The Federal Housing Finance Agency was created under the Housing and Economic Recovery Act to have certain conservatorship powers to address the aftereffects of the 2008 housing bubble bursting. The Agency was under the Executive Branch, but the Act only allowed the President to remove the Agency’s Director “for cause.” Soon after it was created, the Agency entered into a series of agreements and amendments thereof with Fannie Mae and Freddie Mac to resolve their financial troubles. In Collins v. Yellen, a group of shareholders in Fannie Mae and Freddie Mac sued, arguing that the Agency lacked conservator authority under the Act to enter into one of the amendments, but also that the Agency violated the separation of powers because the President could not remove its Director at will. The district court dismissed all the claims, while the Fifth Circuit reversed, severing the removal restriction from the rest of the Act, but otherwise leaving the Agency’s actions intact.

The Court, in a largely unanimous ruling by Justice Alito, held that the Agency was unconstitutionally structured because the Director was not removable at will, per Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. ___ (2020), but that the Agency’s actions were not necessarily void because its officers were constitutionally appointed, and remanded the case for further consideration. The majority also held that the Agency acted within its authority under the Act to enter into the subject agreements. Justice Thomas filed a concurrence noting his concern that the “Government does not necessarily act unlawfully even if a removal restriction is unlawful in the abstract.” Justice Gorsuch’s concurrence argued that the Agency’s actions should have been vacated as a result of the constitutional infirmity. Justice Kagan, joined by Justices Breyer and Sotomayor in part, filed a partial concurrence agreeing with most of the majority opinion, but arguing that it went “farther than it needs to” with regard to the constitutional question. Justice Sotomayor, joined by Justice Breyer, concurred as to the authority of the Agency under the Act, but argued that the majority’s reasoning on the constitutional issue was faulty because the instant case was distinguishable from Seila Law.

A link to the opinion is here: https://www.supremecourt.gov/opinions/20pdf/19-422_k537.pdf