IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-20364

PATRICK J. COLLINS; MARCUS J. LIOTTA; WILLIAM M. HITCHCOCK, 

 Plaintiffs–Appellants,

v.

STEVEN T. MNUCHIN, SECRETARY, U.S. DEPARTMENT OF 

TREASURY; DEPARTMENT OF THE TREASURY; FEDERAL HOUSING 

FINANCE AGENCY; MARK A. CALABRIA, DIRECTOR OF THE FEDERAL 

HOUSING FINANCE AGENCY, 

 Defendants–Appellees.

Appeal from the United States District Court

for the Southern District of Texas

Before STEWART, Chief Judge, JONES, SMITH, DENNIS, OWEN, ELROD, 

SOUTHWICK, HAYNES, GRAVES, HIGGINSON, COSTA, WILLETT, HO, 

DUNCAN, ENGELHARDT, and OLDHAM, Circuit Judges.

DON R. WILLETT, Circuit Judge, joined by JONES, SMITH, OWEN, ELROD, 

HO, DUNCAN, ENGELHARDT, and OLDHAM, Circuit Judges:

The bicentennial of the United States Constitution in 1987 celebrated 

our Founding generation’s ingenious system of separated powers: legislative, 

executive, and judicial. The Constitution inaugurated a revolutionary design. 

Madisonian architecture infused with Newtonian genius—three separate 

branches locked in synchronous orbit by competing interests. “Ambition . . . 

made to counteract ambition,” explained Madison, making clear that this law 

United States Court of Appeals

Fifth Circuit

FILED

September 6, 2019

Lyle W. Cayce

Clerk

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of constitutional motion, using friction to combat faction, was a feature, not a 

bug.1 Our Constitution’s most essential attribute, the separation of powers, 

presumes conflict, which, counterintuitively, produces equilibrium as the 

branches behave not as willing partners but as wary rivals. And our 

Constitution’s paramount aim, preserving individual liberty, presumes that 

branches will behave neither centripetally (seizing other branches’ powers) nor 

centrifugally (ceding their own), but jealously (defending their assigned powers 

against encroachment). No mere tinkerers, the Framers upended things. Three 

rival branches deriving power from three unrivaled words—“We the People”—

inscribed on the parchment in supersize script. In an era of kings and sultans, 

nothing was more audacious than the Preamble’s first three words, a scriptflipping declaration that ultimate sovereignty resides not in the government 

but in the governed.

The Constitution’s 200th birthday coincided with a centennial, the 100th

birthday of the federal administrative state.2 Congress’s passage in 1887 of the 

Interstate Commerce Act, making railroads the first industry subject to federal 

regulation, and the Act’s creation of the nation’s first federal regulatory body, 

the Interstate Commerce Commission, profoundly altered the Framers’ 

tripartite structure. The ICC was an amalgam of all three powers, blending 

functions of all three branches. The administrative state has sprouted since 

 

1 THE FEDERALIST NO. 51, at 349 (James Madison) (J. Cooke ed., 1961); see also 

Mistretta v. United States, 488 U.S. 361, 380 (1989) (“This Court consistently has given voice 

to, and has reaffirmed, the central judgment of the Framers of the Constitution that, within 

our political scheme, the separation of governmental powers into three coordinate Branches 

is essential to the preservation of liberty.”).

2 An Act to Regulate Commerce (Interstate Commerce Act), ch. 104, 24 Stat. 379 

(1887). While many scholars peg the birth of the federal administrative state to the Interstate 

Commerce Commission, others point to other enactments, like the Pendleton Civil Service 

Reform Act of 1883, which created the United States Civil Service Commission, or the 

Steamboat Act of 1852, which created the Steamboat Inspection Service.

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then. But this iron truth endures: Even the most well-intentioned bureaucrats, 

no less than presidents, legislators, and judges, are bound by constitutional 

principles. An agency is restrained by the four corners of its enabling statute 

and “literally has no power to act . . . unless and until Congress confers power 

upon it.”3 And Congress, when creating agencies, is itself constrained—at all 

times—by the separation of powers. 

* * *

The plaintiffs (the Shareholders) own shares in Fannie Mae and Freddie 

Mac. In 2008 Fannie and Freddie’s new regulator, the Federal Housing 

Finance Agency, placed them in conservatorship. FHFA secured financing 

from the Treasury to keep Fannie and Freddie afloat. That relationship

continued, and in 2012 FHFA and Treasury adopted a Third Amendment to 

their financing agreements. Under the Third Amendment, Fannie and Freddie 

give Treasury nearly all their net worth each quarter as a dividend. 

The Shareholders have two principal objections to this arrangement:

First, the Third Amendment exceeded FHFA’s statutory powers. FHFA’s 

enabling statute gives it general powers to use as either conservator or

receiver. The statute grants other, more directed powers to FHFA as 

conservator or receiver respectively. As conservator, the agency may take 

actions “(i) necessary to put the regulated entity in a sound and solvent 

condition; and (ii) appropriate to carry on the business of the regulated entity 

and preserve and conserve the assets and property of the regulated entity.”4

These enumerated conservator powers don’t vanish in the glare of the more 

general ones. Congress created FHFA amid a dire financial calamity, but 

 

3 New York v. FERC, 535 U.S. 1, 18 (2002) (quoting La. Pub. Serv. Comm’n v. FCC, 

476 U.S. 355, 374 (1986)). 4 12 U.S.C. § 4617(b)(2)(D).

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expedience does not license omnipotence. The Shareholders plausibly allege

that the Third Amendment exceeded FHFA’s conservator powers by 

transferring Fannie and Freddie’s future value to a single shareholder, 

Treasury. In Parts I–VI of this opinion, a majority of the en banc court holds

that this claim survives dismissal under Federal Rule of Civil Procedure 

12(b)(6).

Second, the Shareholders argue that FHFA lacked authority to adopt the 

Third Amendment because its Director was not removable by the President.

We adhere to the panel’s reasoning and conclusion that FHFA’s design, an 

independent agency with a single Director removable only “for cause,” violates 

the separation of powers.5 In Parts VII–VIII of this opinion, a majority of the 

en banc court holds that the Director’s “for cause” removal protection is 

unconstitutional.

The remaining question is what remedy the Shareholders are entitled to. 

A different majority of the en banc court holds that prospective relief is the 

proper remedy. In Judge Haynes’s opinion,6 a majority holds that the 

Shareholders can only obtain a declaration that the FHFA’s structure is 

unconstitutional.

We REVERSE the judgment dismissing Count I and REMAND that 

claim for further proceedings. We AFFIRM the judgment dismissing Counts II 

and III. The court REVERSES the judgment as to Count IV and REMANDS

that claim for entry of judgment that the “for cause” removal limitation in 12 

U.S.C. § 4512(b)(2) is unconstitutional.

 

5 Id. § 4512(b)(2).

6 Chief Judge Stewart, Judge Dennis, Judge Owen, Judge Southwick, Judge Graves, 

Judge Higginson, Judge Costa, and Judge Duncan join Judge Haynes’s constitutional remedy 

opinion. 

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I

During last decade’s housing-market crisis, Congress passed and 

President George W. Bush signed the Housing and Economic Recovery Act of 

2008 (HERA).7 The statute created FHFA as an independent agency to oversee 

the Federal National Mortgage Association (Fannie Mae) and the Federal 

Home Loan Mortgage Corporation (Freddie Mac). Fannie and Freddie are 

government-sponsored entities (GSEs) that also have private shareholders, 

including the plaintiffs in this case. Some background on FHFA and the GSEs 

is useful.8

A

Congress created Fannie Mae in 1938.9 Its purposes include “provid[ing]

stability in the secondary market for residential mortgages,” “increasing the 

liquidity of mortgage investments,” and “promot[ing] access to mortgage credit 

throughout the Nation.”10 Congress created Freddie Mac in 1970 to “increase 

the availability of mortgage credit for the financing of urgently needed 

housing.”11 Among other activities, Fannie and Freddie purchase mortgages 

originated by private banks, bundle the mortgages into income-producing 

securities, and sell the securities to investors.

In 2007, mortgage delinquencies and defaults sparked a bank liquidity 

crisis that kindled a recession. At the time, Fannie and Freddie controlled 

 

7 Pub. L. No. 110-289, 122 Stat. 2654 (codified in various sections of 12 U.S.C.). 8 The facts relevant to Counts I–III (the APA claims) are taken from the Shareholders’ 

complaint and are viewed in the light most favorable to them as the nonmovants. See Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009). The facts relevant to Count IV (the constitutional claim) 

are undisputed unless otherwise noted. See Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 

(1986).

9 National Housing Act Amendments of 1938, Pub. L. No. 75-424, 52 Stat. 8, 23.

10 12 U.S.C. §§ 1716, 1717. 11 Federal Home Loan Mortgage Corporation Act, Pub. L. No. 91-351, preamble, 84 

Stat. 450.

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combined mortgage portfolios of approximately $5 trillion—nearly half the 

United States mortgage market. They suffered multi-billion dollar losses. 

Indeed, the GSEs lost more in 2008 ($108 billion) than they had earned in the 

previous thirty-seven years combined ($95 billion).12 But they remained 

solvent because they had taken a relatively conservative mortgage-investing 

approach. They continued to support the United States home-mortgage system 

as distressed banks failed. 

In 2008, the President signed HERA into law to protect the national 

economy from further losses. HERA established FHFA as an “independent 

agency of the Federal Government” and classified Fannie and Freddie as 

“regulated entit[ies]” under FHFA.13

B

A single Director leads FHFA.14 He is “appointed by the President, by 

and with the advice and consent of the Senate.”15 The Director serves a term 

of five years, “unless removed before the end of such term for cause by the 

President.”16 The Director designates three Deputy Directors.17 In case of a 

vacancy in the Director office, “the President shall designate [one of the Deputy 

Directors] to serve as acting Director until the return of the Director, or the 

appointment of a successor.”18

 

12 Office of Inspector General (OIG), FHFA, Analysis of the 2012 Amendments to the 

Senior Preferred Stock Purchase Agreements 5 (Mar. 20, 2013), https://www.fhfaoig.gov/

Content/Files/WPR-2013-002_2.pdf.

13 12 U.S.C. § 4511(a), (b).

14 Id. § 4512(a).

15 Id. § 4512(b)(1).

16 Id. § 4512(b)(2).

17 Id. § 4512(c)–(e) (providing for Deputy Director of the Division of Enterprise 

Regulation, Deputy Director of the Division of Federal Home Loan Bank Regulation, and 

Deputy Director for Housing Mission and Goals).

18 Id. § 4512(f).

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Other features strengthen FHFA’s independence. It runs on annual 

assessments collected from the GSEs, not public or appropriated money.19 It is 

“advise[d]” by the Federal Housing Finance Oversight Board: the Secretary of 

the Treasury, the Secretary of Housing and Urban Development, the 

Chairman of the Securities and Exchange Commission, and the FHFA

Director.20 But the Board’s power is Lilliputian. It “may not exercise any 

executive authority, and the Director may not delegate to the Board any of the 

functions, powers, or duties of the Director.”21

FHFA regulates normal GSE operations. The Director must issue 

regulations, guidelines, or orders necessary to oversee the GSEs and ensure 

their sound operations.22 FHFA also has enforcement authority. The Director 

may bring charges against a GSE for unsound practices or violating the law.23

He may issue cease-and-desist orders, require the GSE to remedy any

violations, and impose penalties.24

C

FHFA is not just a regulator. Under 12 U.S.C. § 4617 it may serve as

conservator or receiver for the GSEs. FHFA has discretion to appoint itself 

conservator or receiver in some cases, and receivership is mandatory in other 

critical insolvency situations.25 Conservatorship and receivership are mutually 

exclusive: Appointing FHFA as receiver “shall immediately terminate any 

conservatorship established for the regulated entity under this chapter.”26

 

19 Id. § 4516. 20 Id. § 4513a(a)–(c). 21 Id. § 4513a(b).

22 Id. § 4526(a); see id. § 4513.

23 Id. § 4631(a)(1).

24 Id. § 4631(c); see id. §§ 4632(e), 4635, 4636, 4641. 25 Id. § 4617(a)(3) (discretionary appointment), (a)(4) (mandatory receivership).

26 Id. § 4617(a)(4)(D).

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D

Section 4617 next provides FHFA’s general powers as conservator or 

receiver. In either role, FHFA is a successor to the GSE:

The Agency shall, as conservator or receiver, and by operation of 

law, immediately succeed to—

(i) all rights, titles, powers, and privileges of the regulated entity, 

and of any stockholder, officer, or director of such regulated entity 

with respect to the regulated entity and the assets of the regulated 

entity . . . .27

Similarly, FHFA in either role may operate the GSE:

The Agency may, as conservator or receiver—

(i) take over the assets of and operate the regulated entity with all 

the powers of the shareholders, the directors, and the officers of 

the regulated entity and conduct all business of the regulated 

entity;

(ii) collect all obligations and money due the regulated entity;

(iii) perform all functions of the regulated entity in the name of the 

regulated entity which are consistent with the appointment as 

conservator or receiver;

(iv) preserve and conserve the assets and property of the regulated 

entity; and

(v) provide by contract for assistance in fulfilling any function, 

activity, action, or duty of the Agency as conservator or receiver.28

And FHFA in either role may exercise incidental powers to carry out those 

enumerated:

Incidental powers

The Agency may, as conservator or receiver—

(i) exercise all powers and authorities specifically granted to 

conservators or receivers, respectively, under this section, and 

such incidental powers as shall be necessary to carry out such 

powers; and

 

27 Id. § 4617(b)(2)(A).

28 Id. § 4617(b)(2)(B).

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(ii) take any action authorized by this section, which the Agency 

determines is in the best interests of the regulated entity or the 

Agency.29

FHFA in either role may also order a shareholder, director, or officer to perform 

any function.30 And in either role it may transfer or sell any GSE asset or

liability without consent.31 FHFA in either role also benefits from an antiinjunction provision: 

Except as provided in this section or at the request of the Director, 

no court may take any action to restrain or affect the exercise of 

powers or functions of the Agency as a conservator or a receiver.32

E

Other powers depend on capacity. Section 4617 grants some powers to

FHFA as conservator only:

Powers as conservator

The Agency may, as conservator, take such action as may be—

(i) necessary to put the regulated entity in a sound and solvent 

condition; and

(ii) appropriate to carry on the business of the regulated entity and 

preserve and conserve the assets and property of the regulated 

entity.33

It grants other powers to FHFA as receiver only:

Additional powers as receiver

In any case in which the Agency is acting as receiver, the Agency 

shall place the regulated entity in liquidation and proceed to 

realize upon the assets of the regulated entity in such manner as 

the Agency deems appropriate . . . .34

 

29 Id. § 4617(b)(2)(J).

30 Id. § 4617(b)(2)(C).

31 Id. § 4617(b)(2)(G).

32 Id. § 4617(f).

33 Id. § 4617(b)(2)(D).

34 Id. § 4617(b)(2)(E).

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Receivership, then, grants a power and duty to liquidate the GSE. 

Unsurprisingly, § 4617 next provides a regime for the receiver’s orderly 

processing of creditor claims. 

It is extensive. As receiver FHFA must publish and mail notice to 

creditors to present their claims.35 It generally must allow or disallow a claim 

within 180 days of filing.36 It must expedite certain secured claims with

potential for irreparable injury.37 It may also make rules for allowing and 

disallowing claims.38 And it must allow proven claims.39 Creditors may 

alternatively pursue their claims in U.S. district court.40 The receivership 

scheme qualifies the succession provision by carving out surviving shareholder 

and creditor rights:

[T]he appointment of the Agency as receiver . . . and its succession, 

by operation of law, to the rights, titles, powers, and privileges 

described in subsection (b)(2)(A) shall terminate all rights and 

claims that the stockholders and creditors of the regulated entity 

may have against the assets or charter . . . except for their right to 

payment, resolution, or other satisfaction of their claims, as 

permitted under subsections (b)(9), (c), and (e).41

In short, FHFA as receiver must divide the GSEs’ assets between creditors and 

shareholders according to law.

 

35 Id. § 4617(b)(3)(B)–(C).

36 Id. § 4617(b)(5)(A).

37 Id. § 4617(b)(8).

38 Id. § 4617(b)(4).

39 Id. § 4617(b)(5)(B).

40 Id. § 4617(b)(6).

41 Id. § 4617(b)(2)(K).

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F

Congress also amended the GSEs’ charters by giving Treasury

temporary authority to purchase their securities.42 In connection with any 

purchase, it required Treasury to make an “[e]mergency determination” that 

the purchase would “(i) provide stability to the financial markets; (ii) prevent 

disruptions in the availability of mortgage finance; and (iii) protect the 

taxpayer.”43 Congress also prescribed six mandatory considerations for 

exercising the authority, “[t]o protect the taxpayers.”44 The temporary 

purchase authority terminated on December 31, 2009, except for Treasury’s 

rights under purchases already made.45

II

In September 2008, FHFA appointed itself a conservator for the GSEs. 

The next day, Treasury and the GSEs entered Preferred Stock Purchase 

Agreements. Treasury made a capital commitment, capped at $100 billion per 

GSE, to keep them from defaulting. In return, Treasury received one million 

senior preferred shares in each GSE. These shares entitled Treasury to:

• a $1 billion senior liquidation preference;

• a dollar-for-dollar increase in that preference each time a GSE

drew on the capital commitment;

• quarterly dividends of either an amount equal to 10% of the

liquidation preference, or a 12% increase in the liquidation 

preference itself;

• warrants allowing Treasury to purchase up to 79.9% of common 

stock; 

 

42 Id. §§ 1455(l)(1) (authority as to Freddie Mac), 1719(g)(1) (authority as to Fannie 

Mae).

43 Id. §§ 1455(l)(1)(B), 1719(g)(1)(B).

44 Id. §§ 1455(l)(1)(C), 1719(g)(1)(C).

45 Id. §§ 1455(l)(4), 1719(g)(4).

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• and periodic commitment fees. 

The Agreements also prohibited the GSEs from declaring a dividend or making 

any other distribution without Treasury’s consent. 

Treasury and FHFA later amended the Agreements. In May 2009 they 

adopted the First Amendment: Treasury agreed to double its funding 

commitment to $200 billion per GSE. In December 2009 they adopted the 

Second Amendment: Treasury agreed to an increased, adjustable commitment

to account for the GSEs’ losses. As of August 2012, the GSEs had drawn 

approximately $187 billion from Treasury’s funding commitment. But they

lacked the cash to pay 10% dividends. So in August 2012 FHFA and Treasury 

adopted the Third Amendment to the Agreements.

The Third Amendment replaced the quarterly 10% dividend with 

variable dividends equal to the GSEs’ entire net worth except a capital reserve. 

The Shareholders call this arrangement the “net worth sweep.” The capital 

reserve buffer started at $3 billion. It decreased annually until it reached zero 

in 2018. This arrangement was a double-edged sword. The GSEs no longer

struggled to make dividend payments, but they would also no longer accrue 

capital. Treasury also suspended the periodic commitment fees. Treasury 

announced that the Third Amendment would “expedite the wind down of 

Fannie Mae and Freddie Mac” and ensure that the GSEs “will be wound down 

and will not be allowed to retain profits, rebuild capital, and return to the 

market in their prior form.”46 A federal official commented privately that the 

 

46 Compl. ¶ 135 (quoting Press Release, Dep’t of Treasury, Treasury Department 

Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac (Aug. 17, 

2012)).

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Third Amendment was designed to prevent Fannie and Freddie from 

recapitalizing.47

The net worth sweep transferred a fortune from Fannie and Freddie to 

Treasury. When this suit was filed, the GSEs had paid $195 billion in dividends 

under the net worth sweep. Under the Agreements more broadly, Treasury had

disbursed $187 billion and recouped $250 billion, thanks largely to the net 

worth sweep.

III

The Shareholders sued FHFA, its Director, Treasury, and its Secretary

(the Agencies). They assert four causes of action, three statutory and one 

constitutional:

• In Count I, they allege the Administrative Procedure Act (APA), 

5 U.S.C. § 706(2)(C), (D), affords relief because FHFA exceeded 

its statutory conservator authority under 12 U.S.C. 

§ 4617(b)(2)(D). 

• In Count II, they allege the APA, 5 U.S.C. § 706(2)(C), (D), 

affords relief because Treasury exceeded its securities-purchase 

authority under 12 U.S.C. §§ 1455(l), 1719(g). Specifically, they 

allege that Treasury purchased securities after the sunset 

period, failed to make the required “[e]mergency 

determination[s],” and disregarded statutory

“[c]onsiderations.”

• In Count III, they allege the APA, 5 U.S.C. § 706(2)(A), affords 

relief because Treasury’s adoption of the net worth sweep was 

arbitrary and capricious.

• In Count IV, they allege FHFA violates Article II, §§ 1 and 3 of 

the Constitution because, among other things, it is headed by a 

single Director removable only for cause. 

 

47 Id. ¶ 107.

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The Shareholders seek a declaration that the net worth sweep violates HERA

and is arbitrary and capricious; a declaration that FHFA’s structure violates 

the separation of powers; an injunction against Treasury to return net-worthsweep dividends (or treat them as paying down the liquidation preference);

vacatur of the net worth sweep; and an injunction against further 

implementation of the net worth sweep.

The Agencies each moved to dismiss all claims under Federal Rules of 

Civil Procedure 12(b)(1) and 12(b)(6). And the Shareholders and FHFA both

moved for summary judgment on Count IV, the constitutional claim. The 

district court granted the Agencies’ motions to dismiss Counts I–III based on 

the anti-injunction provision. And it granted summary judgment to FHFA on 

the merits of Count IV. The Shareholders appealed.

A panel of this court affirmed as to the statutory claims and reversed as 

to the constitutional claim.48 We then granted rehearing en banc, vacating the 

panel decision.49 Before rehearing en banc, both FHFA and Treasury admitted 

the merits of Count IV: FHFA’s structure violates the separation of powers. 

But, several months after rehearing en banc, FHFA reversed its position again. 

It now contends that FHFA’s structure is constitutional. Treasury stands by 

its contrary position. And FHFA and Treasury maintain that for a number of 

other reasons the Shareholders are not entitled to relief on Count IV.

IV

The rules governing jurisdiction and our standard of review are familiar.

Jurisdiction. The district court had jurisdiction under 28 U.S.C. § 1331. 

We have jurisdiction under 28 U.S.C. § 1291.

 

48 Collins v. Mnuchin, 896 F.3d 640 (5th Cir. 2018) (per curiam).

49 Collins v. Mnuchin, 908 F.3d 151 (5th Cir. 2018); 5TH CIR. R. 41.3.

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Standard of review. “We review de novo a district court’s rulings on a 

motion to dismiss and a motion for summary judgment, applying the same 

standard as the district court.”50 “To survive a motion to dismiss, a complaint 

must contain sufficient factual matter, accepted as true, to ‘state a claim to 

relief that is plausible on its face.’”51 “A claim has facial plausibility when the 

plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.”52 Summary 

judgment is proper if “there is no genuine dispute as to any material fact and 

the movant is entitled to judgment as a matter of law.”53 We may consider a 

fact undisputed “[i]f a party . . . fails to properly address another party’s 

assertion of fact.”54

V

We begin with Counts I–III, the Shareholders’ statutory claims. Before 

reaching the merits, we must decide whether they are justiciable under 

HERA’s anti-injunction provision and succession provision.

A

HERA’s anti-injunction provision limits court action against FHFA’s

conservator or receiver powers:

Except as provided in this section or at the request of the Director, 

no court may take any action to restrain or affect the exercise of 

powers or functions of the Agency as a conservator or a receiver.55

To interpret this provision, we consult its plain meaning and its past judicial 

interpretations (including in predecessor statutes).

 

50 TOTAL Gas & Power N. Am., Inc. v. FERC, 859 F.3d 325, 332 (5th Cir. 2017).

51 Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

52 Id.

53 FED. R. CIV. P. 56(a).

54 FED. R. CIV. P. 56(e).

55 12 U.S.C. § 4617(f).

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The Supreme Court instructs that plain meaning comes first: “Statutory 

construction must begin with the language employed by Congress and the 

assumption that the ordinary meaning of that language accurately expresses 

the legislative purpose.”56 Under the anti-injunction provision’s plain meaning, 

we may not grant any relief that interferes with—“restrain[s] or affect[s]”—

FHFA’s conservator powers. Logically, then, we may still grant relief against 

action taken outside those powers. The anti-injunction provision deflects

claims about how the conservator used its powers, not claims it exceeded the 

powers granted. It distinguishes improperly exercising a power (not 

restrainable) from exercising one that was never authorized (restrainable).

Past judicial interpretations confirm this view. Congress borrowed much 

of HERA’s text from the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (FIRREA).57 FIRREA authorizes the Federal Deposit 

Insurance Corporation (FDIC) to act as conservator or receiver for distressed 

banks.58 FIRREA’s vintage conservator and receiver scheme, including the 

anti-injunction provision, is materially similar to HERA’s.59 So is one of 

FIRREA’s own predecessors, the Financial Institutions Supervisory Act of 

1966 (FISA), which governed conservatorship and receivership by the Federal 

 

56 Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252 (2004) 

(quoting Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194 (1985)). 

57 Pub. L. No. 101-73, 103 Stat. 183 (codified at 12 U.S.C. § 1811 et seq.); see Michael 

Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and Freddie Mac: 

Actions Violate HERA and Established Insolvency Principles 19 (Cato Inst., Working Paper 

No. 26, 2015) (“Staff quite literally ‘marked-up’ Sections 11 and 13 of the [Federal Deposit 

Insurance Act (FDIA), a FIRREA predecessor] as the base text for HERA.”).

58 12 U.S.C. § 1821(c). 

59 Compare 12 U.S.C. § 4617(f) (HERA), with id. § 1821(j) (FIRREA) (“Except as 

provided in this section, no court may take any action, except at the request of the Board of 

Directors by regulation or order, to restrain or affect the exercise of powers or functions of 

the Corporation as a conservator or a receiver.”).

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Savings and Loan Insurance Corporation (FSLIC).60 If FIRREA is HERA’s 

parent, FISA is a grandparent.

The Supreme Court tells us that those provisions’ judicial 

interpretations guide our analysis of HERA. “[W]here, as here, Congress 

adopts a new law incorporating sections of a prior law, Congress normally can 

be presumed to have had knowledge of the interpretation given to the 

incorporated law, at least insofar as it affects the new statute.”61 “And when 

‘judicial interpretations have settled the meaning of an existing statutory 

provision, repetition of the same language in a new statute indicates, as a 

general matter, the intent to incorporate its judicial interpretations as well.’”62

The Supreme Court interpreted FISA’s anti-injunction provision in 

Coit.63 It held the provision did not strip federal jurisdiction over claims in a 

FSLIC receivership.64 Rather, it “simply prohibit[ed] courts from restraining 

or affecting . . . those receivership ‘powers and functions’ that have been 

granted by other statutory sources.”65 So the anti-injunction provision didn’t 

affect whether a particular power existed in the first place.66

We have applied Coit to FIRREA’s anti-injunction provision. In Onion

we held that the provision prevented a federal court from stopping a

 

60 Pub. L. No. 89-695, 80 Stat. 1028, 1033 (“Except as otherwise provided in this 

subsection, no court may take any action for or toward the removal of any conservator or 

receiver, or, except at the instance of the Board, restrain or affect the exercise of powers or 

functions of a conservator or receiver.”).

61 Lorillard v. Pons, 434 U.S. 575, 581 (1978). 62 Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85 (2006) (ellipsis 

omitted) (quoting Bragdon v. Abbott, 524 U.S. 624, 645 (1998)).

63 Coit Indep. Joint Venture v. FSLIC, 489 U.S. 561, 574–77 (1989) (interpreting FISA, 

80 Stat. 1033).

64 Id. 

65 Id. at 574.

66 Id. (“[T]his language does not add adjudication of creditor claims to FSLIC’s 

receivership powers.”).

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conservator’s foreclosure and sale.67 In Ward, relying on Onion, we held that 

the anti-injunction provision stopped a federal court from rescinding a 

receiver’s sale.68 We elaborated that there is a “difference between the exercise 

of a function or power that is clearly outside the statutory authority of the RTC 

on the one hand, and improperly or even unlawfully exercising a function or 

power that is clearly authorized by statute on the other.”69

Ward is the anti-injunction provision’s strongest expression. We declined

to review even whether the receiver breached its express statutory duty to 

maximize the property’s value.70 But we did so based on the understanding

that, even if the receiver sold the property for inadequate value, it had

“improperly or unlawfully exercised an authorized power or function,” not

“engage[d] in an activity outside its statutory powers.”71 Ward’s facts are 

different from this case. In Ward, selling low instead of high was an improper 

use of the receiver’s power to liquidate assets. But here, FHFA as conservator 

essentially liquidated assets without ever being appointed receiver. 

Improperly exercising a power is not restrainable, but exercising one beyond 

statutory authority is.

Other circuits follow the same interpretation. Even our sister courts that 

rejected claims like Counts I–III acknowledge the same rule: “Section 4617(f) 

will not protect the Agency if it acts either ultra vires or in some third capacity” 

 

67 281-300 Joint Venture v. Onion, 938 F.2d 35, 39 (5th Cir. 1991) (citing Coit, 489 U.S. 

at 574).

68 Ward v. RTC, 996 F.2d 99, 103 (5th Cir. 1993). 69 Id.; see also Carney v. RTC, 19 F.3d 950, 956 (5th Cir. 1994) (holding that FIRREA 

anti-injunction provision deprived court of jurisdiction because RTC’s action was within 

statutory powers). 70 Ward, 996 F.2d at 103.

71 Id.

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besides conservator or receiver.72 So have circuits deciding unrelated cases

against FHFA. To quote the Ninth Circuit, “the anti-judicial review provision 

is inapplicable when FHFA acts beyond the scope of its conservator power.”73

And the Eleventh Circuit holds that “[t]he FHFA cannot evade judicial scrutiny 

by merely labeling its actions with a conservator stamp.”74

The provision’s plain meaning, FIRREA precedent, and HERA precedent

show that we may grant relief if FHFA exceeded its statutory powers. The 

Agencies primarily contend that the Third Amendment falls within the 

conservatorship powers, 12 U.S.C. § 4617(b)(2). As we explain below, that is 

incorrect, at least at the pleading stage. But first, we address the Agencies’

arguments from disconnected provisions.

The Agencies suggest Treasury’s temporary purchase authority

authorized the Third Amendment.75 Congress authorized Treasury to 

“purchase any obligations and other securities issued by the [GSEs] . . . on such 

terms and conditions . . . and in such amounts as the Secretary may 

determine.”76 It also authorized Treasury “at any time[] [to] exercise any rights 

received in connection with such purchases.”77

 

72 Roberts v. FHFA, 889 F.3d 397, 402 (7th Cir. 2018); see Jacobs v. FHFA, 908 F.3d 

884, 889 (3rd Cir. 2018) (“Section 4617(f) bars claims when 1) the government acts as a 

conservator, 2) it does not exceed its statutory authority, and 3) the remedy sought would 

affect the exercise of that authority.”); Saxton v. FHFA, 901 F.3d 954, 957 (8th Cir. 2018)

(“[T]his provision bars only equitable relief, and only does so if the challenged action is within 

the powers given FHFA by HERA.”); Perry Capital LLC v. Mnuchin, 864 F.3d 591, 606 (D.C. 

Cir. 2017) (“The plain statutory text draws a sharp line in the sand against litigative 

interference . . . with FHFA’s statutorily permitted actions as conservator or receiver.”).

73 County of Sonoma v. FHFA, 710 F.3d 987, 992 (9th Cir. 2013). 74 Leon County v. FHFA, 700 F.3d 1273, 1278 (11th Cir. 2012). 75 See 12 U.S.C. §§ 1455(l)(1)(A), 1719(g)(1)(A).

76 Id. §§ 1455(l)(1)(A), 1719(g)(1)(A).

77 Id. §§ 1455(l)(2)(A), 1719(g)(2)(A).

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But these provisions cannot sustain the Agencies’ argument. “Congress

. . . does not alter the fundamental details of a regulatory scheme in vague 

terms or ancillary provisions—it does not, one might say, hide elephants in 

mouseholes.”78 Authorizing Treasury to enter an open-ended category of 

transactions does not override the elaborate powers scheme in FHFA’s 

enabling statute.79

The Agencies also contend that Congress ratified the Third Amendment

in the Consolidated Appropriations Act of 2016.80 This act restricted Treasury 

from disposing of certain shares, specifically including its rights under the 

Third Amendment, until 2018.81 The statute’s most favorable reading for 

Treasury is that, in directing Treasury to retain its Third Amendment interest, 

Congress recognized or enacted that interest’s lawfulness.82

The Appropriations Act does not support that reading. In directing

Treasury to retain preferred shares, it speaks to future conduct, not past 

action. The Supreme Court has “recognized congressional acquiescence to 

administrative interpretations of a statute in some situations, [but] ha[s] done 

so with extreme care.”83 Treasury faces “a difficult task in overcoming the plain 

 

78 Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001). 79 See id.

80 Pub. L. No. 114-113, § 702, 129 Stat. 2242, 3024–25 (2015). 81 Id.

82 The statute also included a “Sense of Congress” provision:

It is the Sense of Congress that Congress should pass and the President should 

sign into law legislation determining the future of Fannie Mae and Freddie 

Mac, and that notwithstanding the expiration of subsection (b), the Secretary 

should not sell, transfer, relinquish, liquidate, divest, or otherwise dispose of 

any outstanding shares of senior preferred stock acquired pursuant to the 

Senior Preferred Stock Purchase Agreement until such legislation is enacted.

Id. § 702(c).

83 Solid Waste Agency of N. Cook Cty. v. U.S. Army Corps of Eng’rs, 531 U.S. 159, 169 

(2001).

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text and import of [HERA]” with a later enactment.84 Here, the Appropriations 

Act only established a going-forward requirement to maintain the status quo. 

That is not enough to show that the Agencies’ past actions accorded with 

HERA. The Agencies’ conservatorship theory looms large over markets and 

federal conservatorships, so we presume Congress did not stealthily ratify it in

an appropriations rider—hiding an elephant in a mousehole.85

It follows that whether the anti-injunction provision bars relief on 

Counts I–III depends entirely on whether the net worth sweep exceeded 

FHFA’s statutory conservatorship powers.86

B

The Agencies next invoke HERA’s succession provision as a defense. 

When appointed conservator, FHFA succeeds to certain shareholder rights:

The Agency shall, as conservator or receiver, and by operation of 

law, immediately succeed to . . . all rights, titles, powers, and 

privileges of the regulated entity, and of any stockholder, officer, 

or director of such regulated entity with respect to the regulated 

entity and the assets of the regulated entity . . . .87

The Agencies say that FHFA succeeded to the Shareholders’ right to bring 

derivative suits, and Counts I–III are derivative. Generally speaking, “[t]he 

derivative form of action permits an individual shareholder to bring ‘suit to 

enforce a corporate cause of action against officers, directors, and third 

parties,’” whereas a direct cause of action belongs to the shareholder himself.88

 

84 Id. at 170.

85 See Whitman, 531 U.S. at 468 (“Congress, we have held, does not alter the 

fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does 

not, one might say, hide elephants in mouseholes.”). 86 See, e.g., Saxton, 901 F.3d at 959 (concluding that anti-injunction analysis is similar 

for net-worth-sweep claims against both FHFA and Treasury).

87 12 U.S.C. § 4617(b)(2)(A).

88 Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991) (quoting Ross v. Bernhard, 

396 U.S. 531, 534 (1970)).

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Other circuits have held that FHFA succeeded to derivative claims but 

not direct.89 They have textual support: The succession provision transfers

shareholders’ rights “with respect to the regulated entity and [its] assets.”90

Simultaneously, under a separate provision, shareholders and creditors retain 

“their right to payment, resolution, or other satisfaction of their claims” in the

receivership claim-processing scheme.91 This means some claims survive the 

succession provision. And it makes sense to define those claims as direct ones.

The ordinary meaning of claims “with respect to” a GSE and its assets does not 

include a shareholder’s personal claims. And FIRREA decisions took a similar 

view.92

To decide whether Counts I–III are direct or derivative, we begin with 

the cause of action. Counts I–III assert rights under the APA. Under 5 U.S.C. 

§ 702, “[a] person suffering legal wrong . . . or adversely affected or aggrieved 

by agency action within the meaning of a relevant statute is entitled to judicial 

review.” And under 5 U.S.C. § 706, “[t]he reviewing court shall . . . hold 

unlawful and set aside agency action” that is arbitrary and capricious, exceeds

statutory authority, or is otherwise unlawful.

The APA cause of action is broad. The “Administrative Procedure Act . . .

embodies the basic presumption of judicial review to one ‘suffering legal wrong 

because of agency action, or adversely affected or aggrieved by agency action 

within the meaning of a relevant statute.’”93 “[J]udicial review of a final agency 

 

89 See Roberts, 889 F.3d at 408; Perry Capital, 864 F.3d at 624.

90 12 U.S.C. § 4617(b)(2)(A).

91 Id. § 4617(b)(2)(K)(i).

92 Roberts, 889 F.3d at 408 (citing Levin v. Miller, 763 F.3d 667, 669 (7th Cir. 2014); 

Courtney v. Halleran, 485 F.3d 942, 950 (7th Cir. 2007)). 93 Abbott Labs. v. Gardner, 387 U.S. 136, 140 (1967) (quoting 5 U.S.C. § 702), 

abrogated by statute in other part as recognized in Califano v. Sanders, 430 U.S. 99, 105 

(1977).

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action by an aggrieved person will not be cut off unless there is persuasive 

reason to believe that such was the purpose of Congress.”94 An APA claim must 

be justiciable under Article III, but otherwise who may sue is in Congress’s 

hands.95 Congress has granted an APA claim to any party that alleges “the 

challenged action had caused them ‘injury in fact,’ and . . . the alleged injury 

was to an interest ‘arguably within the zone of interests to be protected or 

regulated’ by the statutes that the agencies were claimed to have violated.”96

“Whether a plaintiff comes within the zone of interests . . . requires us to 

determine, using traditional tools of statutory interpretation, whether a 

legislatively conferred cause of action encompasses a particular plaintiff’s 

claim.”97 The Supreme Court once considered the zone of interests a matter of

“prudential standing,” but now calls it one of statutory interpretation.98 The 

Court “ha[s] said, in the APA context that the test is not ‘especially 

demanding.’”99 It has “conspicuously included the word ‘arguably’ in the test 

 

94 Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986) (quoting Abbott 

Labs., 387 U.S. at 140); see Barlow v. Collins, 397 U.S. 159, 166 (1970) (“[P]reclusion of 

judicial review of administrative action adjudicating private rights is not lightly to be 

inferred. Indeed, judicial review of such administrative action is the rule, and 

nonreviewability an exception which must be demonstrated.” (citations omitted)).

95 Sierra Club v. Morton, 405 U.S. 727, 732 n.3 (1972).

96 Id. at 733 (quoting Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 

153 (1970)); see Bennett v. Spear, 520 U.S. 154, 175 (1997) (“In determining whether the 

petitioners have standing under the zone-of-interests test to bring their APA claims, we look 

. . . to the substantive provisions of the [Endangered Species Act of 1973], the alleged 

violations of which serve as the gravamen of the complaint.”).

97 Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 (2014) 

(internal quotation marks omitted).

98 Id. (applying zone-of-interests test and disapproving “prudential standing” label); 

see Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1302 (2017) (“In Lexmark, we said 

that the label ‘prudential standing’ was misleading, for the requirement at issue is in reality 

tied to a particular statute.”).

99 Id. at 130 (quoting Match–E–Be–Nash–She–Wish Band of Pottawatomi Indians v. 

Patchak, 567 U.S. 209, 225 (2012)).

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to indicate that the benefit of any doubt goes to the plaintiff.”100 “[T]he test 

‘forecloses suit only when a plaintiff’s interests are so marginally related to or 

inconsistent with the purposes implicit in the statute that it cannot reasonably 

be assumed that’ Congress authorized that plaintiff to sue.”101 The zone of 

interests “is to be determined not by reference to the overall purpose of the Act 

in question . . . but by reference to the particular provision of law upon which 

the plaintiff relies.”102

Count I, to the extent it has merit, is a direct claim. The Shareholders

suffered injury in fact—they were excluded from the GSEs’ profits. And they

are within the zone of interests HERA protects. Count I alleges that FHFA

violated 12 U.S.C. § 4617(b)(2)(D)—the grant of conservator powers. The

Shareholders’ economic value is “arguably within the zone of interests” for this 

provision.103 It is axiomatic that shareholders are the residual claimants of a 

firm’s value.104 They are among the first beneficiaries of the “sound and solvent 

condition” that a conservator is empowered to pursue.105 And they ordinarily 

have a claim on the “assets and property” that a conservator is empowered to 

“preserve and conserve.”106 For example, in James Madison, the D.C. Circuit 

 

100 Id. (quoting Patchak, 567 U.S. at 225).

101 Id. (quoting Patchak, 567 U.S. at 225).

102 Bennett, 520 U.S. at 175–76. 103 City of Miami, 137 S. Ct. at 1303.

104 Cf. FDIC v. Morley, 867 F.2d 1381, 1391 (11th Cir. 1989) (stating that “Congress 

enacted the [Federal Deposit Insurance Act, a FIRREA precedessor] to protect depositors and 

bank shareholders”).

105 12 U.S.C. § 4617(b)(2)(D); see Compl. ¶¶ 35–37, 44, 109, 114, 142–43 (alleging 

Shareholders’ holdings, accompanying rights, and effect of net worth sweep).

106 12 U.S.C. § 4617(b)(2)(D); see Compl. ¶ 114 (“The effect of the Net Worth Sweep is 

. . . to immediately nullify the rights of private shareholders to any return of their principal 

or any return on their principal (i.e., in the form of dividends).”).

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held a bank shareholder could challenge the FDIC’s appointment as the bank’s 

receiver under FIRREA.107

Plus, HERA elsewhere states that the succession provision does not 

extinguish the Shareholders’ right to pursue their claims in receivership.108

This matters because Count I essentially alleges that an improper 

conservatorship preempted rights that could have been redeemed in 

receivership.109 Because the Shareholders are within the zone of interests 

protected by HERA’s enumeration of conservator powers, they have a direct 

claim.

And the prudential shareholder-standing rule does not change this 

analysis. The rule is “a strand of the standing doctrine that prohibits litigants 

from suing to enforce the rights of third parties.”110 But for APA claims, 

“Congress itself has pared back traditional prudential limitations.”111 The APA 

does not abolish the shareholder-standing doctrine. But it limits it in some 

cases. James Madison is one example, because the court held it had jurisdiction 

to review the shareholder’s APA action against appointment of a receiver.112

The Supreme Court decisions City of Miami and Lexmark also support this 

point: For very broad statutory rights like the APA, an injury in fact and 

 

107 James Madison Ltd. ex rel Hecht v. Ludwig, 82 F.3d 1085, 1094 (D.C. Cir. 1996). 108 12 U.S.C. § 4617(b)(2)(K)(i).

109 See, e.g., Compl. ¶¶ 7 (“Indeed, a receivership that liquidates the Companies would 

have more economic value to the private shareholders than the conservatorship as it was 

structured and operated in practice.”), 56 (alleging no regulator before has imposed 

conservatorship on healthy company while “simultaneously avoiding the organized claims 

process of a receivership”).

