U.S. Supreme Court. (Source: Two Bridges Photography/Shutterstock)
The U.S. Supreme Court ruled Wednesday that the structure of the Federal Housing Finance Agency was unconstitutional and that a sitting president could remove the FHFA's director – leaving the agency in a similar position as the CFPB. The ruling shifted the policy that the director for the FHFA only be fired for cause before the end of their five-year term.
In 2008, Congress created the FHFA to oversee the two mortgage giants, Fannie May and Freddie Mac, during the housing crisis.
In the ruling, Justice Samuel Alito wrote that the agency's "structure violates the separation of powers, and we remand for further proceedings to determine what remedy, if any, the shareholders are entitled to receive on their constitutional claim."
"We're disappointed in today's decision as it removes political independence from an entity that affects the entire financial services marketplace," CUNA President/CEO Jim Nussle said. "Stability at the FHFA is vital to the stability of the entire secondary mortgage market."
NAFCU President/CEO Dan Berger said, "The Supreme Court's decision to rule the FHFA's structure unconstitutional leaves many unanswered questions for the housing market amid the COVID-19 economic recovery and remaining uncertainties. During this period of uncertainty, NAFCU will continue to advocate for policymakers to ensure credit unions retain uninterrupted access to the secondary mortgage market as well as for the GSE Patch to be extended over the long-term."
Wednesday's ruling was very similar to last summer's SCOTUS ruling concerning the structure of the CFPB. In June of 2020, the Supreme Court ruled that the single director structure of the CFPB, limiting the president's power to remove the director "at will," violated the Constitution's separation of powers.
At the time, Chief Justice John Roberts Jr., writing for the 5-4 majority, said an agency run by a single director "lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from presidential control."
President Biden has already indicated he will replace current FHFA Director Mark Calabria. He was appointed by President Trump in 2019.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
