Court of Appeals Rules that FHFA is Structured Unconstitutionally

The U.S. Court of Appeals for the Fifth Circuit ruled on July 17 that the Federal Housing Finance Agency (FHFA) is structured unconstitutionally. Because the agency has a single director who does not require congressional approval and can only be removed “for cause,” the court determined that the FHFA violates the constitutional separation of powers. The decision eliminates the statutory provision that the FHFA director can be removed from office only for cause, allowing the president to fire an FHFA director at will, but keeps the remainder of the agency intact. Current FHFA Director Mel Watt has required Freddie Mac and Fannie Mae, which the FHFA oversees, to make their statutorily required contributions to the national Housing Trust Fund (HTF) and Capital Magnet Fund (CMF). A new appointee could choose to halt funding to the HTF and CMF while Fannie and Freddie remain under government conservatorship. Read the full decision at: