Federal Housing Finance Agency Structure Ruled Unconstitutional

Fifth Circuit COA Ruled Government Regulator Federal Housing Finance Agency Is Unconstitutional

Federal Housing Finance Agency
Federal Housing Finance Agency Director Mel Watt
The Court of Appeals for the Fifth Circuit ruled this week that the Federal Housing Finance Agency is not constitutionally structured. The Federal Housing Finance Agency or FHFA is the oversight for Fannie Mae and Freddie Mac. The government created the FHFA was in the aftermath of the financial crisis of 2008 as a result of bailing out the GSEs.
The court also dealt with the question of the agency’s leadership structure. The lawsuit questioned if the FHFA director can wield absolute authority.
Shareholders didn’t like that the Federal Housing Finance Agency modified its conservatorship agreement with Fannie and Freddie. The modification swept all the profits from the GSEs into the government’s coffers.
Fannie Mae and Freddie Mac shareholders sued the government. Shareholders challenged the structure of the FHFA. They also refer to it as the “Third Amendment Sweep.”
Rather the government claimed they amended the terms of the GSEs’ conservatorship to ensure that the government had enough money to bail them out again if necessary.

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