110 Nocula v. UGS Corp., 520 F.3d 719, 726 (7th Cir. 2008). 111 FAIC Secs., Inc. v. United States, 768 F.2d 352, 357 (D.C. Cir. 1985) (Scalia, J.).

112 82 F.3d at 1094.

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inclusion in the zone of interests can add up to a right of action, even if 

prudential standing limits would have blocked it.113 That is the case here.

In so holding, we do not say that there is no direct–derivative distinction 

for APA claims. Nor is it true that any shareholder may obtain review of agency 

action affecting his holdings. In Thompson v. North American Stainless, LP, 

the Supreme Court rejected the “absurd” proposition that shareholders could 

sue under Title VII employment protections.114 Shareholders are not within 

Title VII’s zone of interests because “the purpose of Title VII is to protect 

employees from their employers’ unlawful actions.”115 But a corporate 

reorganization statute is a different animal. Shareholders may be within its

zone of interests, and here they are.116

Counts II and III, however, are not within the asserted statutes’ zone of 

interests. In Count II the Shareholders allege that Treasury violated 12 U.S.C. 

§§ 1455(l), 1719(g), which granted it authority to purchase securities in the 

GSEs. They say the net worth sweep effectively purchased securities after 

these provisions’ 2009 sunset and otherwise exceeded the purchase

 

113 See City of Miami, 137 S. Ct. at 1302 (“This Court has also referred to a plaintiff’s 

need to satisfy ‘prudential’ or ‘statutory’ standing requirements. In Lexmark, we said that

the label ‘prudential standing’ was misleading, for the requirement at issue is in reality tied 

to a particular statute. The question is whether the statute grants the plaintiff the cause of 

action that he asserts.” (citations omitted)); Lexmark, 572 U.S. at 128 (“Just as a court cannot 

apply its independent policy judgment to recognize a cause of action that Congress has 

denied, it cannot limit a cause of action that Congress has created merely because ‘prudence’

dictates.” (citation omitted)).

114 562 U.S. 170, 176–77 (2011). 115 Id. at 178.

116 See James Madison, 82 F.3d at 1092–94 (“[R]equiring stockholders of wrongfully 

seized national banks to wait on the sidelines while the FDIC liquidates their institutions 

conflicts with Congress’s apparent desire . . . that seized institutions act quickly in 

challenging the FDIC’s appointment.”); Morley, 867 F.2d at 1391 (“Congress enacted the 

FDIA [a FIRREA predecessor] to protect depositors and bank shareholders . . . .”).

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authority.117 In Count III they allege that Treasury acted arbitrarily and 

capriciously under those same sections because it never made the requisite

“[e]mergency determination.”118

Congress granted this purchase authority to protect markets, 

consumers, and taxpayers, not GSE stakeholders. The emergency 

determination asks whether a purchase will stabilize markets, prevent 

disruptions in mortgage finance, and protect taxpayers.119 And the statutes’

mandatory “[c]onsiderations” are likewise public-oriented: Treasury must 

consider the GSEs’ condition, and any transaction’s structure, “[t]o protect the 

taxpayers.”120 So we agree with the district court, though for a different reason, 

that Counts II and III must be dismissed.

VI

We now consider Count I’s substantive allegation that the net worth 

sweep exceeded FHFA’s conservator powers. Like any federal agency, FHFA

“literally has no power to act . . . unless and until Congress confers power upon 

it.”121 This principle is enshrined in statute: “The reviewing court shall . . . hold 

unlawful and set aside agency action, findings, and conclusions found to be . . . 

in excess of statutory jurisdiction, authority, or limitations . . . .”122 It is 

recognized in prominent Supreme Court decisions and implicit in countless 

 

117 See 12 U.S.C. §§ 1455(l)(4) (providing that purchase authority “shall expire 

December 31, 2009”), 1719(g)(4) (same).

118 Id. §§ 1455(l)(1)(B) (“In connection with any use of this authority, the Secretary 

must determine that such actions are necessary to—(i) provide stability to the financial 

markets; (ii) prevent disruptions in the availability of mortgage finance; and (iii) protect the 

taxpayer.”), 1719(g)(1)(B) (same).

119 Id. §§ 1455(l)(1)(B), 1719(g)(1)(B).

120 Id. §§ 1455(l)(1)(C), 1719(g)(1)(C).

121 New York v. FERC, 535 U.S. at 18 (quoting La. Pub. Serv. Comm’n, 476 U.S. at

374). 122 5 U.S.C. § 706.

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others.123 The warning that “[i]f we are to continue a government of limited 

powers, these agencies must themselves be regulated” remains as fresh as 

ever.124

A

To define FHFA’s statutory authority, we “follow the cardinal rule that 

a statute is to be read as a whole, since the meaning of statutory language, 

plain or not, depends on context.”125 Emphasis on isolated provisions at the 

expense of other, more applicable ones is “hyperliteral and contrary to common 

sense.”126 As Learned Hand explained, “[w]ords are not pebbles in alien 

juxtaposition; they have only a communal existence.”127 Our analysis proceeds 

in three parts: HERA’s plain meaning, its past judicial interpretations 

(including FIRREA precedent), and insight from common-law conservatorship.

1

Under HERA’s plain meaning, FHFA as conservator has limited, 

enumerated powers. To begin with, conservator and receiver are distinct and

mutually exclusive roles. HERA says FHFA may “be appointed as conservator 

or receiver for the purpose of reorganizing, rehabilitating, or winding up the 

affairs of a regulated entity.”128 In ordinary use, the word “or” is “almost always 

 

123 See, e.g., Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 134–35 

(1990) (holding that agency “does not have the power to adopt a policy that directly conflicts 

with its governing statute”); La. Pub. Serv. Comm’n, 476 U.S. at 374 (holding that “a federal 

agency may pre-empt state law only when and if it is acting within the scope of its 

congressionally delegated authority”).

124 Felix Frankfurter, The Growth of American Administrative Law, 37 HARV. L. REV. 

638, 639 (1924) (book review) (quoting Elihu Root, Address of the President, 41 AM. BAR ASS’N

REP. 356–69 (1916)).

125 King v. St. Vincent’s Hosp., 502 U.S. 215, 221 (1991) (citation omitted).

126 RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645 (2012). 127 NLRB v. Federbush Co., 121 F.2d 954, 957 (2d Cir. 1941) (quoted in King, 502 U.S. 

at 221).

128 12 U.S.C. § 4617(a)(2) (emphasis added).

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disjunctive, that is, the words it connects are to be given separate meanings.”129

So FHFA may not occupy both roles simultaneously. To the same point, “[t]he 

appointment of the Agency as receiver . . . shall immediately terminate any 

conservatorship.”130 Similarly, the incidental powers provision authorizes 

FHFA to “exercise all powers and authorities specifically granted to 

conservators or receivers, respectively, under this section, and such incidental 

powers as shall be necessary to carry out such powers.”131 In short, the FHFA

Director may appoint the agency as either conservator or receiver, but once he 

does so, FHFA’s powers depend on the role.

Some powers do overlap. HERA grants general powers to FHFA as either 

conservator or receiver. In either capacity, FHFA is a successor to the GSE.132

It succeeds to the GSE’s and its stakeholders’ “rights, titles, powers, and 

privileges . . . with respect to the regulated entity and [its] assets.”133 Similarly, 

FHFA in either capacity has power to operate the GSE.134 This includes taking 

over its assets, operating its business, collecting obligations, performing its 

functions, preserving and conserving its assets and property, and entering 

contracts.135 The list goes on: In either role FHFA may transfer assets or 

 

129 Loughrin v. United States, 573 U.S. 351, 357 (2014) (quoting United States v.

Woods, 571 U.S. 31, 45 (2013)). 130 12 U.S.C. § 4617(a)(4)(D).

131 Id. § 4617(b)(2)(J) (emphasis added).

132 Id. § 4617(b)(2)(A).

133 Id. § 4617(b)(2)(A)(i).

134 Id. § 4617(b)(2)(B).

135 Id.

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liabilities136; cause other stakeholders to perform functions137; pay 

obligations138; issue subpoenas139; and exercise incidental powers.140

But that list has an end. Other powers depend on which role FHFA

occupies. The statute enumerates FHFA’s separate “[p]owers as conservator”:

The Agency may, as conservator, take such action as may be—(i) 

necessary to put the regulated entity in a sound and solvent 

condition; and (ii) appropriate to carry on the business of the 

regulated entity and preserve and conserve the assets and 

property of the regulated entity.141

Then it enumerates “[a]dditional powers as receiver”:

“In any case in which the Agency is acting as receiver, the Agency 

shall place the regulated entity in liquidation and proceed to 

realize upon the assets of the regulated entity in such manner as 

the Agency deems appropriate, including through the sale of assets

. . . .”142

The receiver powers also include organizing a successor enterprise143 and 

administering a detailed claim-processing scheme.144

The receiver powers stand in contrast to the conservator powers. As

receiver, FHFA gains the power to liquidate the GSE and realize on its 

assets.145 It also gains the power to notice, review, and determine creditors’ 

claims.146 A conservator does not have these powers. If it did, a conservator

 

136 Id. § 4617(b)(2)(G).

137 Id. § 4617(b)(2)(C).

138 Id. § 4617(b)(2)(H).

139 Id. § 4617(b)(2)(I).

140 Id. § 4617(b)(2)(J). 141 Id. § 4617(b)(2)(D).

142 Id. § 4617(b)(2)(E).

143 Id. § 4617(b)(2)(F).

144 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).

145 Id. § 4617(b)(2)(E).

146 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).

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could liquidate the GSE’s assets without following HERA’s detailed claimprocessing scheme. 

The Agencies contend that the general powers to “operate the regulated 

entity” and “conduct all [its] business,”147 or “transfer or sell any asset or 

liability of the regulated entity in default,”148 authorize the net worth sweep.

But if read so broadly, these provisions would obliterate the receivership claimprocessing duties. If a conservator or receiver may enter any transaction as 

part of “operat[ing]” the GSE and “conduct[ing]” its business,149 there is no bar 

to circumventing HERA’s creditor and shareholder protections. 

That would raze the receiver’s duties to notice and adjudicate claims.150

It would also be inconsistent with creditors’ and shareholders’ right to have 

their claims paid in receivership.151 So it cannot be a correct reading. “In 

construing a statute we are obliged to give effect, if possible, to every word 

Congress used.”152 And “the canon against surplusage is strongest when an 

interpretation would render superfluous another part of the same statutory 

scheme.”153

Rather than give the general powers their broadest possible meaning, we 

give them a meaning consistent with the separate conservator and receiver

powers. A coherent interpretation of these provisions is not just reasonable, it 

is mandatory. In RadLAX, the Supreme Court held that when “a general 

authorization and a more limited, specific authorization exist side-by-side” in 

 

147 Id. § 4617(b)(2)(B)(i).

148 Id. § 4617(b)(2)(G). 149 Id. § 4617(b)(2)(B)(i).

150 Id. § 4617(b)(3), (b)(4), (b)(5), (b)(7), (b)(8), (b)(9).

151 Id. § 4617(b)(2)(K)(i).

152 Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979); see ANTONIN SCALIA & BRYAN 

A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 176 (2012).

153 Marx v. Gen. Revenue Corp., 568 U.S. 371, 386 (2013).

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the same statute, “the particular enactment must be operative, and the general 

enactment must be taken to affect only such cases within its general language 

as are not within the provisions of the particular enactment.”154 In this 

situation “[t]he general/specific canon . . . avoids not contradiction but the 

superfluity of a specific provision that is swallowed by the general one.”155

Other Supreme Court authority similarly warns against applying a general 

provision at the expense of more specific ones.156

Applying this to HERA, § 4617(b)(2)(D) enumerates the conservator’s 

specific powers to “put the regulated entity in a sound and solvent condition,” 

“carry on [its] business,” and “preserve and conserve” its assets. The shared 

conservator-receiver powers are more general and would swallow the rest of 

the statute if interpreted broadly. So the more “particular enactment must be 

operative.”157 “[M]ay means may” and “‘may’ is, of course, ‘permissive rather 

than obligatory.’”158 But here “may” is a grant of power that enables FHFA to 

act. FHFA as conservator may not exercise a power beyond the ones granted.159

The incidental-powers provision does not change this. It gives FHFA

other powers “necessary to carry out” its enumerated ones.160 We doubt that 

Congress “in fashioning this intricate . . . machinery, would thus hang one of 

 

154 RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645–46 (2012)

(quoting United States v. Chase, 135 U.S. 255, 260 (1890)).

155 Id. at 645.

156 See Bloate v. United States, 559 U.S. 196, 207 (2010) (“[G]eneral language of a 

statutory provision, although broad enough to include it, will not be held to apply to a matter 

specifically dealt with in another part of the same enactment.” (quoting D. Ginsberg & Sons, 

Inc. v. Popkin, 285 U.S. 204, 208 (1932))).

157 RadLAX, 566 U.S. at 646 (quoting Chase, 135 U.S. at 260).

158 Perry Capital, 864 F.3d at 607 (first quoting U.S. Sugar Corp. v. EPA, 830 F.3d 

579, 608 (D.C. Cir. 2016); then quoting Baptist Mem’l Hosp. v. Sebelius, 603 F.3d 57, 63 (D.C. 

Cir. 2010)).

159 E.g., La. Pub. Serv. Comm’n, 476 U.S. at 374 (“[A]n agency literally has no power 

to act . . . unless and until Congress confers power upon it.”).

160 12 U.S.C. § 4617(b)(2)(J).

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the main gears on the tail pipe.”161 Including near-unlimited conservatorship 

powers in this provision would swallow a large chunk of HERA. And incidental

powers are those “necessary to carry out” the powers granted to “conservators 

or receivers, respectively.”162 This links incidental powers to enumerated ones 

and recognizes the conservator-receiver distinction. In short, any exercise of 

an incidental power must serve an enumerated power.163 Beyond limited 

powers to “preserve and conserve” the GSEs’ assets and property, FHFA would 

lack any intelligible principle to guide its discretion as conservator. This would 

permit essentially any action that could be characterized as “reorganizing” the 

GSEs and would eviscerate many pages of 12 U.S.C. § 4617.

The best-interests clause is also consistent with this reading. That 

clause, within the incidental-powers provision, authorizes FHFA to “take any 

action authorized by this section, which the Agency determines is in the best 

interests of the regulated entity or the Agency.”164 Permitting the conservator 

to act in its own interest may appear to depart from the traditional view of a 

conservator as fiduciary. But the best-interests clause modifies FHFA’s 

authority “as conservator or receiver,”165 and it only affects actions that are 

otherwise “authorized by this section.”166 So FHFA may pursue its own 

interests only within the conservator’s enumerated powers. It may not, for 

example, wind down a GSE and jettison receivership protections all in its own 

best interests. That would not be “authorized by this section.” Instead, this 

 

161 Brannan v. Stark, 342 U.S. 451, 463 (1952). 162 12 U.S.C. § 4617(b)(2)(J)(i).

163 Cf. RadLAX, 566 U.S. at 645 (holding that general authority should not be 

interpreted to make specific authority superfluous).

164 12 U.S.C. § 4617(b)(2)(J)(ii) (emphasis added). 165 Id. § 4617(b)(2)(J).

166 Id. § 4617(b)(2)(J)(ii).

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clause is a modest addition to traditional conservatorship powers. It may

permit related-party transactions that would otherwise be inconsistent with 

fiduciary duties.167

2

FIRREA decisions also demonstrate the conservator’s limited, 

enumerated powers.168 FIRREA’s conservator-powers provision is materially 

identical to HERA’s.169 In McAllister we interpreted that provision to “state[] 

explicitly that a conservator only has the power to take actions necessary to 

restore a financially troubled institution to solvency.”170 We are in good 

company—the Fourth, Eighth, Ninth, Eleventh, and D.C. Circuits have 

articulated similar views.171 Under FIRREA, a conservator has power to 

steward the bank’s assets, not to make every conceivable use of them.

 

167 See Perry Capital, 864 F.3d at 643 (Brown, J., dissenting in part).

168 Cf. Merrill Lynch, 547 U.S. at 85 (stating that incorporation of language from 

existing statute generally incorporates its judicial interpretations as well); Lorillard, 434 

U.S. at 581 (“Congress is presumed to be aware of an administrative or judicial interpretation 

of a statute and to adopt that interpretation when it re-enacts a statute without change

. . . .”).

169 Compare 12 U.S.C. § 4617(b)(2)(D) (HERA), with id. § 1821(d)(2)(D) (FIRREA). 170 201 F.3d 570, 579 (5th Cir. 2000). 171 See Elmco Props., Inc. v. Second Nat’l Fed. Sav. Ass’n, 94 F.3d 914, 922 (4th Cir. 

1996) (“[A] conservator’s function is to restore the bank’s solvency and preserve its assets.”); 

James Madison, 82 F.3d at 1090 (“The principal difference between a conservator and 

receiver is that a conservator may operate and dispose of a bank as a going concern, while a 

receiver has the power to liquidate and wind up the affairs of an institution.”); Del E. Webb 

McQueen Dev. Corp. v. RTC, 69 F.3d 355, 361 (9th Cir. 1995) (“The RTC, as conservator, 

operates an institution with the hope that it might someday be rehabilitated. The RTC, as 

receiver, liquidates an institution and distributes its proceeds to creditors according to the 

priority rules set out in the regulations.”); RTC v. United Tr. Fund, Inc., 57 F.3d 1025, 1033 

(11th Cir. 1995) (“The conservator’s mission is to conserve assets which often involves 

continuing an ongoing business. The receiver’s mission is to shut a business down and sell 

off its assets.”); RTC v. CedarMinn Bldg. Ltd. P’ship, 956 F.2d 1446, 1450 (8th Cir. 1992)

(“Had Congress intended RTC’s status as a conservator or a receiver to be mere artifice, it 

would have granted all duties, rights, and powers to the Corporation.”).

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3

The common-law meaning of “conservator” also shows it has limited

powers. The Supreme Court recognizes a “settled principle of interpretation 

that, absent other indication, Congress intends to incorporate the well-settled 

meaning of the common-law terms it uses.”172 And “absence of contrary 

direction may be taken as satisfaction with widely accepted definitions, not as 

a departure from them.”173

There is no shortage of authority for traditional conservatorship. Well

before HERA, or even FIRREA, the Supreme Court recognized that a 

conservator has limited powers and must conserve the ward’s property.174

Under the Uniform Probate Code, a “conservator” is a fiduciary held to the 

same standard of care as a trustee.175 And according to the Congressional 

Research Service, “[a] conservator is appointed to operate the institution, 

conserve its resources, and restore it to viability.”176 Black’s Law Dictionary 

defines “conservator” as “[a] guardian, protector, or preserver . . . the modern 

equivalent of the common-law guardian,” and it defines “managing 

 

172 United States v. Castleman, 572 U.S. 157, 162 (2014) (quoting Sekhar v. United 

States, 570 U.S. 729, 732 (2013)).

173 Morissette v. United States, 342 U.S. 246, 263 (1952); see Bond v. United States, 

572 U.S. 844, 861 (2014) (“In settling on a fair reading of a statute, it is not unusual to 

consider the ordinary meaning of a defined term, particularly when there is dissonance 

between that ordinary meaning and the reach of the definition.”).

174 See Deputy v. du Pont, 308 U.S. 488, 496 (1940) (holding that purchasing stock for 

executive incentives is not an “expense which a conservator of an estate . . . would ordinarily 

incur”); United States v. Chem. Found., 272 U.S. 1, 10–11 (1926) (holding that enemyproperty custodian “was a mere conservator and was authorized to sell only to prevent 

waste”).

175 UNIF. PROB. CODE § 5-418(a). 176 DAVID H. CARPENTER & M. MAUREEN MURPHY, CONG. RES. SERV., FINANCIAL 

INSTITUTION INSOLVENCY: FEDERAL AUTHORITY OVER FANNIE MAE, FREDDIE MAC, AND 

DEPOSITORY INSTITUTIONS 5 (2008), https://digital.library.unt.edu/ark:/67531/metadc

795484/m1/1/high_res_d/RL34657_2008Sep10.pdf.

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conservator” as “[a] person appointed by a court to manage the estate or affairs 

of someone who is legally incapable of doing so.”177

Tethering the conservator’s powers to traditional principles of insolvency 

is both sound and indispensable. FHFA’s present Director has explained that 

“[a] market economy depends upon predictable rules to govern competition. 

These rules must include . . . predictable and fair standards to allocate losses 

and rehabilitate or liquidate a company when it cannot pay its debts.”178

Considering this need for continuity, HERA’s conservator powers must be 

interpreted in light of both FIRREA decisions and traditional 

conservatorship.179 These authorities “reflect a fundamental difference 

between the missions of a conservator, which seeks to reorganize, and a 

receiver, which seeks to liquidate.”180

Congress built FIRREA, and later HERA, on this common-law 

understanding. Until recently, FHFA agreed. It told Congress in 2010 that 

“[t]he purpose of conservatorship is to preserve and conserve each company’s 

assets and property and to put the companies in a sound and solvent 

condition.”181 In 2011, it had a “statutory mission to restore soundness and 

solvency to insolvent regulated entities and to preserve and conserve their 

assets and property.”182 In a 2012 regulation, it said “FHFA’s duties as 

 

177 Conservator, BLACK’S LAW DICTIONARY (11th ed. 2019).

178 Michael Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and 

Freddie Mac: Actions Violate HERA and Established Insolvency Principles 8 (Cato Inst.,

Working Paper No. 26, 2015). 179 See id. at 26–27.

180 Id. at 42.

181 Fed. Hous. Fin. Agency, Report to Congress: 2009, at i (May 25, 2010), 

https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/2009_AnnualReportToCongress_5

08.pdf.

182 Conservatorship and Receivership, 76 Fed. Reg. 35724, 35726 (June 20, 2011)

(emphasis added).

