Collins v. Mnuchin, No. 17-20364 (5th Cir. 2018)Annotate this Case
Shareholders challenged a 2012 agreement between the FHFA, as conservator to Fannie and Freddie, and the Treasury Department. Under the agreement, Treasury provided billions of taxpayer dollars in capital and, in exchange, Fannie and Freddie were required to pay Treasury quarterly dividends equal to their entire net worth (net worth sweep exchange). The Fifth Circuit found the FHFA acted within its statutory authority by adopting the net worth sweep, and thus held that the Shareholder's Administrative Procedure Act claims were barred by 5 U.S.C. 706(2)(A). The court also found that the FHFA was unconstitutionally structured and violated the separation of powers. Accordingly, the court reversed in part and affirmed in part. On remand, the court instructed the district court to enter judgment declaring the "for cause" limitation on removal of the FHFA's Director in 12 U.S.C. 4512(b)(2) violates the Constitution's separation-of-powers principles.