Collins v. Yellen
Case Overview
Shareholders of Fannie Mae and Freddie Mac challenged the Federal Housing Finance Agency's structure and the Net Worth Sweep that redirected company profits to the Treasury. The Supreme Court held 7-2 that the FHFA's single-director-removable-only-for-cause structure violated the separation of powers, but that the shareholders were not entitled to recovery of past profits swept under the Net Worth Sweep.
The Facts
Congress created the FHFA with a single director removable only for cause. After the 2008 financial crisis, FHFA placed Fannie Mae and Freddie Mac in conservatorship and adopted the Third Amendment, which required all net profits be transferred to Treasury rather than paid to shareholders. Shareholders sued, claiming the agency's structure was unconstitutional and the Net Worth Sweep exceeded the FHFA's authority.
The Application
Applying Seila Law to the FHFA's single-director structure, the Court found the removal restriction unconstitutional, but then applied a causation filter to determine relief. Shareholders had to demonstrate that a constitutionally supervised FHFA director would not have adopted the Third Amendment sweeping their profits. Because the shareholders could not overcome this burden (they could not show the structural defect actually caused the Net Worth Sweep rather than the agency's independent judgment during conservatorship), the constitutional violation did not entitle them to monetary recovery. The decision thus carved out a middle path: invalidate the unconstitutional structure going forward while insulating past agency decisions from being unwound based solely on the constitutional defect.
The Conclusion
**Collins v. Yellen invalidated the FHFA's removal protection but denied shareholders monetary relief from the Net Worth Sweep because they could not show the constitutional defect caused their injury.** The ruling extended Seila Law's single-director removal framework to the FHFA and reinforced that unconstitutional agency structure does not automatically entitle parties to retrospective remedies for agency actions.
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Case Analysis
Facts
Congress created the FHFA with a single director removable only for cause. After the 2008 financial crisis, FHFA placed Fannie Mae and Freddie Mac in conservatorship and adopted the Third Amendment, which required all net profits be transferred to Treasury rather than paid to shareholders. Shareholders sued, claiming the agency's structure was unconstitutional and the Net Worth Sweep exceeded the FHFA's authority.
Issue
Whether the FHFA's structure, with a single director removable only for cause, violates the separation of powers, and if so, what remedy shareholders are entitled to for actions taken by the unconstitutionally structured agency.
Rule
Under Seila Law, an agency led by a single director who may only be removed for cause is unconstitutional as it limits presidential supervision without sufficient justification. However, actions taken by such an agency are not automatically void. To obtain retrospective relief, shareholders must demonstrate that but for the unconstitutional removal restriction, a properly supervised official would have acted differently.
Analysis
Applying Seila Law to the FHFA's single-director structure, the Court found the removal restriction unconstitutional, but then applied a causation filter to determine relief: shareholders had to demonstrate that a constitutionally supervised FHFA director would not have adopted the Third Amendment sweeping their profits. Because the shareholders could not overcome this burden. They could not show the structural defect actually caused the Net Worth Sweep rather than the agency's independent judgment during conservatorship. The constitutional violation did not entitle them to monetary recovery. The decision thus carved out a middle path: invalidate the unconstitutional structure going forward while insulating past agency decisions from being unwound based solely on the constitutional defect.
Conclusion
**Collins v. Yellen invalidated the FHFA's removal protection but denied shareholders monetary relief from the Net Worth Sweep because they could not show the constitutional defect caused their injury.** The ruling extended Seila Law's single-director removal framework to the FHFA and reinforced that unconstitutional agency structure does not automatically entitle parties to retrospective remedies for agency actions.
Notes
OT2020. Added via SCOTUS bulk import 2026-05-14
Overview
Shareholders of Fannie Mae and Freddie Mac challenged the Federal Housing Finance Agency's structure and the Net Worth Sweep that redirected company profits to the Treasury. The Supreme Court held 7-2 that the FHFA's single-director-removable-only-for-cause structure violated the separation of powers, but that the shareholders were not entitled to recovery of past profits swept under the Net Worth Sweep.
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