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conservator require the conservation and preservation of the Enterprises’

assets. . . . [A]ny goal-setting must be closely linked to putting the Enterprises 

in sound and solvent condition.”183 These contemporary statements align with

the traditional understanding of conservatorship.

Congress did not repudiate common-law conservatorship in FIRREA or 

HERA. Instead, it consistently authorized the FDIC and then FHFA to put 

entities in a “sound and solvent condition,” “carry on th[eir] business,” and 

“preserve and conserve th[eir] assets and property.”184 Neither HERA’s general 

powers, implied powers, nor right to act in FHFA’s own best interest is the 

kind of “contrary direction” that quells common-law conservatorship.185 A 

conservatorship of Fannie Mae or Freddie Mac (here, both) sways an entire 

industry. Given the potential effect on markets, firms, and consumers, partial

suggestions are not enough to show that HERA inverted traditional 

conservatorship.186 “Conservator” is an old role’s anchor, not a new role’s 

banner.187

B

Now to apply this understanding of conservator powers to the Third 

Amendment. We hold the Shareholders stated a plausible claim that the Third 

Amendment exceeded statutory authority. Transferring substantially all 

 

183 2012-2014 Enterprise Housing Goals, 77 Fed. Reg. 67535, 67549–50 (Nov. 13, 2012) 

(emphasis added); see also Fannie Mae and Freddie Mac Loan Purchase Limits: Request for 

Public Input on Implementation Issues, 78 Fed. Reg. 77450, 77451 (Dec. 23, 2013) (describing 

authority to “preserve and conserve” GSEs’ assets as “FHFA’s conservator obligation”). 184 12 U.S.C. §§ 4617(b)(2)(D) (HERA), 1821(d)(2)(D) (FIRREA).

185 Morissette, 342 U.S. at 263. 186 See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 160 (2000) (“[W]e 

are confident that Congress could not have intended to delegate a decision of such economic 

and political significance to an agency in so cryptic a fashion.”).

187 See Castleman, 572 U.S. at 162 (stating that Congress intends to incorporate 

settled meaning of common-law terms it uses); Morissette, 342 U.S. at 263 (holding that

Congress, in using term of art, presumably adopts its legal tradition and meaning).

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capital to Treasury, without limitation, exceeds FHFA’s powers to put the 

GSEs in a “sound and solvent condition,” “carry on the[ir] business,” and 

“preserve and conserve [their] assets and property.”188 We ground this holding 

in statutory interpretation, not business judgment.

In adopting the net worth sweep, the Agencies abandoned rehabilitation 

in favor of “winding down” the GSEs. Treasury announced that the Third 

Amendment would “expedite the wind down of Fannie Mae and Freddie Mac” 

and ensure that the GSEs “will be wound down and will not be allowed to retain 

profits, rebuild capital, and return to the market in their prior form.”189 The 

FHFA acting Director also said that the Third Amendment “reinforce[d] the 

notion that the [GSEs] will not be building capital as a potential step to 

regaining their former corporate status.”190 In a report to Congress, FHFA

explained that it was “prioritizing [its] actions to move the housing industry to 

a new state, one without Fannie Mae and Freddie Mac.”191 For reasons we are 

about to explain, this “wind down” exceeded the conservator’s powers and is 

the type of transaction reserved for a receiver. 

As a textual matter, the net worth sweep actively undermined pursuit of 

a “sound and solvent condition,” and it did not “preserve and conserve” the 

GSEs’ assets.192 Treasury has collected $195 billion under the net worth 

sweep.193 This alone exceeds the $187 billion it invested.194 After paying back 

 

188 12 U.S.C. § 4617(b)(2)(D).

189 Compl. ¶ 135 (quoting Press Release, Dep’t of Treasury, Treasury Department 

Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac (Aug. 17, 

2012)).

190 Id. ¶ 140 (quoting Edward J. DeMarco, Acting Director, FHFA, Statement Before 

the U.S. Sen. Comm. on Banking, Hous., & Urban Affairs (Apr. 18, 2013)).

191 Id. (quoting FHFA, Report to Congress 2012, at 13 (June 13, 2013)).

192 12 U.S.C. § 4617(b)(2)(D).

193 Compl. ¶¶ 25, 87.

194 Id.

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more than the initial investment, the GSEs remain on the hook for Treasury’s

entire $189 billion liquidation preference.195 And under the net worth sweep, 

Treasury has a right to the GSEs’ net worth in perpetuity.196

FHFA had authority, of course, to pay back Treasury for the GSEs’ draws 

on the funding commitment. The funding commitment provided liquidity and 

took on risk, so Treasury was also entitled to compensation for the cost of 

financing. But the net worth sweep continues transferring the GSEs’ net worth 

indefinitely, well after Treasury has been repaid and the GSEs returned to 

sound condition. That kind of liquidation goes beyond the conservator’s powers.

FIRREA precedent confirms that this exceeds statutory conservator 

powers. In Elmco Properties, the Fourth Circuit held that a creditor was 

unlawfully deprived of its claim because it never received notice of the 

receivership.197 The creditor had notice of a conservatorship. But “the RTC as 

conservator cannot . . . liquidate a failed bank. Instead, the conservator’s 

function is to restore the bank’s solvency and preserve its assets.”198 Dividing up 

and distributing the institution’s property is inconsistent with a conservator’s 

powers, so the creditor in Elmco was not on inquiry notice to pursue its 

claim.199 To “wind down” the GSEs’ affairs here, FHFA needed to follow 

HERA’s carefully crafted receivership procedures. But FHFA was never 

appointed receiver, so it lacked authority to bleed the GSEs’ profits in 

perpetuity.

 

195 The $189 billion figure is $187 billion drawn, plus an initial $1 billion liquidation 

preference per GSE. Id. ¶¶ 8, 87, 152.

196 Id. ¶ 25.

197 Elmco Props., Inc. v. Second Nat’l Fed. Sav. Ass’n, 94 F.3d 914, 922 (4th Cir. 1996). 198 Id. (emphasis added).

199 See id.

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Finally, based on the Shareholders’ allegations, the net worth sweep is 

inconsistent with conservatorship’s common-law meaning. In United States v. 

Chemical Foundation, the Supreme Court characterized a wartime enemyproperty custodian as “a mere conservator” with “the powers of a common-law 

trustee.”200 And a common-law conservator may not give the ward’s assets to a 

single shareholder, just as a fiduciary or trustee may not do so.201 Admittedly,

HERA modified the common-law meaning in some ways, such as by permitting 

use of enumerated powers in FHFA’s best interest.202 But in more relevant

areas HERA provided no “contrary direction” against the common-law 

meaning:203 It did not authorize a conservator to “wind down” the ward’s affairs 

or perpetually drain its earnings. Under traditional principles of insolvency, 

investors and the market reasonably expect a conservator to “operate, 

rehabilitate, reorganize, and restore the health of the troubled institution,” not 

summarily take its property.204 The Third Amendment inverts traditional 

conservatorship.

It is worth noting that the facts at this stage are distinguishable from 

those in some sister-circuit decisions. The Shareholders appeal from a 

dismissal under Rule 12(b)(6). The complaint alleges facts showing ultra vires 

action that were not present in some other cases. For example, emails suggest

 

200 272 U.S. at 10 (interpreting Trading with the Enemy Act of October 6, 1917, Pub. 

L. No. 65-91, § 12, 40 Stat. 411, 423 (codified as amended at 50 U.S.C. § 4312)).

201 See UNIF. PROB. CODE § 5-418(a) (“A conservator . . . is a fiduciary and shall observe 

the standards of care applicable to a trustee.”); Conservator, BLACK’S LAW DICTIONARY (11th 

ed. 2019) (defining “conservator” as “[a] guardian, protector, or preserver”).

202 12 U.S.C. § 4617(b)(2)(J)(ii); cf. Perry Capital, 864 F.3d at 643 (Brown, J., 

dissenting in part) (stating limited interpretation of best-interests clause).

203 Morissette, 342 U.S. at 263. 204 Michael Krimminger & Mark A. Calabria, The Conservatorships of Fannie Mae and 

Freddie Mac: Actions Violate HERA and Established Insolvency Principles 42–43 (Cato Inst.,

Working Paper No. 26, 2015).

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that the Agencies designed the Third Agreement to prevent Fannie and 

Freddie from recapitalizing. National Economic Council advisor Jim Parrott, 

who worked with Treasury in developing the net worth sweep, allegedly wrote: 

“[W]e’ve closed off [the] possibility that [Fannie and Freddie] ever[] go 

(pretend) private again.”205 Similarly, when Bloomberg published a comment 

that “[w]hat the Treasury Department seems to be doing here, and I think it’s 

a really good idea, is to deprive [Fannie and Freddie] of all their capital so that 

[they can not go private again],” Parrott emailed the source: “Good comment in 

Bloomberg—you are exactly right on substance and intent.”206 The emails 

reinforce that the Third Amendment “deprive[d]” the GSEs of their capital, 

keeping them in a permanent state of suspension, which is not authorized by 

statutory conservator powers.207 The pleadings in Jacobs v. Federal Housing 

Finance Agency208 and Perry Capital LLC v. Mnuchin209 appear to lack similar 

allegations. That factual difference distinguishes them. 

But Saxton v. Federal Housing Finance Agency210 and Roberts v. Federal 

Housing Finance Agency211 had facts similar to the Shareholders’ allegations 

here. So we recognize that our decision conflicts with at least some other 

circuits. The conflict is whether HERA authorized FHFA to adopt the Third 

Amendment. We think that, in interpreting HERA’s conservatorship and 

 

205 Compl. ¶ 107 (alterations in original). 206 Id.

207 Compl. ¶ 107.

208 908 F.3d 884 (3d Cir. 2018).

209 864 F.3d 591 (D.C. Cir. 2017). 210 901 F.3d 954, 957 (8th Cir. 2018); see Amended Complaint ¶ 92, Saxton v. FHFA, 

No. 15–CV–47–LRR (N.D. Iowa Feb. 9, 2016), ECF No. 61 (alleging similar email 

communications).

211 889 F.3d 397, 402 (7th Cir. 2018); see Amended Complaint ¶ 106–07, Roberts v. 

FHFA, No. 1:16-cv-2107 (N.D. Ill. Apr. 5, 2016), ECF No. 22 (alleging similar email 

communications).

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receivership scheme, FHFA’s general powers should not render specific ones 

meaningless. This is especially true because, although HERA qualifies 

traditional conservatorship, it does not eviscerate it. So traditional principles

of insolvency and FIRREA decisions remain relevant. And they counsel against 

a near-limitless view of FHFA’s conservator powers.

The complaint states a plausible claim that FHFA exceeded its statutory 

authority. Judge Haynes’s dissent suggests that the Shareholders could waive 

the legal standard for reviewing the grant of a motion to dismiss. But the 

Supreme Court explained in Iqbal that “[t]o survive a motion to dismiss, a 

complaint must contain sufficient factual matter, accepted as true, to ‘state a 

claim to relief that is plausible on its face.’”212 The standard is generally 

applicable, and we see no exception here. When we reverse the grant of a 

motion to dismiss, the district court may decide if fact issues require trial or if 

summary judgment should be granted.213 The proper remedy is to reverse the 

motion-to-dismiss denial and remand Count I for further proceedings.

VII

We now turn to Count IV, the Shareholders’ constitutional claim.

Although the Shareholders could theoretically obtain full relief under Count I 

alone, they appeal from the dismissal of that count, so the parties have yet to 

litigate it to judgment. On the constitutional claim, in contrast, both sides 

moved for summary judgment in the district court. So we consider whether the 

 

212 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

213 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (holding that trial 

court shall grant a motion for summary judgment if there is no genuine issue for trial); 5B 

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1349

(3d ed. 2019) (“These seven defenses [in Rule 12(b)(1)–(7)] are permitted to be asserted prior 

to service of a responsive pleading because they present preliminary or threshold matters 

that normally should be adjudicated early in the action.”).

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Shareholders are entitled to some or all of their requested relief on this record 

alone. We first consider Count IV’s justiciability based on standing and the 

succession provision.214

A

Federal courts have power to decide “Cases” and “Controversies.”215

“That case-or-controversy requirement is satisfied only where a plaintiff has 

standing.”216 At its “irreducible constitutional minimum,” standing requires 

plaintiffs to show they suffered “an injury in fact,” the injury is “fairly 

traceable” to the defendant’s actions, and the injury will “likely . . . be redressed 

by a favorable decision.”217 “The party invoking federal jurisdiction bears the 

burden of establishing these elements.”218 Here, the summary-judgment 

standard applies to jurisdictional facts.219

The Shareholders suffered injury in fact. The required injury to 

challenge agency action is minimal: The Supreme Court has “allowed 

important interests to be vindicated by plaintiffs with no more at stake in the 

outcome of an action than a fraction of a vote, a $5 fine and costs, and a $1.50 

poll tax.”220 The Agencies contend that, by the time of the net worth sweep, the 

Shareholders had no rights to dividends and their shares were delisted from

 

214 For completeness, we note the Agencies do not argue that the anti-injunction 

provision prevents relief on Count IV. 215 U.S. CONST. art. III, § 2. 216 Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 273 (2008).

217 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (alterations and 

internal quotation marks omitted). 218 Id. at 561.

219 See id. 

220 United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 

U.S. 669, 689 n.14 (1973) (citations omitted).

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the New York Stock Exchange. But pumping large profits to Treasury instead 

of restoring the GSEs’ capital structure is an injury in fact.221

The Shareholders’ injury is traceable to the removal protection. The 

Agencies contend that the President’s undisputed control over FHFA’s 

counterparty, Treasury, shows that a President-controlled FHFA would have 

adopted the net worth sweep. But standing does not require proof that an

officer would have acted differently in the “counterfactual world” where he was 

properly authorized.222 In Free Enterprise Fund, the Supreme Court explained

that “the separation of powers does not depend on the views of individual 

Presidents, nor on whether ‘the encroached-upon branch approves the 

encroachment.’”223 And in Bowsher v. Synar, the Court said that “[t]he 

separated powers of our Government cannot be permitted to turn on judicial 

assessment of whether an officer exercising executive power is” likely to be 

fired.224 The Shareholders observe that FHFA’s status as an “independent” 

counterparty could actually have boosted the Third Amendment’s political 

salability. Fortunately, under Synar and Free Enterprise Fund, we need not 

weigh in on that counterfactual. 

 

221 See Perry Capital, 864 F.3d at 632 (finding injury in fact because shareholders 

alleged that “the Third Amendment, by depriving them of their right to share in the 

Companies’ assets when and if they are liquidated, immediately diminished the value of their 

shares”).

222 Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 512 n.12 

(2010).

223 Id. at 497 (citations omitted) (quoting New York v. United States, 505 U.S. 144, 182 

(1992)).

224 478 U.S. 714, 730 (1986); see also Landry v. FDIC, 204 F.3d 1125, 1131 (D.C. Cir. 

2000) (“There is certainly no rule that a party claiming constitutional error in the vesting of 

authority must show a direct causal link between the error and the authority’s adverse 

decision . . . . Bowsher v. Synar extended this principle to general separation-of-powers 

claims.” (citation omitted)).

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And the relief sought would redress the Shareholders’ injury. The 

Agencies contend that vacating past agency action is improper in a removal 

case and in this case particularly. But the form of injunctive or declaratory 

relief is a merits question.225 The Shareholders seek, among other things, 

vacatur of the net worth sweep. That would redress their injury.

The Shareholders have standing.

B

The succession provision does not bar Count IV because it does not bar 

any direct claims.226 A plaintiff with Article III standing can maintain a direct 

claim against government action that violates the separation of powers.227 In 

Bond v. United States the Supreme Court collected numerous separation-ofpowers cases litigated by individuals with an otherwise-justiciable case or 

controversy.228 “If the constitutional structure of our Government that protects 

individual liberty is compromised, individuals who suffer otherwise justiciable 

injury may object.”229

There is a separate reason the succession provision does not bar the 

Shareholders’ constitutional claim. “[W]here Congress intends to preclude 

judicial review of constitutional claims its intent to do so must be clear.”230

 

225 See Warth v. Seldin, 422 U.S. 490, 500–02 (1975) (presuming merits of complaint 

for purposes of standing analysis). 226 See 12 U.S.C. § 4617(b)(2)(A) (providing that FHFA succeeds to shareholder rights

“with respect to the regulated entity and the assets of the regulated entity”); Roberts, 889 

F.3d at 408; Perry Capital, 864 F.3d at 624.

227 See Free Enter. Fund, 561 U.S. at 487–91 (holding court had jurisdiction over 

declaratory judgment action alleging violation of separation of powers).

228 564 U.S. 211, 223 (2011) (citing Free Enter. Fund, 561 U.S. 477; Clinton v. City of 

New York, 524 U.S. 417 (1998); Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995); Synar, 

478 U.S. 714 (1986); INS v. Chadha, 462 U.S. 919 (1983); N. Pipeline Constr. Co. v. Marathon 

Pipe Line Co., 458 U.S. 50 (1982); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 

(1952); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)).

229 Id.

230 Webster v. Doe, 486 U.S. 592, 603 (1988).

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Only a “heightened showing” in the statute may be interpreted to “deny any 

judicial forum for a colorable constitutional claim.”231 Here, the succession 

provision does not cross-reference the Administrative Procedure Act’s general 

rule that agency action is reviewable.232 It does not directly address judicial 

review at all. This is not the kind of “heightened showing”233 or “‘clear and 

convincing’ evidence”234 required for Congress to deny review of constitutional 

claims. 

VIII

The Shareholders are entitled to judgment on Count IV. 

A

HERA’s for-cause removal protection infringes Article II. It limits the 

President’s removal power and does not fit within the recognized exception for 

independent agencies. That exception, established in Humphrey’s Executor v. 

United States, has applied only to multi-member bodies of experts.235 A single 

agency director lacks the checks inherent in multilateral decision making and 

is more difficult for the President to influence.236 We reinstate Part II B 2 of 

the panel opinion, which holds that FHFA’s structure is unconstitutional.237

That Part explains that the Director’s removal protection, in combination with 

 

231 Id.

232 5 U.S.C. § 702.

233 Webster, 486 U.S. at 603.

234 Johnson v. Robinson, 415 U.S. 361, 373 (1974) (quoting Abbott Labs., 387 U.S. at 

141).

235 295 U.S. 602, 628–32 (1935). 236 See id. at 624 (stating that the Federal Trade Commission is a “body of experts”).

237 Collins, 896 F.3d at 659–75. This opinion supersedes the panel opinion in 

remaining part. See, e.g., J.T. Gibbons, Inc. v. Crawford Fitting Co., 790 F.2d 1193, 1194 (5th 

Cir. 1986) (en banc) (reinstating parts of panel opinion).

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other FHFA features, is inconsistent with Article II and the separation of 

powers. It also distinguishes the D.C. Circuit’s PHH Corp. decision.238

We disagree with Judge Higginson’s attempt to distinguish this removal 

protection from those the Supreme Court has held unconstitutional. He cites 

scholarship that HERA’s “for cause” removal provision gives less protection 

than statutes limiting removal to “inefficiency, neglect of duty, or malfeasance 

in office.”239 Initially, requiring “cause” for removal is well recognized as an 

independent agency’s threshold feature.240 And in Synar, when the Supreme 

Court considered a statute permitting Congress to remove an official for 

“inefficiency,” “neglect of duty,” or “malfeasance,” it held this alternative 

language is quite broad.241 True, the removal protection that Free Enterprise 

Fund held unconstitutional was exceptionally strict.242 But the Court held that 

the proper amount of second-level removal protection there was none, not a 

relaxed amount.243

Judge Higginson also points to uncertainty about whether and how a 

removal would unfold. But the Court in Synar “reject[ed] [the] argument that 

consideration of the effect of a removal provision is not ‘ripe’ until that 

provision is actually used.”244 In Synar this was because Congress’s removal 

 

238 PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75 (D.C. Cir. 2018) (en banc). 239 Humphrey’s Ex’r, 295 U.S. at 619 (quoting Federal Trade Commission Act, 15 

U.S.C. § 41).

240 See Free Enter. Fund, 561 U.S. at 483 (“Congress can, under certain circumstances, 

create independent agencies run by principal officers appointed by the President, whom the 

President may not remove at will but only for good cause.”).

241 Synar, 478 U.S. at 729.

242 561 U.S. at 503 (“A Board member cannot be removed except for willful violations 

of the Act, Board rules, or the securities laws; willful abuse of authority; or unreasonable 

failure to enforce compliance . . . .”).

243 Id. at 509 (“Concluding that the removal restrictions are invalid leaves the Board 

removable by the Commission at will, and leaves the President separated from Board 

members by only a single level of good-cause tenure.”).

244 478 U.S. at 727 n.5.

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authority gave it effective control over the Comptroller in the status quo.245

Although here the problem is an absence of control, not its misplacement, the 

same “ripeness” principle applies.

B

The Agencies contend the Shareholders are not entitled to relief for other 

reasons. They first say that the FHFA acting Director who adopted the Third 

Amendment was, unlike a normally appointed Director, not insulated from 

removal. Under 12 U.S.C. § 4512(b)(2), the Director serves for five years 

“unless removed before the end of such term for cause by the President.” That 

provision does not explicitly address acting Directors. Under 12 U.S.C. 

§ 4512(f), the President chooses any acting Director from among the Deputy 

Directors. And that provision does not explicitly address removal. 

But HERA unequivocally says what kind of agency it creates: “There is 

established the Federal Housing Finance Agency, which shall be an 

independent agency of the Federal Government.”246 In history and Supreme 

Court precedent, Presidential removal is the “sharp line of cleavage” between 

independent agencies and executive ones.247 So we do not read the procedural 

guidance for choosing an acting Director to override the removal restriction, 

much less FHFA’s central character. Instead, we read these provisions 

together.248 The removal restriction applied to the acting Director.

Judge Costa’s contrary authorities are distinguishable. In Swan v. 

