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The high court ruled that Federal Housing Finance Agency (FHFA) oversight of Fannie Mae and Freddie Mac violates the U.S. Constitution\u2019s separation of powers.<\/span><\/span><\/p>\n<\/div>\n WASHINGTON (AP) \u2013 The Supreme Court on Wednesday ruled that the structure of the agency that oversees mortgage giants Fannie Mae and Freddie Mac violates separation of powers principles in the Constitution.<\/span><\/span><\/p>\n The justices sent the case involving the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac and was created during the 2008 financial crisis, back to a lower court for additional proceedings.<\/span><\/span><\/p>\n Shareholders of the two companies had argued that the FHFA\u2019s structure was unconstitutional and that the justices should set aside a 2012 agreement under which the companies have paid the government billions. That money is compensation for the taxpayer bailout that Fannie Mae and Freddie Mac received following the 2008 financial crisis.<\/span><\/span><\/p>\n The justices didn\u2019t go that far in their decision.<\/span><\/span><\/p>\n The \u201cFHFA\u2019s structure violates the separation of powers, and we remand for further proceedings to determine what remedy, if any, the shareholders are entitled to receive on their constitutional claim,\u201d Justice Samuel Alito wrote for a majority of the court.<\/span><\/span><\/p>\n The case is in many ways similar to one the justices decided last year involving the FHFA\u2019s companion agency, the Consumer Financial Protection Bureau (CFPB), which is the government\u2019s consumer watchdog agency. It was created by Congress in response to the same financial crisis.<\/span><\/span><\/p>\n In the case involving the bureau, the court struck down restrictions Congress imposed that said the president could only fire the bureau\u2019s director for \u201cinefficiency, neglect of duty, or malfeasance in office.\u201d<\/span><\/span><\/p>\n Just as the CFPB\u2019s leader was, the director of the FHFA is nominated by the president and confirmed by the Senate to a five-year term. In the FHFA\u2019s case, the director was only removable by the president \u201cfor cause.\u201d<\/span><\/span><\/p>\n\n