Docket no.
19-422 refers to the Supreme Court case of Patrick J.
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Collins et al.
v.
Steven T.
Mnuchin, Secretary of the Treasury, et al., which was consolidated with Yellen v.
Collins.
The case involves the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), two government-sponsored enterprises (GSEs) that suffered significant losses when the housing bubble burst in 2008.
The Treasury invested billions of dollars in the GSEs in return for compensation consisting of fixed dividends, but the GSEs' dividend obligations exceeded their total earnings, requiring them to draw even more money from the Treasury.
The shareholders of Fannie Mae and Freddie Mac filed a lawsuit challenging the actions of the Federal Housing Finance Agency (FHFA), claiming that the agency had exceeded its authority and destroyed the value of their ownership interests.
The shareholders argued that the FHFA's structure violated the constitutional principle of separation of powers, as the agency was led by a single director who could only be removed by the President for cause.
The case was argued before the Supreme Court on December 9, 2020, and the Court issued its decision on June 23, 2021.
In its ruling, the Supreme Court held that the FHFA did not exceed its authority as a conservator of Fannie Mae and Freddie Mac, and that the anti-injunction provisions of the Housing and Economic Recovery Act of 2008 barred the shareholders' statutory claims.
However, the Court also found that the FHFA's structure violated the separation of powers principle, as the agency's single-director leadership structure was unconstitutional.
As a remedy, the Court ruled that the shareholders were entitled to seek prospective relief, such as an injunction against the FHFA's unconstitutional structure, but not retrospective relief, such as monetary damages.
The Court's decision in Collins v.
Yellen has significant implications for the future of Fannie Mae and Freddie Mac, as well as for the broader regulatory landscape governing government-sponsored enterprises.
The case has also sparked a debate around the appropriate level of executive branch oversight and the balance of power between the legislative and executive branches.
Docket no.
19-422 is one of the most significant Supreme Court cases in recent years, as it touches on important issues of constitutional law, financial regulation, and the role of government in the housing market.