Clinton, the D.C. Circuit held that the President could remove a National 

 

245 Id.

246 12 U.S.C. § 4511(a).

247 Wiener v. United States, 357 U.S. 349, 353 (1958). 248 See King, 502 U.S. at 221 (applying “the cardinal rule that a statute is to be read 

as a whole, since the meaning of statutory language, plain or not, depends on context”

(citation omitted)).

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Credit Union Administration Board member serving in a “holdover” 

capacity.249 But here the FHFA acting Director was not a holdover serving past 

his term’s end. So at least one of Swan’s concerns, that “the absence of any 

term limit in the NCUA holdover clause enables holdover members to continue 

in office indefinitely,” is misplaced.250 And, while HERA’s general removal 

protection is unequivocal,251 in Swan “[t]he NCUA statute d[id] not expressly 

prevent the President from removing NCUA Board members except for good 

cause.”252 The court simply assumed the statute protected Board Members 

during their normal terms, then held any such protection did not extend to 

holdover Members.253 In short, Swan interprets a different statute and has 

limited value for generalizing a rule. 

Judge Costa also cites the Office of Legal Counsel opinion Designating 

an Acting Director of the Bureau of Consumer Financial Protection.254 That 

opinion is about filling a vacancy under the CFPB’s enabling statute and the 

Federal Vacancies Reform Act. Its reasoning includes a general rule that

statutory removal protection does not extend to anyone temporarily 

performing an office.255 But it relies principally on Swan for that proposition, 

and it doesn’t explain why the same rule cuts across different enabling 

 

249 100 F.3d 973 (1996). 250 Id. at 987.

251 12 U.S.C. § 4512 (“The Director shall be appointed for a term of 5 years, unless 

removed before the end of such term for cause by the President.”).

252 100 F.3d at 981.

253 Id. at 983 (“[W]e will assume arguendo that Board members have removal 

protection during their appointed terms and focus instead on determining whether, even if 

that is so, holdover members are similarly protected.”).

254 41 Op. O.L.C. ___, 2017 WL 6419154 (Nov. 25, 2017) (interpreting 12 U.S.C. § 5491 

and 5 U.S.C §§ 3345-3349d).

255 Id. at *7.

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statutes. As a matter of statutory interpretation, HERA’s removal restriction 

applied to the acting Director here.

C

Treasury also contends that FHFA in its conservator capacity does not 

exercise executive power, so violating the separation of powers was harmless 

here. Treasury cites Beszborn, where we held that the RTC as receiver 

exercised nongovernmental power in suing on behalf of the institution in 

receivership.256 “[T]he suit was purely an action between private 

individuals.”257 So later criminal prosecution of the same defendants did not 

violate the Double Jeopardy Clause because the first “punishment,” the civil 

suit, was not sought by a sovereign.258 Treasury also observes that private 

parties are sometimes appointed as receivers.259

Whether an agency exercises government power as conservator or 

receiver “depends on the context of the claim.”260 In Slattery, the Federal 

Circuit held that the FDIC as receiver acted for the United States when it 

retained a surplus from the seized bank’s assets.261 “[T]he claims [we]re 

asserted against the government, seeking return of the monetary surplus 

obtained for the seized bank.”262 So the bank’s former shareholders could 

maintain their claims against the United States.263

 

256 United States v. Beszborn, 21 F.3d 62, 68 (5th Cir. 1994).

257 Id.

258 Id.

259 See 12 U.S.C. § 191 (authorizing Comptroller of the Currency to appoint receiver); 

12 C.F.R. § 51.2 (“The Comptroller . . . may appoint any person, including the OCC or another 

government agency, as receiver for an uninsured bank.”).

260 Slattery v. United States, 583 F.3d 800, 827 (Fed. Cir. 2009). 261 Id. at 828.

262 Id. at 827.

263 Id. at 827–28.

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The Third Amendment has more in common with Slattery than with 

Beszborn, showing that it invoked executive power. In Beszborn, we took care 

to say the receiver’s action on the bank’s behalf benefited “all stockholders and 

creditors of the bank” rather than “the United States Treasury.”264 The Third 

Amendment reversed this precisely. It transferred the wards’ assets to the 

government, similar to retaining the liquidation surplus in Slattery.265 FHFA

is a federal agency, empowered by a federal statute, enriching the federal 

government. It adopted the Third Amendment with federal governmental 

power. And that power was executive in nature. The Agencies do not contend, 

nor could they, that the Third Amendment was quasi-legislative or quasijudicial.266

Treasury’s remaining arguments do not budge this point. It cites 12 

U.S.C. § 191 and 12 C.F.R. § 51.2 as evidence that private parties can be 

receivers. But every conservator or receiver relies on some public authority, 

whether court or agency.267 Even in Treasury’s example, “[t]he receiver 

performs its duties under the direction of the Comptroller.”268 In this case, 

Congress empowered FHFA as a federal agency.269 Absent that authority there 

 

264 21 F.3d at 68.

265 See 538 F.3d at 827–28.

266 Cf. First Fed. Sav. Bank & Tr. v. Ryan, 927 F.2d 1345, 1359 (6th Cir. 1991) (“[T]he 

appointment of a conservator or receiver is not a ‘judicial power’ . . . . We believe that the 

power given to the Director to appoint a conservator or receiver is an executive power.”). 267 E.g. Booth v. Clark, 58 U.S. 322, 331 (1854) (“The receiver is but the creature of the 

court; he has no powers except such as are conferred upon him by the order of his 

appointment and the course and practice of the court . . . .”); see 28 U.S.C. § 959 (providing 

that actions against court-appointed receivers are “subject to the general equity power of such 

court so far as the same may be necessary to the ends of justice”); FED. R. CIV. P. 66 (“[T]he 

practice in administering an estate by a receiver . . . must accord with the historical practice 

in federal courts or with a local rule.”).

268 12 C.F.R. § 51.2(a). 269 12 U.S.C. § 4511(a) (“There is established the Federal Housing Finance Agency, 

which shall be an independent agency of the Federal Government.”).

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would be no conservatorship and no Third Amendment. And every federal 

agency must function within the federal Constitution’s checks and balances. 

As then-Judge Kavanaugh explained in his PHH Corp. dissent, a 

constitutional agency structure serves “to protect liberty and prevent arbitrary 

decisionmaking by a single unaccountable Director.”270

Finally, Treasury’s attempt to distinguish the Third Amendment from 

governmental power is not, in any event, a standing argument. In the 

Appointments Clause case Freytag v. Commissioner, the Supreme Court held 

that whether the official acted as an Officer of the United States in the 

particular decision challenged was “beside the point” for standing purposes.271

The Court rejected the Commissioner’s argument that the taxpayers lacked 

standing to complain about the special trial judge’s role in other cases.272 If by 

statute he performed at least some duties of an Officer of the United States, 

his appointment must accord with Article II.273 This case is analogous.274

* * *

The Constitution bounds Congress’s power to create agencies, draw their 

structure, and grant them authority. Agencies with removal-protected

principal officers were a unique, but recognized, blend of legislative, executive, 

and judicial powers long before the FHFA. Their unique position has also been 

relatively static, until recently. The removal-protected FHFA Director is a new 

 

270 881 F.3d at 186 (Kavanaugh, J., dissenting). 271 501 U.S. 868, 882 (1991). 272 Id.

273 Id.; see also Dep’t of Transp. v. Ass’n of Am. R.Rs., 135 S. Ct. 1225, 1232 (2015)

(holding Amtrak was a government entity in part because “rather than advancing its own 

private economic interests, Amtrak is required to pursue numerous, additional goals defined 

by statute”).

274 See Free Enter. Fund, 561 U.S. at 497–98 (holding separation of powers requires 

Presidential oversight of the executive power).

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innovation and falls outside the lines that Humphrey’s Executor recognized. 

Granting both removal protection and full agency leadership to a single FHFA 

Director stretches the independent-agency pattern beyond what the 

Constitution allows.

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HAYNES, Circuit Judge, joined by STEWART, Chief Judge, and DENNIS, 

OWEN, SOUTHWICK, GRAVES, HIGGINSON, COSTA, and DUNCAN, 

Circuit Judges:

Some of us1 agree with the conclusion reached in Section VIII.A–C of the 

majority en banc opinion that the FHFA is unconstitutionally structured, and 

some of us2 conclude otherwise, but we all agree that, given the holding of the 

majority of the en banc court reversing the district court on this point and 

finding the FHFA to be unconstitutionally structured, it is necessary to reach 

the question of what remedy is appropriate for the structure found to be 

unconstitutional by the majority. We now turn to the remedy question. 

When addressing the partial unconstitutionality of a statute such as this 

one, we seek to honor Congress’s intent while fixing the problematic aspects of 

the statute. Thus, in this case, the appropriate—and most judicially 

conservative—remedy is to sever the “for cause” restriction on removal of the 

FHFA director from the statute. See 12 U.S.C. § 4512(b)(2).

The remedial analysis here is informed by that in Free Enterprise Fund. 

We start from the “normal rule that partial, rather than facial, invalidation is 

the required course.” Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 504 

(1985); Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 

508 (2010) (“‘Generally speaking, when confronting a constitutional flaw in a 

statute, we try to limit the solution to the problem,’ severing any ‘problematic 

portions while leaving the remainder intact.’” (quoting Ayotte v. Planned 

Parenthood of N. New Eng., 546 U.S. 320, 328–29 (2006))). Just as in Free 

 

1 Judges Owen, Southwick, Haynes, Graves and Duncan agree that the FHFA is 

unconstitutionally structured. Judges Southwick, Haynes, and Graves concur in that 

conclusion only. 

2 Chief Judge Stewart and Judges Dennis, Higginson, and Costa.

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Enterprise Fund, if we declare the “for cause” removal restriction 

unconstitutional, then the executive officer will immediately be subject to 

sufficient Presidential oversight. 561 U.S. at 509. Finally, nothing in the 

statutory scheme suggests that Congress would prefer a complete unwind of 

actions taken by the FHFA to an FHFA director removable at will. Thus, 

severance of the “for cause” restriction remedies the Shareholders’ injury as 

found by the majority of this court of being overseen by an unconstitutionally 

structured agency.

Here it is also “true that the language providing for good-cause removal 

is only one of a number of statutory provisions that, working together, produce 

a constitutional violation.” Id. But, as the Supreme Court recognized, we 

should not roam further to invalidate other provisions or modify the statute’s 

requirements. The other options would be far more invasive and “editorial.” 

Id. at 510. Instead, we pursue a path that respects the legislative decisions 

made by the Congress that passed HERA and the legislative power of the 

current Congress to amend the statute without unwarranted disruption. 

The Shareholders ask that we also invalidate the Net Worth Sweep, 

claiming the remedy must resolve the injury. Assuming arguendo that an 

injury in the form of an unconstitutionally structured agency exists,3 the 

Shareholders may not pick and choose among remedies based on their 

preferences. The Shareholders’ complaint requested that a court invalidate 

only the Net Worth Sweep. They never requested a declaratory judgment 

about the PSPAs as a whole or even the Third Amendment. That is because 

the rest of the deal is a pretty good one for them: who would not want a 

virtually unlimited line of credit from the Treasury? Yet the Shareholders’ 

 

3 As noted above, there are differing views surrounding the constitutionality issue. 

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constitutional theory is that everything the FHFA has done since its inception 

is void because it was an unconstitutionally structured agency.4 They never 

explain why if all acts were void (or voidable), they are entitled to pick and 

choose a single provision to invalidate. That is inconsistent with the usual 

course of remedies. See Fed. Ins. Co. v. Singing River Health Sys., 850 F.3d 

187, 198 n.5 (5th Cir. 2017) (noting that accepting the premise that a party to 

an invalid contract could pick which parts to enforce would lead to an “absurd 

result”); RESTATEMENT (SECOND) OF CONTRACTS § 383 (AM. LAW. INST. 1981) 

(“A party who has the power of avoidance must ordinarily avoid the entire 

contract, including any part that has already been performed. He cannot 

disaffirm part of the contract that is particularly disadvantageous to himself 

while affirming a more advantageous part . . . .”).

Generally, there are at least two classes of cases where the appropriate 

remedy is to invalidate an action taken by an unconstitutional agency or 

officer. First, the Supreme Court has invalidated actions by actors who were 

granted power inconsistent with their role in the constitutional program. For 

example, the Shareholders’ marquee case for their theory is Bowsher v. Synar, 

478 U.S. 714 (1986). There, Congress delegated executive authority to a 

congressional officer. Id. at 732–34. But “Congress [could not] grant to an 

officer under its control what it [did] not possess.” Id. at 726. The Supreme 

Court declared unconstitutional the statutory power that impermissibly 

empowered the congressional officer to exercise executive authority. Id. at 

 

4 They attempt to temper that theory by arguing that legal challenges might still not 

succeed due to standing, statutes of limitations, and potential ratification of past actions. 

But their theory is nonetheless that everything the FHFA has done is void.

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734–36.5 Because the officer never should have had the authority in the first 

place, courts would naturally invalidate exercises of the authority. Id.; cf. 

Nguyen v. United States, 539 U.S. 69, 71 (2003) (vacating and remanding a 

case where an officer appointed under Article IV exercised Article III judicial 

authority). The Supreme Court has also invalidated exercises of authority that 

steal constitutionally specified power from other branches. See Clinton, 524 

U.S. 417; INS v. Chadha, 462 U.S. 919 (1983). 

Second, the Court has invalidated actions taken by individuals who were 

not properly appointed under the Constitution. It has thus vacated and 

remanded adjudications by officers who were not appointed by the appropriate 

official, see Lucia v. SEC, 138 S. Ct. 2044, 2055 (2018), or who skipped Senate 

confirmation through misuse of the Recess Appointments Clause, see NLRB v. 

Noel Canning, 573 U.S. 513 (2014). 

A common thread runs through these two categories. In each, officers 

were vested with authority that was never properly theirs to exercise. Such 

separation-of-powers violations are, as the D.C. Circuit put it, “void ab initio.” 

Noel Canning v. NLRB, 705 F.3d 490, 493 (D.C. Cir. 2013), aff’d but criticized, 

573 U.S. 513.

Restrictions on removal are different. In such cases the conclusion is 

that the officers are duly appointed by the appropriate officials and exercise 

authority that is properly theirs. The problem identified by the majority 

decision in this case is that, once appointed, they are too distant from 

presidential oversight to satisfy the Constitution’s requirements. 

 

5 The Court in Bowsher determined that the “issue of remedy” for the separation-ofpowers violation at issue was “a thicket we need not enter,” because Congress had provided 

“fallback” provisions in the statute in case it was invalidated. Id. at 734–35.

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Perhaps in some instances such an officer’s actions should be 

invalidated. The theory would be that a new President would want to remove 

the incumbent officer to instill his own selection, or maybe that an independent 

officer would act differently than if that officer were removable at will. We 

have found no cases from either our court or the Supreme Court accepting that 

theory.

But even if that theory is right, it does not apply here for two reasons. 

First, the action at issue is the adoption of the Net Worth Sweep, and the 

President had adequate oversight of that action. The entire PSPAs, including 

the Third Amendment’s Net Worth Sweep, were created between the FHFA 

and Treasury. During the process, the Treasury was overseen by the Secretary 

of the Treasury, who was subject to at will removal by the President. The 

President, thus, had plenary authority to stop the adoption of the Net Worth 

Sweep. This is thus a unique situation where we need not speculate about 

whether appropriate presidential oversight would have stopped the Net Worth 

Sweep. We know that the President, acting through the Secretary of the 

Treasury, could have stopped it but did not.6

Second, we can take judicial notice of this reality: subsequent Presidents 

have picked their own FHFA directors, allaying concerns that the removal 

restriction prevented them from installing someone who would carry out their 

policy vision. After the adoption of the Net Worth Sweep, President Obama 

selected a Director who was confirmed by the Senate. Once confirmed, that 

 

6 We do not hold that plaintiffs asserting a separation-of-powers claim bear the burden 

of proving a different outcome absent a removal restriction. See Free Enter. Fund, 561 U.S. 

at 512 n.12. We hold only that plaintiffs may not sue to invalidate an agency action due to 

lack of presidential oversight when their allegations show that the President had oversight 

of the action.

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director authorized filings in this court that supported and defended the Net 

Worth Sweep. He never questioned its propriety. President Trump later 

selected an acting Director under the Vacancies Reform Act. He never 

questioned the propriety of the Net Worth Sweep and reaffirmed the previous 

administration’s position. President Trump has since selected a new director. 

He has not filed anything in this court or made any judicially noticeable 

statement opposing the Net Worth Sweep. The Net Worth Sweep has thus 

transcended political affiliations and traversed presidential administrations—

even when an issue like the constitutionality of the structure of the FHFA has 

divided different directors. Were these Presidents concerned about 

invalidating the Net Worth Sweep, they could have picked different Directors 

who would carry out that vision, either in action or in litigation. These 

subsequent picks’ affirmation of the Net Worth Sweep demonstrates without 

question that invalidating the Net Worth Sweep would actually erode 

executive authority rather than reaffirm it. See Lucia, 138 S. Ct. at 2055.

Our decision not to invalidate the Net Worth Sweep is thus grounded in 

our respect for the Constitution and our co-equal branches of government. 

Undoing the Net Worth Sweep, as suggested by the dissenting opinion, would 

wipe out an action approved or ratified by two different Presidents’ directors 

under the guise of respecting the presidency; how does that make sense? Here, 

the Constitution commits executive authority to the President. The President 

had full oversight of the adoption of the Net Worth Sweep, and each President 

since has appointed FHFA Directors who have affirmed it. We should not 

invalidate those Presidents’ executive actions by invoking their need to 

exercise executive authority. 

One final point: any remedy that invalidates the Net Worth Sweep 

without a judgment that fixes the constitutional problems would be 

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particularly perverse. The FHFA could not ratify any previous actions or even 

continue operating because it would still suffer the same separation-of-powers 

defects we have identified here—just without an explicit declaration fixing the 

issue. We would invalidate an entire agency without any precedent directing 

us to do so. Similarly, there is no virtue in declaring the agency action unlawful 

then punting the form that judgment should take back to the district court. 

The only judgment the Shareholders are entitled to is the one the Supreme 

Court has given in similar removal-restriction cases, which is a declaration 

removing the “for cause” provision found unconstitutional by a majority of this 

court. Sending the case back for further litigation would cast one of the most 

financially consequential agencies into chaos. It would also further muddy our 

precedent on the appropriate remedy in removal-restriction cases.

In summary, the Shareholders’ ongoing injury, if indeed there is one,7 is 

remedied by a declaration that the “for cause” restriction is declared removed. 

We go no further. We will not let the Shareholders pick and choose parts of 

the PSPAs to invalidate when the President had adequate oversight over their 

adoption and particularly when two different presidents have selected agency 

heads who have supported the Net Worth Sweep. The appropriate remedy is 

the one that fixes the Shareholders’ purported injury. That is exactly what our 

declaratory judgment does. Consequently, we decline to invalidate the Net 

Worth Sweep or PSPAs.8 Instead, we conclude, given that the majority of the 

court has found the FHFA unconstitutionally structured, that the appropriate 

remedy for that finding is to declare the “for cause” provision severed.

 

7 See n.3 supra.

8 Because we reject the Shareholders’ request to unwind the Net Worth Sweep, we do 

not in this section address whether § 4617(f) would bar such relief if it were otherwise 

necessary.

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STUART KYLE DUNCAN, Circuit Judge, joined by OWEN, Circuit Judge, 

concurring:

While I join all of Judge Willett’s superb majority opinion, I do not join 

his separate opinion that concludes the proper remedy for the separation-ofpowers violation here is to vacate the Third Amendment. To the contrary, the 

proper remedy—as Judge Haynes cogently explains in her separate majority 

opinion—is to sever the for-cause removal provision from the challenged 

statute. See Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 

477, 508 (2010) (“PCAOB”) (“‘Generally speaking, when confronting a 

constitutional flaw in a statute, we try to limit the solution to the problem,’ 

severing any ‘problematic portions while leaving the remainder intact.’”) 

(quoting Ayotte v. Planned Parenthood of N. New Eng., 546 U.S. 320, 328–29 

(2006)). I write separately to explain why I think the Supreme Court’s 

precedents compel that narrower remedy. 

To justify vacating the Third Amendment, Judge Willett asserts that 

“the action of an unconstitutionally-insulated officer . . . must be set aside.” 

Willett Dissent at 1. I can find no support for that categorical proposition. 

Judge Willett relies principally on Bowsher v. Synar, 478 U.S. 714 (1986), but 

Bowsher is off-point. Bowsher involved a challenge—not to an executive-branch 

official “insulated” from presidential oversight—but to the Comptroller 

General, essentially a legislative officer, removable by Congress, who was 

purporting to exercise executive power. See 478 U.S. at 728 (noting 

Comptroller General was removable by joint resolution “at any time” so that 

the officer “should be brought under the sole control of Congress”) (quotes 

omitted); id. at 730 (noting “Congress has consistently viewed the Comptroller 

General as an officer of the Legislative Branch”). This Article I creature, 

Bowsher unsurprisingly told us, “may not be entrusted with executive powers.” 

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Id. at 732. And, in any event, Bowsher concluded that the “issue of remedy” for 

the separation-of-powers violation was “a thicket we need not enter,” because 

Congress had provided a “fallback” provision should the act be invalidated. Id.

at 734, 735; see also id. at 718–19 (describing “fallback” process). Thus, I do not 

read Bowsher as providing much, if any, guidance as to the remedy for an 

unconstitutionally insulated agency.

