrote separately to highlight what he saw as a deeper unresolved problem: identifying a removal restriction as unconstitutional does not automatically mean the agency's actions were unlawful. Because the FHFA Directors were properly appointed and the President always had the constitutional power to remove them (the statute's contrary command being void from the start), Thomas doubted the shareholders could show any Director actually acted without authority. He urged courts on remand to confront this issue directly.
Concurrence in part — Justice Kagan
Justice Kagan agreed on the statutory claim and concurred in the judgment on the constitutional question — stare decisis from Seila Law compelled her to agree the FHFA's removal restriction is unconstitutional, even though she had dissented from Seila Law itself. She wrote separately to object to two things: the majority's political theory equating presidential removal power with democratic accountability, and its unnecessary expansion of Seila Law beyond agencies with 'significant executive power.' She also joined the remedy analysis and suggested the Fifth Circuit may have already done enough work to resolve the remand quickly.
Concurrence in part — Justice Gorsuch
Justice Gorsuch agreed with the constitutional holding but sharply disagreed with the remedy. In his view, actions taken by an unconstitutionally insulated executive officer are void — the same result that follows when an officer is unconstitutionally appointed. He criticized the majority's novel 'would the President have acted differently?' inquiry as speculative, unprecedented, and practically unworkable, arguing that it forces lower courts and litigants to reconstruct counterfactual history about executive decision-making.
Dissent in part — Justice Sotomayor
Justice Sotomayor, joined by Justice Breyer, dissented from the constitutional holding. In her view, Seila Law's rule — that single-director agencies with 'significant executive power' must have at-will-removable directors — simply does not apply to the FHFA, which lacks such power. The FHFA regulates government-sponsored enterprises rather than private citizens, exercises only modest enforcement authority, and fits comfortably within historical traditions of independent financial regulators. She argued the majority ignored the very distinctions it had drawn just the prior term.
How the Court got there
The legal reasoning, step by step
- The Housing and Economic Recovery Act contains an anti-injunction clause stating that no court may 'restrain or affect' actions the FHFA takes as a conservator, unless the FHFA exceeded its conservator authority. The Court read this to allow judicial review only when the FHFA acted outside its powers — not when it exercised them, even in ways that harmed shareholders.
- Turning to whether the 2012 dividend restructuring exceeded that authority, the Court noted a key feature of this particular conservatorship: unlike most, the Act permits the FHFA to act in the best interests of 'the regulated entity or the Agency.' This meant the FHFA could legitimately prioritize public stability of the mortgage market over the private interests of Fannie Mae and Freddie Mac's shareholders, and the restructuring was a reasonable exercise of that choice.
- On the constitutional question, the Court applied *Seila Law LLC v. Consumer Financial Protection Bureau* (2020) — a recent ruling holding that Congress cannot protect a single-director independent agency's head from at-will presidential removal. That rule exists because concentrating executive authority in a single unaccountable official severs the chain of electoral accountability the Constitution requires.
- The FHFA fits the same structural profile as the CFPB in Seila Law: one director, significant executive authority, and a statutory removal restriction. The Court rejected arguments that the FHFA's smaller regulatory footprint or its conservator role made a constitutional difference — the President's removal power serves accountability goals regardless of the agency's size or its mix of regulatory and managerial functions.
- On remedy, the Court declined to void the 2012 restructuring in its entirety. The FHFA Directors who adopted and implemented it were properly appointed under the Constitution's Appointments Clause; only the removal restriction — not their authority to act — was unconstitutional. An unlawful removal provision does not strip a lawfully appointed officer of all power to carry out official duties.
- The Court left open whether shareholders could still obtain damages by proving the unconstitutional removal restriction actually caused them harm — for instance, if the President would have fired a Director to stop the 2012 restructuring but was prevented from doing so by the statute. That factual and legal question was sent back to the lower courts to resolve first.
Doctrinal impact
Cases affected by this decision
Reaffirms Seila Law LLC v. Consumer Financial Protection Bureau (591 U.S. ___)
The Court applies Seila Law's rule directly to strike down FHFA's similar single-director removal restriction.
Distinguishes Humphrey's Executor v. United States (295 U.S. 602)
The Court declines to extend this multi-member commission precedent to protect a single-director agency.