The U.S. Supreme Court case Fahey v. Mallonee et al., 1946, involved a dispute over the reorganization of a federal savings and loan association in Long Beach, California by the Federal Home Loan Bank Administration (FHLBA). The FHLBA had taken control of the association due to concerns about its financial stability and appointed new management without shareholder approval. The original shareholders filed suit against this action arguing that it violated their rights under federal law governing such associations as well as constitutional protections for property rights. The Supreme Court ruled in favor of the FHLBA, upholding its authority to intervene and reorganize troubled institutions without prior consent from shareholders or courts. It held that Congress had granted broad powers to administrative agencies like FHLBA to protect public interests in economic stability and sound banking practices which could override individual property rights when necessary.

In the dissenting opinion for the case of Fahey v. Mallonee, Justice Frankfurter argued that the majority's decision to uphold a lower court ruling in favor of a savings and loan association was incorrect. He contended that federal law gave broad powers to the Federal Home Loan Bank Commissioner to regulate these institutions, including reorganizing them when necessary for their stability or survival. The majority had ruled that this power did not extend to forcing mergers without consent from shareholders, but Frankfurter disagreed with this interpretation. He believed it undermined Congress' intent in creating strong regulatory oversight over such associations following banking crises earlier in the 20th century. Furthermore, he felt it could potentially harm future efforts by regulators trying to prevent financial instability or collapse within these types of institutions.