Putting Bowsher aside, more recent Supreme Court authority confirms 

my view that severance is the proper remedy for the separation-of-powers 

violation before us. In PCAOB, the petitioners argued that the agency’s 

“freedom from Presidential oversight and control rendered it and all power and 

authority exercised by it in violation of the Constitution.” 561 U.S. at 508 

(quotes omitted). But the Court “reject[ed] such a broad holding” and deployed

the narrower remedy of severing the unconstitutional culprit—there, the 

second layer of for-cause removal. Id. at 509–10. Moreover, for remedial 

purposes PCAOB contrasted an unconstitutionally insulated officer with an 

unconstitutionally appointed officer: The Court pointedly “[p]ut[ ] to one side 

petitioners’ Appointments Clause challenges,” id. at 508, which it addressed 

(and rejected) in another part of its opinion. Id. at 510–13. When the Court did 

later find an Appointments Clause violation in Lucia, its remedy was to vacate 

the prior actions of the invalidly appointed officers. See Lucia v. S.E.C., 138 S. 

Ct. 2044, 2055 (2018) (concluding “the ‘appropriate’ remedy for an adjudication 

tainted with an appointments violation is a new ‘hearing before a properly 

appointed’ official”) (quoting Ryder v. United States, 515 U.S. 177, 183 (1995)). 

That is the kind of backward-looking remedy—vacating the Third 

Amendment—Judge Willett would apply here, but the Supreme Court’s cases 

do not support applying it to fix an unconstitutionally insulated agency head.

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Instead, as PCAOB indicates, the cure for that malady is narrower. 

Stripping away the FHFA Director’s unconstitutional insulation is the 

“minimalist remedy” that “maintain[s] presidential control while leaving in 

place the regulatory functions of an agency.” Neomi Rao, Removal: Necessary 

and Sufficient for Presidential Control, 65 Ala. L. Rev. 1205, 1261 (2014) 

(discussing PCAOB). Consequently, to remedy the separation-of-powers 

violation presented here, I would sever the for-cause removal provision, 

rendering the agency properly responsive to the President’s “general 

administrative control of those executing the laws.” Myers v. United States, 

272 U.S. 52, 164 (1926).

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ANDREW S. OLDHAM and JAMES C. HO, Circuit Judges, concurring in part 

and dissenting in part:

We join Judge Willett’s opinion.1 We write separately in response to the 

suggestion that there is no constitutional problem because this case does not 

involve the Public Company Accounting Oversight Board (“PCAOB”), the 

Comptroller General, or the Postmaster General. Post, at 97–107 (Higginson, 

J.). Our learned colleague suggests that: (I) the Constitution’s original public 

meaning offers little guidance on the scope of the removal power; (II) the 

Supreme Court’s precedents don’t help the shareholders here; and (III) even if 

they did, we have the “judicial” power to rewrite Congress’s law. With greatest 

respect, that’s all wrong. 

I.

The Constitution vests in the President the power to remove executive 

officers. Any intimation to the contrary must be rejected.

A.

Traditionally, the executive power allowed the head of state to appoint 

and remove his ministers, as well as his judges, at will. See 1 WILLIAM

BLACKSTONE, COMMENTARIES *260 [hereinafter BLACKSTONE’S

COMMENTARIES] (describing English efforts to “remove all judicial power out of 

the hands of the king’s privy council”); id. at *261–63 (explaining that “the king 

is . . . the fountain of honour, of office, and of privilege,” that the king holds 

 

1 We have lingering doubts about the meaning of the Housing and Economic Recovery 

Act’s so-called “succession provision,” 12 U.S.C. § 4617(b)(2)(A)(i). But we agree with Judge 

Willett’s opinion for the Court that, whatever the meaning of that provision, it’s insufficiently 

clear to displace the presumption of reviewability under the Administrative Procedure Act. 

See Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986); Abbott Labs. v. 

Gardner, 387 U.S. 136, 140 (1967), abrogated by statute in other part as recognized in 

Califano v. Sanders, 430 U.S. 99, 105 (1977).

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“the prerogative of erecting and disposing of offices,” and that “the king . . . is 

the best and only judge, in what capacities, with what privileges, and under 

what distinctions, his people are the best qualified to serve, and to act under 

him”); 2 THOMAS RUTHERFORTH, INSTITUTES OF NATURAL LAW 60 (1756) 

(noting that officers “are the agents of the executive power; and consequently 

the appointment of them belongs to this power”). The American colonies 

chafed at the corrupting effects of this unbridled power. See, e.g., 

DECLARATION OF INDEPENDENCE para. 11 (1776) (“[The King] has made Judges 

dependent on his Will alone, for the tenure of their offices, and the amount and 

payment of their salaries”); DECLARATION OF RIGHTS AND GRIEVANCES para. 4 

(1774) (condemning as “impolitic, unjust, and cruel, as well as 

unconstitutional” the Massachusetts Government Act, 14 Geo. 3 c. 45, which 

empowered the King’s representative to appoint and remove—at will—the 

Province’s officers and judges). 

In response, some early State constitutions limited the executive power 

to appoint judges and officers. See, e.g., S.C. CONST. of Mar. 26, 1776 art. XXII 

(assigning to the legislature the power to choose “the commissioners of the 

treasury, the secretary of the colony, register of mesne conveyances, attorneygeneral, and powder receiver”); VA. CONST. of 1776 paras. 35, 36 (requiring 

legislative approval for the governor’s judicial appointments). Others limited 

the removal power, and granted civil and judicial officers freedom from 

executive interference “during good behavior.”2 N.Y. CONST. of 1777, 

art. XXIV. See also MD. CONST. of 1776 art. XL (granting “good behaviour” 

 

2 This phrase derives from the English Act of Settlement, which stripped the Crown 

of the power to remove judges at will, and guaranteed judicial commissions “quamdiu se bene 

gesserint” (‘during good behavior’). Act of Settlement, 1701, 12 & 13 Will. 3 c. 2 § 3.

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tenure to the attorney-general); id. art. XLVIII (permitting the governor to 

remove only those “civil officer[s] who ha[ve] not a commission during good 

behavior”); MASS. CONST. of 1780 pt. 2, ch. III, art. 1 (providing that “[a]ll 

judicial officers . . . shall hold their offices during good behavior,” but allowing 

the governor to remove them “with consent of the council . . . upon address of 

both houses of the legislature”).

When the Framers drafted the federal Constitution, they had the same 

options before them. Ultimately, they chose to give Article III judges “good 

Behaviour” protection from presidential interference, see U.S. CONST. art. III, 

§ 1, cl. 2, and mandated Senate approval for appointments of superior officers, 

see U.S. CONST. art. II, § 2, cl. 2. The Constitution therefore took away the 

traditional executive power to remove judges and to appoint officers 

unilaterally. But the Framers chose not to grant “good behavior” tenure to 

officers, as some States had done. By that omission, the Framers kept for the 

President the executive’s traditional at-will removal power over superior 

officers.3 See Steven Calabresi & Saikrishna Prakash, The President’s Power 

to Execute the Laws, 104 YALE L.J. 541, 597 (1994). 

 

3 Congress may also remove “civil officers” for “Treason, Bribery, or other High Crimes 

and Misdemeanors” through impeachment and conviction. U.S. CONST. art. II, § 4. But this 

provision was inserted to limit Congress’s impeachment power, rather than to abrogate the 

executive’s removal power: In Britain at the time, “all the king’s subjects, whether peers or 

commoners, [we]re impeachable in parliament.” JOSEPH STORY, COMMENTARIES ON THE 

CONSTITUTION § 283 (1833). Peers could be impeached “for any crime.” 4 BLACKSTONE’S 

COMMENTARIES, supra, at *257. And some State constitutions permitted impeachment for 

“maladministration” in addition to misconduct. See, e.g., MASS. CONST. of 1780 pt. 2, ch. I, 

§ 2, art. VIII. The impeachment power in Article II therefore represents a narrowing of the 

legislature’s traditional ability to interfere with executive affairs. 

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B.

What the text and structure of the Constitution provide, the historical 

practice confirms. Start with the very first Congress. 

On March 4, 1789, Congress convened in New York City. 1 ANNALS OF 

CONG. 15, 95 (1789). One of its first orders of business was to propagate the 

Executive Branch. Representative James Madison moved “that there shall be 

established an Executive Department, to be denominated the Department of 

Foreign Affairs, at the head of which there shall be an officer, to be called the 

Secretary to the Department of Foreign Affairs, who shall be appointed by the 

President, by and with the advice and consent of the Senate; and to be 

removable by the President.” Id. at 370–71. 

The motion sparked a debate “centered around whether the Congress 

‘should recognize and declare the power of the President under the 

Constitution to remove the Secretary of Foreign Affairs without the advice and 

consent of the Senate.’” See Bowsher v. Synar, 478 U.S. 714, 723 (1986) 

(quoting Myers v. United States, 272 U.S. 52, 114 (1926)). And it culminated 

in the famed “Decision of 1789” in which a majority of both legislative 

chambers agreed that “the Constitution’s grant of executive power authorized 

the President to remove executive officers.” Saikrishna Prakash, New Light 

on the Decision of 1789, 91 CORNELL L. REV. 1021, 1023 (2006) [hereinafter 

Prakash, Decision of 1789]; see also 1 ANNALS OF CONG. at 399.

Up until the Civil War, there was virtually no doubt that the Decision of 

1789 was correct. Presidents Washington, Adams, and Jefferson relied on that 

power to remove over 170 officers. Prakash, Decision of 1789, supra, at 1066. 

In their respective Commentaries in the 1820s and 1830s, Chancellor James 

Kent and Justice Joseph Story considered the matter settled and beyond 

alteration. See Myers, 272 U.S. at 148–50. 

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Congress briefly flirted with revisiting the issue after the Civil War. In 

1867, Congress passed the Tenure of Office Act (over the President’s veto), 

reversed its longstanding position, and claimed for itself the power to condition 

removal on the advice and consent of the Senate. See Tenure of Office Act, ch. 

154, 14 Stat. 430 (1867). But even then, it was questionable whether Congress 

considered the Act to be constitutional. See Free Enterprise Fund, 561 U.S. at 

494 n.3 (noting that the law “was widely regarded as unconstitutional and void 

(as it is universally regarded today)”). Its passage was undoubtedly motivated 

by animus towards President Johnson. See GROVER CLEVELAND, THE 

INDEPENDENCE OF THE EXECUTIVE 29 (1913). Less than two months into 

President Grant’s tenure, it was repealed in part to permit the President to 

suspend officers “until the end of the next session of the Senate.” 16 Stat. 6, 7. 

It was repealed in its entirety in 1887. See 24 Stat. 500.

The history of the use of the removal power—and congressional 

acquiescence in that use—matters. In interpreting the Constitution, “we put 

significant weight upon historical practice,” particularly where the issues 

“concern the allocation of power between two elected branches of Government.” 

NLRB v. Noel Canning, 573 U.S. 513, 524 (2014). Indeed, “a practice of at least 

twenty years duration on the part of the executive department, acquiesced in 

by the legislative department, is entitled to great regard in determining the 

true construction of a constitutional provision the phraseology of which is in 

any respect of doubtful meaning.” The Pocket Veto Case, 279 U.S. 655, 690 

(1929) (quotation omitted). We should therefore be especially hesitant to 

interfere with an executive power that was exercised, unfettered by Congress, 

for over 75 years.

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II.

The Supreme Court first squarely addressed the President’s 

constitutionally vested removal power in 1926.4 But once proved not enough. 

In the decades since, the Court has offered varying takes on the limits of that 

power—all apparently still good precedent. See Free Enterprise Fund v. Public 

Company Accounting Oversight Board, 561 U.S. 477, 483 (2010) (“The parties 

do not ask us to reexamine any of these precedents, and we do not do so.”). Yet 

none of those precedents supports the novel limits on removal found in the 

Housing and Economic Recovery Act (“HERA”). Indeed, the lack of historical 

precedent to support HERA may be “the most telling indication of the severe 

constitutional problem” with it. Id. at 505 (quoting Free Enterprise Fund v. 

Public Company Accounting Oversight Board, 537 F.3d 667, 699 (D.C. Cir. 

2008) (Kavanaugh, J., dissenting)).

A.

Let’s start at the beginning. In Myers, the Court addressed “whether 

under the Constitution the President has the exclusive power of removing 

executive officers of the United States whom he has appointed by and with the 

advice and consent of the Senate.” 272 U.S. at 60. The Court noted “[t]here is 

 

4 As to the pre-Myers corpus, Judge Higginson rightly notes that United States v. 

Perkins, 116 U.S. 483 (1886), and United States v. Shurtleff, 189 U.S. 311 (1903), are not 

especially salient for present purposes. Post, at 98 n.2 (Higginson, J.). That said, the Court’s 

opinion in In re Hennen, 38 U.S. 230 (1839), offers insights into the Court’s view of the 

Decision of 1789. Reflecting on the President’s power to remove officers whom he appointed, 

the Court said “it was very early adopted, as the practical construction of the Constitution, 

that this power was vested in the President alone. And such would appear to have been the 

legislative construction of the Constitution.” Id. at 259. And, by 1839, it had become “the 

settled and well understood construction of the Constitution, that the power of removal was 

vested in the President alone . . . although the appointment of the officer was by the President 

and Senate.” Ibid.

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no express provision respecting removals in the Constitution.” Id. at 109. But 

it did not stop there.

Instead, the Court considered the original meaning of the “executive 

power,” the Decision of 1789, and the President’s duties under the Take Care 

Clause. As to the original meaning of the “executive power,” the Court noted 

that both the Congress constituted under the Articles of Confederation and the 

British crown exercised executive power, and that as a part of that power, both 

the Congress and the crown could appoint and remove executive officers. Id.

at 110, 118. The Court’s extensive discussion of the Decision of 1789, see id. at 

111–63, underscored the importance of that Congress’s constitutional 

deliberation and the ensuing “clear affirmative recognition of [the Decision of 

1789] by each branch of the government,” id. at 163. And Chief Justice Taft 

considered the duties of his former post. Speaking from experience,5 the Chief 

Justice explained that “when the grant of the executive power is enforced by 

the express mandate to take care that the laws be faithfully executed, it 

emphasizes the necessity for including within the executive power as conferred 

the exclusive power of removal.” Id. at 122; see Jack Goldsmith & John F. 

Manning, The Protean Take Care Clause, 164 U. PA. L. REV. 1835, 1836 (2016) 

(“Chief Justice Taft invoked [the Take Care Clause] to hammer home the 

implication that a President charged with exercising all of the executive power 

must have the means to control subordinates through whom he or she would 

necessarily act[.]”). On this point, text, history, and structure all aligned: 

 

5 Notably, when serving as President, Taft fired two members of the Board of General 

Appraisers. According to Professor Bamzai, that “was the first presidential for-cause 

removal.” Aditya Bamzai, Taft, Frankfurter, and the First Presidential For-Cause Removal, 

52 U. RICH. L. REV. 691, 691–92 (2018).

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The vesting of the executive power in the President was essentially 

a grant of the power to execute the laws. But the President alone 

and unaided could not execute the laws. He must execute them by 

the assistance of subordinates. . . . As he is charged specifically to 

take care that they be faithfully executed, the reasonable 

implication, even in the absence of express words, was that as part 

of his executive power he should select those who were to act for 

him under his direction in the execution of the laws. The further 

implication must be, in the absence of any express limitation 

respecting removals, that as his selection of administrative officers 

is essential to the execution of the laws by him, so must be his 

power of removing those for whom he cannot continue to be 

responsible. It was urged that the natural meaning of the term 

‘executive power’ granted the President included the appointment 

and removal of executive subordinates. If such appointments and 

removals were not an exercise of the executive power, what were 

they? They certainly were not the exercise of legislative or judicial 

power in government as usually understood.

Myers, 272 U.S. at 117–18 (citations omitted). 

As the Court’s opinion drew to a close, it returned to the Decision of 1789. 

The Court again emphasized that the first Congress “was a Congress whose 

constitutional decisions have always been regarded, as they should be 

regarded, as of the greatest weight in the interpretation of that fundamental 

instrument.” Id. at 174–75. And because the Court “found [its] conclusion 

strongly favoring the view which prevailed in the First Congress,” it “ha[d] no 

hesitation in holding that conclusion to be correct.” Id. at 176. So the Court 

held “that the Tenure of Office Act of 1867, in so far as it attempted to prevent 

the President from removing executive officers who had been appointed by him 

by and with the advice and consent of the Senate, was invalid.” Ibid.

Under Myers, this would be an easy case: Any limit on the President’s 

power to remove a principal executive officer is unconstitutional. 

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Our dissenting colleagues brush Myers aside based on this factual 

distinction: Myers dealt with a statute requiring “the ‘advice and consent of 

the Senate’” before the President could remove the officer, whereas HERA does 

not. Post, at 99 (Higginson, J.) (quoting Myers, 272 U.S. at 60). True enough. 

But it was not the character of the limitation on the President’s removal power 

that led the Myers Court to reject it. Rather, it was the existence of any

limitation at all—it was the denial of “the unrestricted power of removal” that 

the Court found invalid. 272 U.S. at 176. Myers held the removal power 

belongs to the President alone, and Congress cannot constrain it. Ibid. Under 

Myers, HERA’s removal restriction is unconstitutional.

B.

Of course, Myers was not the last word on the nature of the President’s 

removal power. In Humphrey’s Executor v. United States, 295 U.S. 602 (1935), 

the Supreme Court announced a different rule. The Humphrey’s Executor 

Court maintained that Congress could not prevent the President from 

removing any (principal) officers exercising “purely” executive power. But it 

introduced the concept of administrative agencies that don’t exercise executive 

power—a possibility Myers seemingly had not contemplated. See also Prakash, 

Decision of 1789, supra, at 1071 (arguing the Decision of 1789 did not resolve 

whether Congress could limit the President’s removal power for non-executive 

officers). And for these non-executive administrative agencies, it approved 

greater restrictions on the President’s removal power. Humphrey’s Executor, 

295 U.S. at 631–32.

The administrative agency at issue was the Federal Trade Commission. 

President Hoover appointed Humphrey as a Commissioner. Soon after his 

election in 1932, President Roosevelt removed Humphrey from office. Id. at 

619. To his dying day, Humphrey maintained he was still a Commissioner. 

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Ibid. Later, Humphrey’s estate sued for his unpaid salary, claiming President 

Roosevelt lacked the power to remove an FTC Commissioner. Ibid. The estate 

pointed to the Federal Trade Commission Act, which provided that 

Commissioners would be appointed by the President, would serve for a certain 

term of years, and could be removed by the President “for inefficiency, neglect 

of duty, or malfeasance in office.” Id. at 620 (citing Federal Trade Commission 

Act, ch. 311, § 1, 38 Stat. 717, 718 (1914) (codified as amended at 15 U.S.C. 

§ 41)). 

President Roosevelt had cited no “inefficiency, neglect of duty, or 

malfeasance in office” as cause for removing Humphrey. Id. at 620, 626. He 

simply wanted to appoint his own Commissioner with whom he “should have 

a full confidence.” Id. at 620 (citing a letter from Roosevelt to Humphrey). 

Roosevelt’s administration pointed to Myers. After all, Myers had recently 

confirmed that the Constitution grants the President unrestricted power to 

remove executive officers for any reason or no reason at all. See 272 U.S. at 

176 (holding a statute that “attempted to prevent the President from removing 

executive officers who had been appointed by him . . . was invalid”). 

Roosevelt’s administration argued that the Myers rule applied to the Federal 

Trade Commissioners, notwithstanding Congress’s provision of a term of office 

and enumeration of causes justifying their removal. Humphrey’s Executor, 295 

U.S. at 626. 

The Court disagreed. Relying on the FTCA’s legislative history, it 

reasoned Congress had intended the FTC to function “wholly disconnected 

from the executive department.” Id. at 630. The FTC was “to be nonpartisan; 

and it must, from the very nature of its duties, act with entire impartiality.” 

Id. at 624. And the Court maintained that the FTC’s “duties are neither 

political nor executive, but predominantly quasi judicial and quasi legislative.” 

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Ibid. Moreover, the Court had no “doubt[s]” about “[t]he authority of Congress” 

to create such agencies and “to require them to act in discharge of their duties 

independently of executive control.” Id. at 629. “[T]hat authority includes, as 

an appropriate incident, power to fix the period during which the [officers] 

shall continue, and to forbid their removal except for cause in the meantime.” 

Ibid. In short, Humphrey’s Executor held that officials exercising quasilegislative or quasi-judicial power could be insulated by for-cause-removal 

protection because of the need to keep such officials “independent” of the 

executive. Id. at 628. If an officer “exercises no part of the executive power 

vested by the Constitution in the President,” it says, Congress can limit the 

President’s removal power. Ibid. On the other hand, if the officer is “purely 

executive,” Congress cannot limit that power. Id. at 631–32 (affirming the 

Myers rule for purely executive officers). Thus, the scope of the President’s 

removal power “depend[s] upon the character of the office.” Id. at 631.

Humphrey’s Executor is difficult to apply for two reasons. First, its 

division between purely executive and quasi-legislative or quasi-judicial does 

not map neatly onto modern understandings of executive power. See Morrison 

v. Olson, 487 U.S. 654, 689 n.28 (1988) (discussing “[t]he difficulty of defining 

such categories of ‘executive’ or ‘quasi-legislative’ officials”); see also Bowsher, 

478 U.S. at 762 n.3 (1986) (White, J., dissenting). And second, the Supreme 

Court itself limited Humphrey’s Executor in Bowsher. There, the Comptroller 

General was subject to removal only by Congress and only for cause. See 

Bowsher, 478 U.S. at 727–28. The Court held this violated the Constitution’s 

separation-of-powers principles by making an official exercising executive 

power subservient to the legislative branch. See id. at 726, 732–33. The 

Comptroller General’s primary duty was to prepare a detailed report in 

accordance with a legislative mandate. Id. at 732. The Court held that this 

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was an exercise of executive power: “Interpreting a law enacted by Congress 

to implement the legislative mandate is the very essence of ‘execution’ of the 

law.” Id. at 733. That was so even though Congress “ha[d] consistently viewed 

the Comptroller General as an officer of the Legislative branch.” Id. at 731. 

