Power to fire agency heads
Collins v. Yellen
In brief
The Court gave the shareholders a mixed result: it threw out their Recovery Act claim, ruled that the law limiting the President’s power to remove FHFA’s director violates the Constitution, and sent the case back to the lower court (remanded).
- Where it stands
- Decided
Decided 9-0 · July 28, 2021 · Opinion by Justice Kagan
- What it’s about
- This case arose from shareholders’ challenge to the Federal Housing Finance Agency’s handling of Fannie Mae and Freddie Mac while they were in federal conservatorship, especially a Treasury-FHFA agreement that redirected the companies’ profits to the government.
- Who it affects
- The shareholders cannot get a court remedy through their claim under the Recovery Act because FHFA’s actions stayed within its powers as a conservator (manager of a distressed company).
Summary: written with AI from the case record.
What it's about
The Court considered both whether that challenge was barred by the housing statute and whether FHFA’s leadership structure—an independent agency headed by a single director removable only for cause—was unconstitutional.
The case linked the government’s rescue of Fannie Mae and Freddie Mac to a constitutional fight over the President’s power to remove leaders of agencies meant to operate independently.
Question presented
1. Whether FHFA’s structure violates the separation of powers; and? 2. Whether the courts must set aside a final agency action that FHFA took when it was unconstitutionally structured and strike down the statutory provisions that make FHFA independent.
What the Court decided
Holding
1. The shareholders’ statutory claim must be dismissed. The “antiinjunction clause” of the Recovery Act provides that unless review is specifically authorized by one of its provisions or is requested by the Director, “no court may take any action to restrain or affect the exercise of powers or functions of the Agency as a conservator or a receiver.” §4617(f). Where, as here, the FHFA’s challenged actions did not exceed its “powers or functions” “as a conservator,” relief is prohibited. 2. The Recovery Act’s restriction on the President’s power to remove the FHFA Director, 12 U. S. C. §4512(b)(2), is unconstitutional. 938 F. 3d 553, affirmed in part, reversed in part, vacated in part, and remanded.
The vote
From the opinions
“Yet today, for the third time in just over a decade, the Court strikes down the tenure protections Congress provided an independent agency’s leadership.”
What's next
The lower court must apply the Supreme Court’s mixed ruling in any remaining proceedings. The shareholders cannot get a court remedy through the Recovery Act claim the Court threw out.
Why it matters
The Court also ruled that the law limiting the President’s power to remove FHFA’s director violates the Constitution, while the lower court handles any remaining proceedings.
Documents
Docket activity
New analysis added
AI analysis generated: Case Briefing
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
Show 6 moreShow fewer
New analysis added
AI analysis generated: Decision Record
Case data updated: status, opinion_date
Opinion added: opinion
Brief added: Petition
Brief added: Questions Presented
More questions
- What did the Supreme Court decide in Collins v. Yellen?
- It threw out the shareholders’ Recovery Act claim and ruled that the limit on removing FHFA’s director violates the Constitution. It sent the case back to the lower court (remanded).
- What happened to the shareholders’ Recovery Act claim?
- The Court threw out the claim. The Recovery Act blocks a court remedy when FHFA’s challenged actions stay within its powers as a conservator, or manager of a distressed company.
- What did the Court say about FHFA’s structure?
- It ruled that the law limiting the President’s power to remove FHFA’s director violates the separation of powers (the Constitution’s division of government authority).
- What happens next in Collins v. Yellen?
- The lower court must handle any remaining proceedings under the Supreme Court’s mixed ruling. The shareholders cannot get a court remedy through the claim the Court threw out.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.