President Biden replaced the director of the Federal Housing Finance Agency (FHFA) yesterday after a ruling from the Supreme Court found that the agency’s structure was unconstitutional.
The decision from the high court paved the way for the President to replace the leadership at the FHFA, which the Biden Administration had previously signaled it would do.
In a split decision, the Supreme Court ruled 7-2 that the agency overseeing Fannie Mae and Freddie Mac was unconstitutional because it violated the separation of powers. Under the current arrangement, the president could only replace the director of the FHFA for “just cause.”
Shortly after the ruling was handed down, the Biden administration said it was replacing FHFA Director Mark Calabria with Sandra Thompson, who had been serving as deputy director of the FHFA’s Division of Housing Mission and Goals since 2013, according to a release from the FHFA announcing the appointment.
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Meanwhile, the court also voted unanimously to reject claims by a group of investors that the 2012 agreement requiring all profits from the GSEs go to the Federal government violated the constitution and that the FHFA lacked the authority to enter into the agreement with the Treasury.
Calabria had served as the head regulator of the FHFA, which oversees the $7.2 trillion mortgage finance market, for a little more than two years, after being appointed by former President Donald Trump to serve a five-year term in 2019. The housing chief was focused on releasing the GSEs from the government conservatorship that has been in place since 2008.
In January, amid rumors that the outgoing Trump administration would make a last-minute bid to privatize Fannie Mae and Freddie Mac, the Treasury Department and the FHFA reached an agreement on limiting the agency’s growth.