And in reaching its conclusion, the Court pointed to the Decision of 1789 as 

“provid[ing] contemporaneous and weighty evidence of the Constitution’s 

meaning since many of the Members of the First Congress had taken part in 

framing that instrument.” Id. at 723–24.

Given that Bowsher turned on Congress’s control over the executive 

officer in question—a problem undisputedly not at issue here—the dissenters 

are tempted to ignore Bowsher as irrelevant. Post, at 99 (Higginson, J.). But 

Bowsher is highly relevant in the way it cabins Humphrey’s Executor. After 

Bowsher, Congress cannot legislate around the nature of executive power by 

creating an office that reports to another branch, rather than (or in addition 

to) reporting solely to the Executive Branch. See 478 U.S. at 731–32; cf. 

Humphrey’s Executor, 295 U.S. at 628 (reasoning the FTC is not an executive 

agency because it was “created by Congress to carry into effect legislative 

policies . . . in accordance with the legislative standard . . . and to perform 

other specified duties as a legislative or as a judicial aid”).

So what does Humphrey’s Executor by way of Bowsher mean here? Well, 

the Federal Housing Finance Agency (“FHFA”) Director obviously exercises 

executive power. As relevant to this case, FHFA implemented a statute—

HERA—by making factual findings that triggered authorization to take over 

and operate the Government Sponsored Entities (“GSEs”). That’s an executive 

act. Cf. Gundy v. United States, 139 S. Ct. 2116, 2140 (2019) (Gorsuch, J., 

dissenting) (explaining that “condition[ing]” the application of statutes “on 

fact-finding” by the executive has been “long associated with the executive 

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function”); Department of Transportation v. Association of American Railroads, 

135 S. Ct. 1225, 1247 (2015) (Thomas, J., concurring in the judgment) 

(explaining that “conditional legislation does not seem to call on the President 

to exercise . . . legislative power” even though it makes the suspension or 

operation of statutory provisions “depend upon the action of the President 

based upon the occurrence of subsequent events, or the ascertainment by him 

of certain facts”); Bushnell v. Leland, 164 U.S. 684, 685 (1897) (rejecting the 

argument that “empowering [the comptroller] either to appoint a receiver or to 

make a ratable call upon the stockholders, is tantamount to vesting that officer 

with judicial power, in violation of the constitution”). Operating the GSEs in 

accordance with statutory directives is also executive. After all, 

“implement[ing] the legislative mandate is the very essence of ‘execution’ of 

the law.” Bowsher, 478 U.S. at 733. 

True, FHFA also has powers that might seem quasi-legislative. For 

example, it can promulgate regulations. See, e.g., 12 U.S.C. §§ 4536, 4617(i)(8). 

But having that power cannot be enough to render an agency quasi-legislative 

for purposes of Humphrey’s Executor. If it were, nearly every member of the 

President’s cabinet would be a quasi-legislative official and could be given forcause removal protection. And that can’t be. See Morrison, 487 U.S. at 690 

(“Myers was undoubtedly correct in its holding, and in its broader suggestion 

that there are some ‘purely executive’ officials who must be removable by the 

President at will if he is to be able to accomplish his constitutional role.”).

But wherever you draw the line between “executive” and “quasilegislative” power, the exercise of power at the heart of this case is executive.6 

 

6 Judge Higginson agrees that our inquiry should focus on the particular exercise of power 

at issue—here, “the FHFA’s conservatorship function.” Post, at 107. Our disagreement is 

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FHFA executed a contract and enforced its terms; that is the heartland of 

executive power. See also Part II.E, infra. In deciding this case or controversy, 

our constitutional analysis should focus on the nature of the agency action 

being challenged—not the agency’s power in the abstract. Thus, in relevant 

part, “the character of the office” held by the FHFA Director is executive. 

Humphrey’s Executor, 295 U.S. at 631. Again, the for-cause removal restriction 

is invalid.7

C.

In Morrison v. Olson, 487 U.S. 654 (1988), the Supreme Court arranged 

the removal precedents around a new organizing principle: Removal 

restrictions cannot unduly interfere with the President’s fulfillment of his 

constitutional obligations—including the power to take care that the laws be 

faithfully executed. Morrison involved the Ethics in Government Act’s 

provision for the appointment of an independent counsel to “investigate, and, 

if appropriate, prosecute certain high-ranking Government officials for 

violations of federal criminal laws.” Id. at 660 (discussing 28 U.S.C. §§ 591–

99). The independent counsel, once appointed, could only be removed “by the 

personal action of the Attorney General and only for cause.” Id. at 663 (quoting 

28 U.S.C. § 596(a)(1)). 

 

whether FHFA’s “conservatorship function” is executive or something else. Our colleagues 

evidently think it is something else, but exactly what it is they do not say. See ibid.

7 And even if we considered the FHFA Director to be both “quasi-legislative” and 

executive, then the FHFA’s Director would fall into the “field of doubt” that Humphrey’s 

Executor left for “future consideration.” 295 U.S. at 632. And insofar as the “nature of the 

function” test discussed in Wiener v. United States, 357 U.S. 349, 353 (1958), was rooted in 

the “philosophy of Humphrey’s Executor,” id. at 356, applying that test here would yield 

similar results. The “intrinsic judicial character of the task” of the War Claims 

Commissioners led the Court to decide that case against President Eisenhower. Id. at 355. 

The executive function at issue here would command the opposite result.

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There was “no real dispute that the functions performed by the 

independent counsel are ‘executive’ in the sense that they are law enforcement 

functions that typically have been undertaken by officials within the Executive 

Branch.” Id. at 691. But the Morrison majority treated the categories used in 

Humphrey’s Executor (executive vs. quasi-legislative or quasi-judicial) as 

relevant but not dispositive. We agree with our dissenting colleagues on this 

point: “Morrison downgraded Wiener’s and Humphrey’s Executor’s inquiries 

from a determinative to a subsidiary level.” See post, at 106 (Higginson, J.). 

The Morrison Court instead concluded that the constitutionality of 

limitations on the President’s removal power is not “define[d] [by] rigid 

categories of those officials who may or may not be removed at will by the 

President, but” aims to “ensure that Congress does not interfere with the 

President’s exercise of the ‘executive power’ and his constitutionally appointed 

duty to ‘take care that the laws be faithfully executed’ under Article II.” 

Morrison, 487 U.S. at 689–90. So, under Morrison, removal restrictions that 

do not limit “the President’s ability to perform his constitutional duty” are 

permissible. Id. at 690.

The Morrison Court concluded the independent counsel’s office survives 

this test. First, the Court deemed the independent counsel an inferior office 

“with limited jurisdiction and tenure and lacking policymaking or significant 

administrative authority.” Id. at 691; see also id. at 671–72. Second, the Court 

noted that the President retained the ability to remove the independent 

counsel for cause (through the Attorney General). Id. at 692–93; see also id. at 

696. Congress limited the removal power “to establish the necessary 

independence of the office,” the Court concluded. Id. at 693. And in light of 

the independent counsel’s status as an inferior officer accountable to the 

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Attorney General, such a limitation didn’t unduly “interfere” with the 

President’s constitutional duties. Ibid.

So what of the FHFA Director? Like the independent counsel, the FHFA 

Director exercises the executive power of implementing the laws. See Part II.B, 

supra. But unlike the independent counsel, the FHFA Director is a principal 

officer with significant authority, and he is not subject to significant 

presidential control through any other executive officer. FHFA’s insulation 

from the ordinary appropriations process means its Director does not even 

answer to Congress. Cf. Humphrey’s Executor, 295 U.S. at 628 (explaining the 

FTC is quasi-legislative because it acts “in aid of the legislative power” where 

it makes “investigations and reports . . . for the information of Congress”). And 

that also deprives the President of the control he exercises over most 

independent agencies, who “must participate in the annual budget cycle” under 

the oversight of the Office of Management and Budget.8 Perhaps it’s true that 

“[n]o man is an island.” JOHN DONNE, DEVOTIONS UPON EMERGENT 

OCCASIONS, Meditation XVII 108 (Ann Arbor Paperback ed., 1959) (1624). But 

FHFA’s Director comes pretty close.

To satisfy Morrison, “the Executive Branch” must have “sufficient 

control over” the independent officer “to ensure that the President is able to 

perform his constitutionally assigned duties.” 487 U.S. at 696. Here, it’s not 

clear the Executive Branch has any control at all. 

 

8 Eloise Pasachoff, The President’s Budget as a Source of Agency Policy Control, 125 YALE 

L.J. 2182, 2203–04 (2016); see also Rachel E. Barkow, Insulating Agencies: Avoiding Capture 

Through Institutional Design, 89 TEX. L. REV. 15, 42–43 (2010) (“If agencies must rely on 

OMB for budget requests, the President has a huge lever of power over the agency, whether 

or not the head of the agency is removable at will.”). 

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D.

In Free Enterprise Fund, the Supreme Court made clear that Morrison

only extends so far. The Free Enterprise Fund Court dealt with the members 

of the Public Company Accounting Oversight Board (“PCAOB”) who could be 

removed only by the Securities and Exchange Commission (“SEC”). 561 U.S.

at 483. The PCAOB board members could only be removed by the SEC for 

cause, and the members of the SEC are principal officers who can only be 

removed by the President for cause. Id. at 486–87. The Court concluded this 

double for-cause protection arrangement violates the Constitution: 

This novel structure does not merely add to the Board’s 

independence, but transforms it. Neither the President, nor 

anyone directly responsible to him, nor even an officer whose 

conduct he may review only for good cause, has full control over 

the Board. 

Id. at 496. So the Court found PCAOB Commissioners could not 

constitutionally exercise executive power. See ibid.

The Court reaffirmed its focus on the importance of the relevant office 

by distinguishing principal officers from inferior officers and inferior officers 

from mere employees. Id. at 506 (“We do not decide the status of other 

Government employees, nor do we decide whether ‘lesser functionaries 

subordinate to officers of the United States’ must be subject to the same sort 

of control as those who exercise ‘significant authority pursuant to the laws.’”). 

Thus, the above analysis concerning the status of a principal officer under 

Morrison applies here in much the same way. 

But Free Enterprise Fund also emphasized a suspicion of novel agency 

structures. Before the case came before the Supreme Court, then-Judge 

Kavanaugh had dissented from the D.C. Circuit’s opinion upholding the 

PCAOB: 

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Humphrey’s Executor and Morrison represent what up to now have 

been the outermost constitutional limits of permissible 

congressional restrictions on the President’s removal power. 

Therefore, given a choice between drawing the line at the holdings 

in Humphrey’s Executor and Morrison or extending those cases to 

authorize novel structures such as the PCAOB that further 

attenuate the President’s control over executive officers, we should 

opt for the former. We should resolve questions about the scope of 

those precedents in light of and in the direction of the 

constitutional text and constitutional history. In this case, that 

sensible principle dictates that we hold the line and not allow 

encroachments on the President’s removal power beyond what 

Humphrey’s Executor and Morrison already permit. 

Free Enterprise Fund, 537 F.3d at 698 (Kavanaugh, J., dissenting) (citations 

omitted). The Supreme Court shared his concern: “Perhaps the most telling 

indication of the severe constitutional problem with the PCAOB is the lack of 

historical precedent for this entity.” Free Enterprise Fund, 561 U.S. at 505 

(quoting 537 F.3d at 699 (Kavanaugh, J., dissenting)).

The novel agency structure at issue in this case raises similar suspicions. 

Granting that the protections here are not a “Matryoshka doll of tenure 

protections,” id. at 497, Congress nevertheless insulated the FHFA Director in 

an unprecedented way. The FHFA Director is a principal officer, not an 

inferior one or an employee; he exercises significant executive authority; and 

he does so by himself, not as part of a multi-member body. Cf. PHH Corp. v. 

CFPB, 881 F.3d 75, 198 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting) 

(noting that another agency’s “single-Director structure departs from settled 

historical practice, threatens individual liberty, and diminishes the President’s 

Article II authority to exercise the executive power.”).9 HERA thereby grants 

 

9 Many have discussed the unique ways an independent agency headed by a single 

Director could undermine the President’s Article II powers. See ante, at 46–47 (Willett, J.); 

PHH Corp., 881 F.3d at 156–57 (Henderson, J., dissenting); id. at 183–84 (Kavanaugh, J., 

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“executive power without the Executive’s oversight” and “subverts the 

President’s ability to ensure that the laws are faithfully executed.” Free 

Enterprise Fund, 561 U.S. at 498. Thus, FHFA fails under Free Enterprise 

Fund too. 

E.

Judge Higginson’s principal response to all of this is that “FHFA’s 

conservatorship function” is “a role one would be hard-pressed to characterize 

as near the heart of executive power.” Post, at 107. We disagree. To our minds, 

you’d be hard-pressed to characterize it as anything other than executive 

power. 

“The executive power” vested by Article II, Section 1, is the power of 

“enforcing the laws.” 1 BLACKSTONE’S COMMENTARIES, supra, at *146. At the 

Founding, the “executive power” was understood in contradistinction to the

“legislative” power of “making the laws.” Ibid.; see also id. at *261; MATTHEW 

HALE, THE PREROGATIVES OF THE KING 176 (D.E.C. Yale ed. 1976). Without 

an executive to enforce, administer, or otherwise execute the law, legislation 

was a mere parchment barrier: “[T]he Vigour of the Laws consists in their 

Executive Power; Ten thousand Acts of Parliament signify no more than One 

Single Proclamation, unless the Gentlemen, in whose hands the Execution of 

those Laws is placed, take care to see them duly made use of . . . .” DANIEL 

DEFOE, THE POOR MAN’S PLEA 23 (2d ed. 1693). Thus, the power to execute the 

law is the power to follow a legislative instruction and “transform [legislative] 

 

dissenting). When the Founders vested a single President with the executive power in Article 

II of the Constitution, they recognized that one person had the potential to act with greater 

speed, decisiveness, and secrecy than a multi-member body. See THE FEDERALIST NO. 70, at 

424 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (“Decision, activity, secrecy, and 

dispatch will generally characterize the proceedings of one man in a much more eminent 

degree than the proceedings of any greater number . . . .”).

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intentions into reality.” Julian Davis Mortensen, Article II Vests the Executive 

Power, Not the Royal Prerogative, 119 COLUM. L. REV. 1169, 1236 (2019).

There can be no doubt that FHFA purported to “execute” HERA here—

even if it did so unlawfully. See ante, at 50–52 (Willett, J.). It “made use of” 

the statute to adopt the Third Amendment. And it made use of the statute 

(and the Third Amendment) to sweep the GSEs’ profits. That plainly 

constitutes “the executive power.”

But suppose we’re wrong that FHFA is an executive branch agency—

where would you put it instead? FHFA is an agency of the federal government. 

See 12 U.S.C. § 4511(a) (establishing FHFA as “an independent agency of the 

Federal Government”); id. § 4617(b)(2)(J)(ii) (granting FHFA power to “take 

any action authorized by this section, which the Agency determines is in the 

best interests of . . . the Agency”). Surely Judge Higginson does not mean to 

suggest FHFA is exercising “legislative or judicial power in government as 

usually understood.” Myers, 272 U.S. at 117–18. 

It’s irrelevant that the Secretary of the Treasury—the other party to the 

Net Worth Sweep—could veto the deal. Cf. post, at 105 (Higginson, J.); post, 

at 112–13 (Costa, J.). It has never been true that setting aside an officer’s 

action in a case involving the removal power requires proof that an uninsulated 

officer would not have taken the challenged action. Such counterfactual 

causation is alien to the Supreme Court’s interpretation of Article II. Neither 

appointment cases nor removal cases require it. See Landry v. FDIC, 204 F.3d 

1125, 1131 (D.C. Cir. 2000) (“There is certainly no rule that a party claiming 

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constitutional error in the vesting of authority must show a direct causal link 

between the error and the authority’s adverse decision.”).10

Take Free Enterprise Fund, for example. That case implicated both 

appointment and removal. As to the former, the Court refused to require 

counterfactual causation as an element of standing to bring an appointment 

claim. 561 U.S. at 512 n.12 (“[S]tanding does not require precise proof of what 

the Board’s policies might have been in that counterfactual world.”). And as to 

the latter, the Court likewise rejected counterfactual causation. The Court 

granted prospective relief requiring officers to be properly removable before 

exercising executive authority. Id. at 513. And it did so without analyzing 

whether less-insulated officers would make different decisions than the 

unconstitutionally insulated officers did. If a plaintiff must show that a 

removable officer would make a different decision, then Free Enterprise Fund

 

10 For the same reasons, it’s irrelevant that the Third Amendment was adopted by an 

Acting Director of FHFA, rather than a Senate-confirmed Director. See post, at 109 (Costa, 

J.). The Acting Director serves until the appointment of a Director—the latter of whom is 

insulated by the for-cause removal restriction. See 12 U.S.C. §§ 4512(b), 4512(f). The 

President’s power to replace the Acting Director with a for-cause insulated Director is a 

Damoclean sword that hardly solves the constitutional problem with the latter. After we 

granted rehearing en banc, FHFA argued for the first time that the Acting Director can be 

replaced under the Federal Vacancies Reform Act (“FVRA”). That argument is forfeited 

under our longstanding rules. See Excavators & Erectors, Inc. v. Bullard Engineers, Inc., 489 

F.2d 318, 320 (5th Cir. 1973) (“While these contentions may have had merit if timely raised 

in the district court, it is well established that . . . issues not raised or presented in the lower 

court will not be considered for the first time on appeal.”). It’s also ironic because the 

Government argues the FHFA Director is not exercising executive power while justifying its 

constitutionality under a statute—the FVRA—that applies only to “an officer of an Executive 

Agency.” 5 U.S.C. § 3345(a). In all events, this point now appears moot because the Senate 

confirmed a permanent Director who enjoys for-cause insulation. And almost immediately 

after his confirmation, that insulated Director revoked FHFA’s prior concession regarding 

the unconstitutionality of the for-cause removal restriction, instead defended its 

constitutionality, and continued sweeping the GSEs’ profits.

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would not have granted relief without considering whether a more accountable 

officer would make different decisions.

Or take NLRB v. Noel Canning, 573 U.S. 513 (2014). By the time that 

case reached the Supreme Court, the NLRB already had new, validly 

appointed members. There was no evidence the new Board members were 

inclined to overturn the actions of the old, unconstitutionally appointed 

members. In fact, the litigants challenging the appointments told the Supreme 

Court that “going forward the government can solve the problem through 

agency ratification of past decisions.” Transcript of Oral Argument at 66, Noel 

Canning, 573 U.S. 513 (No. 12-1281). Nevertheless, the Court invalidated the 

old members’ decisions. See Noel Canning, 573 U.S. at 522 (“[T]hat the Board 

now unquestionably has a quorum does not moot the controversy about the 

validity of the previously entered Board order.”).

The best support we can find for counterfactual causation is in the 

Bowsher dissent. It argued the unconstitutional removal provision was 

“unlikely to be” invoked, meaning in “political realit[y]” the officer’s decisionmaking was unaffected. 478 U.S. at 730 (discussing Justice White’s dissent). 

But the majority rejected that analysis: “The separated powers of our 

Government cannot be permitted to turn on judicial assessment of whether an 

officer exercising executive power is” likely to be fired. Ibid. “The Framers did 

not rest our liberties on such bureaucratic minutiae.” Free Enterprise Fund, 

561 U.S. at 500. Thus, there is no reason for us to speculate about what a 

more-accountable officer would have thought about the Net Worth Sweep. And 

the Treasury Secretary’s agreement to the Net Worth Sweep doesn’t tell us 

anything about the propriety of insulating the FHFA Director. 

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III.

A majority of our Court believes that the appropriate remedy for the 

constitutional violation is to delete the offending statutory text. We 

respectfully disagree, because we do not think our limited Article III power to 

decide cases and controversies permits such a remedy.

The judicial power vested by Article III of the Constitution extends to 

“Cases” and “Controversies.” U.S. CONST. art. III, § 2, cl. 1. It generally does 

not include the legislative power to erase, rewrite, or otherwise “strike down” 

statutes: “[U]nder our constitutional system courts are not roving commissions 

assigned to pass judgment on the validity of the Nation’s laws.” Broadrick v. 

Oklahoma, 413 U.S. 601, 610–11 (1973). Rather, “[c]onstitutional judgments, 

as Mr. Chief Justice Marshall recognized, are justified only out of the necessity 

of adjudicating rights in particular cases between the litigants brought before 

the Court.” Ibid. (citing Marbury v. Madison, 5 U.S. (1 Cranch) 137, 178 

(1803)); see also United States v. Godoy, 890 F.3d 531, 539–40 (5th Cir. 2018) 

(explaining that the Supreme Court’s declining to apply an unlawful statutory 

provision does not purge that provision from existence).

When then-Judge Scalia was sitting as a member of the three-judge 

district court in Synar v. United States, he recognized the importance of 

choosing a remedy that redresses the plaintiffs’ injury-in-fact. See Synar v. 

United States, 626 F. Supp. 1374, 1393 (D.D.C.) (per curiam), aff’d sub nom. 

Bowsher v. Synar, 478 U.S. 714 (1986). In that case, the constitutional 

violation was caused by a “combination” of statutes: one authorizing an officer 

to exercise executive power and another governing the appointment or removal 

of the officer in question. Ibid. Justice Scalia was faced with the question: 

Which statute should the court refuse to apply when either one would be 

constitutional in isolation? His answer was the statute that “allegedly 

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authorizes the injury-in-fact that confers standing upon the plaintiff.” Ibid.

(synthesizing numerous Supreme Court precedents). Because the injury-infact in that case was caused by the statutory grant of executive power, that 

grant had to “yield.” Id. at 1393–94. 

