5th Circ. Finds FHFA Structure Unconstitutional

Law360 (July 17, 2018, 8:38 PM EDT) -- The Fifth Circuit ruled Monday that the Federal Housing Finance Agency, created in the wake of the 2008 financial crisis to oversee the government-sponsored mortgage entities Fannie Mae and Freddie Mac, is unconstitutionally structured because its oversight by a single director who is insulated from the president violates the Constitution’s separation of powers clause.

The 83-page ruling by a three-judge panel from the Fifth Circuit overturned a Texas district court ruling on the constitutional issue, but upheld the lower court’s dismissal of claims by a group of shareholders that FHFA’s so-called net-worth sweep agreement was unfair to investors. Under the agreement,...

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