December 11, 2020

Justices Seem Concerned Over FHFA Case Ramifications

Business litigation counsel Matthew Clark authored an article for Law360 titled, “Justices Seem Concerned Over FHFA Case Ramifications,” that provides background and recent updates on oral arguments in the U.S. Supreme Court case, Collins v. Mnuchin.

The Collins v. Mnuchin case challenges the constitutionality of an independent administrative agency led by a single director or administrator removable by the president only for cause. The independent administrative agency in question is the Federal Housing Finance Agency (FHFA), which was created during the 2008 financial crisis and has a single administrator who Congress sought to protect from political interference via a for-cause removal provision.

In his article, Clark noted that in June 2020, the Supreme Court heard a similar case – Seila Law v. Consumer Financial Protection Bureau (CFPB) – where they ruled that the for-cause removal provision applicable to the director of the CFPB was unconstitutional because it violated the U.S. Constitution’s separation of powers. The court also held that the removal restriction was severable, remanding the case for further proceedings to determine what relief was ultimately available to the petitioner.

Clark explained the background of the Collins v. Mnuchin case and how Seila Law v. CFPB will likely impact how the Supreme Court addresses the FHFA. Clark noted that it’s expected the court will rule similarly on the removal provision, but the bigger question appeared to be how far the court will go to unwind past FHFA actions.

Clark summarized points made in the oral arguments on Dec. 9 and concluded that the questions from the justices suggested that the court is very concerned about the consequences its decision will have upon the FHFA and other administrative agencies whose leadership is subject to some form of removal restriction. Clark also concluded that if the court does find the for-cause provision unconstitutional, then the case could provide more direction than Seila Law did regarding how courts should deal with subsequent challenges to for-cause removal provisions applicable to other agencies.

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