Yellen v. Collins

Questions presented

SCOTUS records, cert granted 9 Jul 2020

1. During the national housing crisis of 2008, the Federal Housing Finance Agency (FHFA) exercised its authority under a federal statute to appoint itself as conservator of Fannie Mae and Freddie Mac. FHFA, as conservator, negotiated agreements with the Department of the Treasury under which Treasury committed to investing billions of dollars in the enterprises in return for compensation consisting, in part, of fixed dividends. In 2012, after numerous quarters in which the enterprises' dividend obligations exceeded their total earnings - forcing the enterprises to draw more money from Treasury just to pay the dividends - FHFA and Treasury negotiated the Third Amendment to their agreements. The Third Amendment replaced the fixed dividend with a variable quarterly dividend equal to the enterprises' net worth minus a specified capital reserve. The questions presented are:
2. Whether the statute's anti-injunction clause, which precludes courts from taking any action that would "restrain or affect the exercise of powers or functions of the Agency as a conservator," 12 U.S.C. 4617(f), precludes a federal court from setting aside the Third Amendment.
3. Whether the statute's succession clause - under which FHFA, as conservator, inherits the shareholders' rights to bring derivative actions on behalf of the enterprises - precludes the shareholders from challenging the Third Amendment.

Opinion summary

Etalia.ai summary of the majority opinion

The case involved shareholders of Fannie Mae and Freddie Mac challenging the constitutionality of the structure of the Federal Housing Finance Agency (FHFA) and its actions under a Third Amendment to agreements with the Treasury. The Supreme Court held that while FHFA's structure, featuring a single director removable only for cause, violated separation-of-powers principles, this did not invalidate past actions taken by FHFA. The Court found that such unconstitutional restrictions on removal could be severed from other provisions without affecting their validity. As a result, it remanded for further proceedings regarding whether specific harm resulted from these structural issues.

Dissent summary

Etalia.ai summary of the dissenting opinions

In Yellen v. Collins, the dissenting opinion was primarily concerned with the interpretation of the Federal Housing Finance Agency's (FHFA) structure and its implications for separation of powers principles. The dissent argued that while the majority found a constitutional flaw in FHFA’s leadership structure due to its single-director setup removable only for cause, this did not warrant invalidating past actions taken by FHFA under such a framework. The dissent emphasized that even if there were issues with how directors could be removed, it should not retroactively affect decisions made during their tenure unless those specific decisions were directly challenged as unconstitutional or unlawful on other grounds. Furthermore, they expressed concern about undermining agency stability and predictability by allowing broad challenges to previous administrative actions based solely on structural arguments without clear evidence of harm caused by said structure at the time those actions were taken.