The U.S. Supreme Court held that the Constitution allows the president to remove the head of an agency. President Joe Biden intends to fire Mark Calabria, who has led the Federal Housing Finance Agency since former President Donald Trump appointed him in 2019. The Associated Press has the story:
Housing agency structure violates the Constitution, Supreme Court holds
WASHINGTON (AP) — The Supreme Court on Wednesday gave the president greater power to fire the head of the agency that oversees mortgage giants Fannie Mae and Freddie Mac, ruling that the agency’s structure violates separation of powers principles in the Constitution.
Writing for a majority of the court, Justice Samuel Alito said that as the justices explained in a case last year, “the Constitution prohibits even ‘modest restrictions’ on the President’s power to remove the head of an agency with a single top officer.”
The ruling paves the way for President Joe Biden to remove Mark Calabria, who was nominated to head the Federal Housing Finance Agency in 2019 by then-President Donald Trump.
White House press secretary Jen Psaki told reporters after the Supreme Court decision that the president would nominate a new head of the FHFA, but she did not give a timeline.
The justices sent the case involving FHFA, which was created during the 2008 financial crisis, back to a lower court for additional proceedings.
Shareholders of the two companies had argued that the FHFA’s structure was unconstitutional and that the justices should set aside a 2012 agreement under which the companies have paid the government billions. That money is compensation for the taxpayer bailout that Fannie Mae and Freddie Mac received following the 2008 financial crisis. The 2012 agreement has since been replaced by a new one.
The justices declined to do what shareholders asked and set aside the entire 2012 agreement.
‘Violates the separation of powers’
The “FHFA’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,” Alito wrote.
The justices noted that the agreement the shareholders complained about was entered into by an acting director of the agency, who was removable by the president for any reason. The justices said that conclusion “defeats the shareholders’ argument for setting aside” the agreement in its entirety.
The case is in many ways similar to one the justices decided last year involving the FHFA’s companion agency, the Consumer Financial Protection Bureau, which is the government’s consumer watchdog agency. It was created by Congress in response to the same financial crisis.
In the case involving the bureau, the court struck down restrictions Congress imposed that said the president could only fire the bureau’s director for “inefficiency, neglect of duty, or malfeasance in office.”
Just as the bureau’s leader was, the director of the FHFA is nominated by the president and confirmed by the Senate to a five-year term. In the FHFA’s case, the director was only removable by the president “for cause.”
In a statement issued after the ruling Calabria, the current FHFA director, called the job the honor of a lifetime and said he respected the decision and the authority of the president. He added that while the FHFA acted “quickly and effectively to provide relief to homeowners and renters impacted by the COVID-19 pandemic” problems remained and he wished his successor “all the best in fixing the remaining flaws of the housing finance system in order to preserve homeownership opportunities for all Americans.”
The two consolidated cases the court ruled in are Collins v. Yellen, 19-422, and Yellen v. Collins, 19-563.
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By JESSICA GRESKO
Associated Press reporter Josh Boak contributed to this report.
