Hours after the Supreme Court gave President Biden the power to fire FHFA chair Mark Calabria Biden did just that…
Before we get to the decision, lets do a little rewind courtesy of SCOTUSblog… (SCOTUSblog)
- From the beginning. During the 2008 housing crisis, the Government created the Federal Housing Finance Agency to regulate Fannie Mae and Freddie Mac, putting both Enterprises into conservatorship. The FHFA then entered into an agreement with the Treasury Department to provide funding for Fannie and Freddie in exchange for compensation tied to the department’s investment.
- A change in 2012. The FHFA and Treasury changed the agreement to require Fannie and Freddie to pay dividends linked to the companies’ net worth, rather than the size of Treasury’s investment. This was not unsubstantial. In the years that followed, Fannie and Freddie paid the Treasury approximately $200 billion “which, Justice Samuel Alito’s opinion for the court notes, is “at least $124 billion more than the companies would have had to pay” under the prior formula.”
- The lawsuit. Three shareholders went to court to challenge the 2012 change. “They made two arguments: first, that the FHFA and Treasury lacked the authority to enter into the amendment, and second, that the statute that created the FHFA is unconstitutional because it allows the president to fire the agency’s director only ‘for cause.'”
On Wednesday, the justices unanimously rejected the shareholders’ argument that FHFA and Treasury lacked the authority to enter into the 2012 amendment. On the other question, the court agreed. Removal restrictions on the head of the FHFA “violate the Constitution’s separation of powers because they infringe on the president’s authority over executive-branch decision-making.” The solution is simple, the President can fire the head of the FHFA. And President Biden did just that (POLITICO)