In this case, Plaintiffs are injured by the Net Worth Sweep—an exercise 

of executive power unconstitutionally granted by HERA. Plaintiffs lost the 

value of their investments because FHFA used the Net Worth Sweep to 

transfer their money to the Treasury. They ask us to “[v]acat[e] and set[] aside 

the [contract’s] Net Worth Sweep” provision. Our Article III powers permit us 

to grant this remedy, as it would redress Plaintiffs’ injury-in-fact. Such a 

remedy finds support in precedent. See, e.g., Noel Canning v. NLRB, 705 F.3d 

490, 493, 514–15 (D.C. Cir. 2013), aff’d, 134 S. Ct. 2550 (2014) (vacating the 

NLRB’s order because the Board was unconstitutionally constituted); see also

Dresser-Rand Co. v. NLRB, 576 F. App’x 332, 33–34 (5th Cir. 2014) (vacating 

Board’s order that was issued by only two lawfully appointed members). 

Instead of granting this remedy, a majority of our Court charts a 

different path. They seek to blue-pencil the statute by deleting the 

unconstitutional statutory provision. Such a remedy is improper for two 

reasons.

First, it affords Plaintiffs no relief whatsoever. On these facts, editing 

the statute would not resolve any case or controversy. Plaintiffs do not 

complain about the possibility of future regulatory activity. Instead, they 

complain only about a past decision made by the FHFA Director: contractually 

agreeing to the Net Worth Sweep. A complaint based solely on past violations 

cannot justify prospective relief ordering an agency to disregard a statutory 

provision going forward. In a case seeking redress for past harms such as this 

one, prospective relief is no relief at all. Cf. Lucia v. SEC, 138 S. Ct. 2044, 2055 

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n.5 (2018) (explaining that Appointments Clause remedies should be designed 

to preserve the separation of powers and “to create ‘[]incentive[s] to raise 

Appointments Clause challenges’” (quoting Ryder v. United States, 515 U.S. 

177, 183 (1995)).

Free Enterprise Fund is the principal precedent for the majority’s bluepencil remedy. But there, the plaintiffs sought an injunction against future 

audits and investigations by the unconstitutionally insulated agency. To 

remedy the plaintiffs’ prospective injury-in-fact, the Court refused to apply the 

statute insulating the officers from removal. See 561 U.S. at 508–10. The 

Court recognized that the statutory provision was “only one of a number of 

statutory provisions that, working together, produce a constitutional 

violation.” Id. at 509. In refusing to apply the for-cause protection provision 

that insulated the PCAOB commissioners from removal, it applied the most 

modest remedy it could to redress the plaintiffs’ injuries. Thus, the Free 

Enterprise Fund remedy was effectively an injunction ordering the agency to 

disregard the second layer of for-cause removal protection going forward, 

unless and until Congress chose to fix the constitutional violation in a different 

way. In this case, Plaintiffs did not complain about the threat of future harm, 

so blue-penciling the statute would not redress any injury they have alleged. 

Strangely, our colleagues who argue that Plaintiffs lack standing to 

bring their constitutional claim also join a majority of the Court in endorsing 

a blue-penciling remedy. Nowhere in their opinion do they explain how our 

Court could purport to delete a statutory provision when there is no active case 

or controversy within the meaning of Article III. We think Plaintiffs do have 

standing, yet we cannot identify how deleting the FHFA Director’s removal 

protection would redress any harm Plaintiffs have alleged. On what basis 

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could our colleagues possibly believe that a blue-penciling remedy is 

constitutionally permissible? We can see none.

The second problem we have with the remedy endorsed by a majority of 

our Court is that we do not believe Article III of the Constitution permits us to 

“strike” the FHFA Director’s for-cause protection from the statute. See Murphy 

v. NCAA, 138 S. Ct. 1461, 1485 (2018) (Thomas, J., concurring) (explaining 

that “[e]arly American courts did not have a severability doctrine” because 

“[t]hey recognized that the judicial power is, fundamentally, the power to 

render judgments in individual cases”); Jonathan F. Mitchell, The Writ-ofErasure Fallacy, 104 VA. L. REV. 933, 936 (2018) (explaining “federal courts 

have no authority to erase a duly enacted law from the statute books” but have 

only the power “to decline to enforce a statute in a particular case or 

controversy” and “to enjoin executive officials from taking steps to enforce a 

statute”); Kevin C. Walsh, Partial Unconstitutionality, 85 N.Y.U. L. REV. 738, 

756 (2010) (explaining that the Founders did not conceive of judicial review as 

the power to “strike down” legislation).

At the Constitutional Convention, several delegates, including James 

Wilson and James Madison, argued for a “Council of Revision” comprised of 

federal judges and the executive. Mitchell, supra, at 954. The Council would 

have had the power to veto legislation passed by Congress, subject to 

congressional override. Ibid. A veto of legislation would render it “void,” 

without any legal effect. Ibid. That proposal was defeated at the Convention 

on June 4, 1787. Id. at 957. Wilson and Madison tried again on July 21, but 

again they were defeated. Id. at 958. Finally, on August 15, they made one 

last attempt to give the judiciary a veto over federal legislation, proposing that 

the Supreme Court be given the power to veto legislation independent of the 

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President, subject to congressional override. Id. at 958–59. Again, they were 

defeated. Id. at 959. 

In the final Constitution, the judiciary was given only the power to decide 

cases and controversies—to resolve legal disputes between parties and order 

remedies to redress injuries. Thus, when a court concludes that a statute is 

unconstitutional, it is not “striking down” or “voiding” or “invalidating” the law. 

It is merely holding that the law may not be applied to the parties in the 

dispute. The Constitution does not empower courts to delete sections of state 

and federal codes. The Founders expressly considered the possibility of a 

judicial veto, and they rejected it multiple times during the Constitutional 

Convention.

This history has been obscured by rhetoric that Chief Justice Marshall 

used in Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), to explain judicial 

review. In that case he famously declared that a statute found 

unconstitutional by a court becomes “entirely void,” “invalid,” and “not law.” 

Id. at 177–78. Subsequent cases have compounded the confusion. See, e.g., 

The Civil Rights Cases, 109 U.S. 3, 26 (1883) (holding “void” sections 1 and 2 

of the Civil Rights Act of 1875). Nevertheless, it is indisputable that courts do 

not have the power to erase duly enacted statutes. Instead, they may decline 

to enforce them or enjoin their future enforcement to resolve cases and 

controversies.

Our Court should not add to the confusion about the judiciary’s limited 

powers by claiming to “sever” a statute based on open-ended speculation about 

how Congress would have solved the separation-of-powers problem. And we 

certainly should not rewrite the statute while pretending such legislative

activity is the most modest judicial remedy. We would instead remand to the 

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district court with instructions to fashion a remedy that actually redresses 

Plaintiffs’ harms.

* * *

Whether we apply the Constitution’s original public meaning, Myers, 

Humphrey’s Executor, Morrison, or Free Enterprise Fund, the conclusion in this 

case is the same. The FHFA Director cannot exercise the executive power of 

the United States because he is unconstitutionally insulated from presidential 

control and accountability. And our Court does not have the power under 

Article III to order a remedy that does not redress Plaintiffs’ injuries.

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HAYNES, Circuit Judge, joined by STEWART, Chief Judge, and DENNIS, 

SOUTHWICK, GRAVES, HIGGINSON, and COSTA, Circuit Judges, 

dissenting with respect to statutory claims:

I conclude—as the panel in this case and five other circuits have held—

that 12 U.S.C. § 4617(f) bars us from granting the relief that the Shareholders 

seek on their statutory claims. See Jacobs v. FHFA, 908 F.3d 884 (3d Cir. 

2018); Saxton v. FHFA, 901 F.3d 954 (8th Cir. 2018); Roberts v. FHFA, 889 

F.3d 397 (7th Cir. 2018); Robinson v. FHFA, 876 F.3d 220 (6th Cir. 2017); Perry 

Capital LLC v. Mnuchin, 864 F.3d 591 (D.C. Cir. 2017). This court’s role is not 

to question why as to the benefits and detriments of the Net Worth Sweep. 

Instead, under a statutory challenge to the FHFA’s conduct, our court must 

examine the statute in question and apply it.

Every court to address the issue agrees that the core question is whether 

the FHFA acted within its statutory authority. It is the core question because 

§ 4617(f) states that “no court may take any action to restrain or affect the 

exercise of powers or functions of the Agency as a conservator or a receiver” 

unless otherwise specified by statute or requested by the Director. The 

Shareholders argue that the FHFA has exceeded its statutory “powers or 

functions . . . as a conservator or a receiver” such that the bar does not apply. 

So I examine whether adopting the Net Worth Sweep was within those 

statutory powers.

Given HERA’s grant of extensive powers to the FHFA, I conclude that 

the FHFA acted within its statutory powers when it adopted the Net Worth 

Sweep. The FHFA’s “powers are many and mostly discretionary.” Jacobs, 908 

F.3d at 889. To begin with, once a conservator, the FHFA takes over the rights 

and powers of the shareholders, officers, and directors. 12 U.S.C. 

§ 4617(b)(2)(A)(i). It is then free to then “conduct all business of the regulated 

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entity” without any restriction on that grant of power. See id.

§ 4617(b)(2)(B)(i). 

Most importantly, when the FHFA conducts a company’s business, it 

does not have to consider the interests of shareholders. HERA dictates that 

the Director “ensure that . . . the activities of each regulated entity and the 

manner in which such regulated entity is operated are consistent with the 

public interest.” Id. § 4513(a)(1)(B)(v). Most sweepingly, the FHFA may “take 

any action authorized by [§ 4617], which the [FHFA] determines is in the best 

interests of the regulated entity [e.g., the GSEs] or the Agency [i.e., the FHFA].” 

Id. § 4617(b)(2)(J)(ii) (emphasis added). As Judge Stras said, “That is no typo. 

The FHFA can operate critically important businesses, with trillions of dollars 

in assets and the financial support of the federal government, in its own best 

interests—apparently to the exclusion of the interests of the American people, 

Fannie and Freddie, and their shareholders.” Saxton, 901 F.3d at 960 (Stras, 

J., concurring). On top of that, the decision about what is in the FHFA’s best

interest is committed to the FHFA. 

This broad statutory grant of authority undermines the Shareholders’ 

core arguments. To begin with, the Shareholders argue that the statute 

requires the FHFA to pursue the goal of “preserving and conserving” assets 

and operating the GSEs in a “sound and solvent” manner. But those quoted 

terms are snippets from only some of the provisions in § 4617 granting the 

FHFA authority. See 12 U.S.C. § 4617(b)(2)(B)(iv), (b)(2)(D). When reviewed 

in context, each of those provisions is written as a permissive grant of 

authority. For example, § 4617(b)(2)(D) begins, “The Agency may, as 

conservator, take such action as may be . . . .” Other provisions, like 

§ 4617(b)(2)(B)(i) and § 4617(b)(2)(J)(ii), grant the FHFA authority 

unrestricted by the goals of asset preservation and solvency. 

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Undeterred, the Shareholders argue that though the snipped provisions 

use “may,” they are actually mandatory and constrain all other grants of 

authority. Their theory is that “may” is “a simple concession to the practical 

reality that a conservator may not always succeed in rehabilitating its ward.” 

See Perry Capital, 864 F.3d at 638 n.1 (Brown, J., dissenting). But when “may” 

and “shall” appear in the section, “the normal inference is that each is used in 

its usual sense—the one act being permissive, the other mandatory.” Anderson 

v. Yungkau, 329 U.S. 482, 485 (1947). Congress uses “shall” to note mandatory 

responsibilities, even when the officer carrying them out cannot possibly 

succeed. See, e.g., 28 U.S.C. § 547 (“[E]ach United States attorney, within his 

district, shall . . . prosecute for all offenses against the United States . . . .”). 

For instance, in the very same section, the FHFA is told it “shall seek to develop 

incentives for claimants to participate in the alternative dispute resolution 

process.” 12 U.S.C. § 4617(b)(7)(B). “Shall” makes the command mandatory, 

while “seek” signals that the FHFA might still fail. Congress could have used 

similar language to constrain the FHFA’s actions, but it chose not to. 

The Shareholders also argue that the word “conservator” connotes a 

requirement that the FHFA “conserve” assets. They rely on the common law 

meaning of the term, which they believe Congress reflected in the statute. 

Congress is free to use common law terms in statutes, which courts then look 

to when interpreting the statute in the absence of statutory definitions. But 

that general rule gives way when the statute dictates otherwise. See, e.g., 

Taylor v. United States, 495 U.S. 575, 594 (1990). Here, HERA’s statutory 

scheme is inconsistent with the traditional notions of a conservator. Common 

law conservators are supposed to look out for the rights of shareholders or 

other beneficiaries. But the FHFA looks out for the public’s and its own 

interests, a key difference from common law conservatorships. So this court 

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cannot read any common law principles into Congress’s use of the word 

“conservator.”

During oral argument before the en banc court, a member of our court 

suggested that this claim should not be resolved on a motion to dismiss because 

it includes factual allegations beyond what appeared before other courts of 

appeals. However, neither party had previously argued this point, each 

proceeding from the assumption that this was purely a legal issue that could 

be resolved on a motion to dismiss. Indeed, the term “plausible” as it relates 

to the Shareholders’ complaint appears nowhere in their briefing. Instead, the 

Shareholders focused their assertions on the contention that the FHFA 

exceeded its statutory powers as a matter of law. They certainly never argued 

that there are “fact issues” that need to be litigated or more fully developed as 

it pertains to their statutory arguments regarding § 4617(f). It is hardly novel 

law that an appellant’s failure to brief an issue waives it. See, e.g., Singh v. 

RadioShack Corp., 882 F.3d 137, 149 (5th Cir. 2018). 

Despite the clear waiver, that en banc oral argument question has now 

morphed into the holding of the majority opinion on this issue. The majority 

opinion concludes that the Shareholders stated a “plausible” claim that the 

FHFA exceeded its statutory authority in enacting the Third Amendment and 

remands for “further proceedings.” Now, due to the majority opinion’s 

departure from the Shareholders’ arguments, will the district court be required 

to hold a trial on FHFA’s intent? That makes little sense.

Even if this argument were not waived, it still does not pass muster as a 

distinction from the other circuits’ decisions. First, the complaints in the 

previous suits all alleged that the FHFA did not have the intent of conserving 

the GSEs’ capital, even if they did not cite every piece of evidence supporting 

that view. Second, and more importantly, the statute permits the FHFA to act 

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in the public’s or its own interest, and the statute commits the decision of what 

is in the FHFA’s best interest to itself. So even if those agencies’ subjective 

intent—whatever that means—was to operate Fannie Mae and Freddie Mac 

for its or the public’s benefit, the statute allows the FHFA to do so. 

Nothing about this case alters the robust case law from other circuits. I 

would join all our sister circuits that have considered this question and rejected 

the Shareholders’ statutory claim. The Shareholders have not shown that the 

FHFA exceeded its enormous grant of authority. I conclude that § 4617(f) bars 

us from “tak[ing] any action to restrain or affect the exercise of powers or 

functions of the [FHFA] as a conservator or a receiver.” Because the 

Shareholders’ statutory claims would “restrain or affect” the FHFA’s acting in 

its role as conservator, the Shareholders’ claims should fail. I would affirm the 

district court’s order granting the Agencies’ motions to dismiss the 

Shareholders’ APA claims because such claims are barred by 12 U.S.C. 

§ 4617(f). I respectfully dissent from the contrary decision to remand.

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STEPHEN A. HIGGINSON, Circuit Judge, joined by STEWART, Chief Judge, 

and DENNIS and COSTA, Circuit Judges, dissenting in part:

It is wrong to declare the FHFA unconstitutionally structured. Neither 

the parties nor the majority has addressed the statutory text central to the 

constitutional issue: the provision establishing the FHFA Director’s five-year 

term “unless removed before the end of such term for cause by the President.” 

12 U.S.C. § 4512(b)(2). For-cause removal provisions typically enumerate the 

specific grounds that would justify removal, such as “inefficiency, neglect of 

duty, or malfeasance in office.” See Humphrey’s Executor v. United States, 295

U.S. 602, 619 (1935) (quoting 15 U.S.C. § 41). This one does not. Thus, it is 

concerning that no one in this litigation has addressed why or how § 4512(b)(2) 

is an undue impediment to removal in practice; indeed, no one has even 

suggested what § 4512(b)(2)’s text means.1 Furthermore, no one has identified 

an entity empowered to block a presidential removal under § 4512(b)(2). 

It is unwise to base a momentous constitutional ruling on the expected 

effects of a statutory provision no one has made the effort to construe.

***

The Constitution affords sparse materials to resolve this question––only 

broad pronouncements that “[t]he executive Power shall be vested” in the 

President and that “he shall take Care that the Laws be faithfully executed.” 

Art. II §§ 1, 3. These clauses say nothing about removal of executive-branch 

officers, and there is little that is tractable or manageable in them compared, 

for instance, to the Appointments Clause. See Art. II § 2. That clause 

 

1 The en banc D.C. Circuit’s decision on the constitutionality of the Consumer 

Financial Protection Bureau’s design elicited varying views on this question as to the forcause removal protection of that agency’s director. Compare PHH Corp. v. Consumer Fin. 

Prot. Bureau, 881 F.3d 75, 122–24 (D.C. Cir. 2018) (Wilkins, J., concurring), with id. at 124–

37 (Griffith, J., concurring).

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distinguishes between categories of officers and specifies who may appoint socalled “inferior” officers. Id. These specifications helpfully structure a welldeveloped case law on presidential appointments. See, e.g., Lucia v. S.E.C., 138 

S. Ct. 2044, 2051–56 (2018); Edmond v. United States, 520 U.S. 651, 658–66 

(1997). No such specificity guides us here.

What we have instead is a relatively limited body of modern Supreme 

Court decisions. Only six cases, decided over eighty-five years, comprise the 

corpus of relevant precedential material. On the one side, three cases identify 

unconstitutional limits on the presidential removal power. See Free Enter. 

Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010); Bowsher v. 

Synar, 478 U.S. 714 (1986); Myers v. United States, 272 U.S. 52 (1926). On the 

other, three cases uphold limits on the presidential removal power. See 

Morrison v. Olson, 487 U.S. 654 (1988); Wiener v. United States, 357 U.S. 349 

(1958); Humphrey’s Executor v. United States, 295 U.S. 602 (1935).2 As with 

the sparseness of constitutional text, the limited extent of this caselaw 

counsels, at minimum, caution before we announce from the bench that 

Congress has violated the Constitution.3

 

2 One might also place United States v. Perkins, 116 U.S. 483 (1886), concerning a 

cadet engineer in the Navy, and United States v. Shurtleff, 189 U.S. 311 (1903), concerning a 

“general appraiser of merchandise,” in the corpus of removal cases, but their remoteness in 

time and the simplicity of the positions at issue––relative to the complexity of modern 

administrative agency design––make them minor parts of that corpus for present purposes. 

Presidential removal was at issue also in Mistretta v. United States, 488 U.S. 361 (1989), 

regarding the U.S. Sentencing Commission, but the Court’s animating concern in that 

instance was interference with judicial power, not executive.

3 The concurring opinion that responds to my views misses that my dissent is 

fundamentally rooted in the principle of judicial restraint. This principle must be our guide 

“in cases of peculiar delicacy,” such as those that challenge the constitutionality of Congress’s 

enactments. See McCulloch v. Maryland, 17 U.S. 316, 401 (1819) (Marshall, C.J.). Moreover, 

I do not recognize my views in the paraphrases that the concurring opinion gives of them. At 

the very beginning, for instance, the concurring opinion imputes views to me about “original

public meaning” and “‘judicial’ power to rewrite Congress’s law,” yet neither is an argument 

I elaborate here.

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Two of the three cases striking down limits on the presidential removal 

power are plainly beyond the circumstances here, because they addressed 

provisions that located control over removal wholly or partly in the legislative 

branch. Bowsher concerned a law assigning executive functions to the 

Comptroller General, an official removable only by Congress. 478 U.S. at 728–

34. Myers concerned a postmaster whose removal by the President was subject 

to the “advice and consent of the Senate.” 272 U.S. at 60. Congress gave itself 

no such control over removal of the FHFA Director, so neither case furnishes a 

basis on which to find the FHFA unconstitutionally structured.

Appellants’ constitutional challenge therefore stands or falls on Free 

Enterprise Fund, the only other Supreme Court decision fashioning the 

Constitution’s scant textual materials into a rule by which we might invalidate 

an agency’s structure. In Free Enterprise Fund, the Court affirmed the 

principle that “Congress can, under certain circumstances, create independent 

agencies run by principal officers appointed by the President, whom the 

President may not remove at will but only for good cause.” 561 U.S. at 483. 

Free Enterprise Fund addressed “something quite different”: vesting the forcause removal decision in officials who were themselves protected against 

removal without cause, thereby creating “two layers of good-cause tenure.” Id. 

at 495, 497. Appellants thus have the difficult task of showing that Free 

Enterprise Fund, which affirmed one layer of good-cause tenure while 

condemning two, somehow requires us to invalidate the one layer protecting 

the FHFA Director. 

In addition to showing that Free Enterprise Fund implicitly negated a 

principle it explicitly affirmed, Appellants must also confront three cases 

approving good-cause tenure: Humphrey’s Executor, Wiener, and Morrison. 

These cases each affirmed Congress’s power to insulate officials against 

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presidential removal. The cases affirmed that power in widely varying 

institutional contexts and despite circumstances that, under then-existing 

precedent, would make curtailment of Congress’s power the expected outcome. 

Humphrey’s Executor came first, nine years after Myers’s ringing 

vindication of the President’s “unrestricted power of removal.” See Myers, 272 

U.S. at 176. The case concerned the protection of Federal Trade Commission 

members from removal unless for “inefficiency, neglect of duty, or malfeasance 

in office.” 295 U.S. at 619. Given Myers’s emphatic declaration of principle, this 

insulation of FTC commissioners would surely fall. But it did not. A unanimous 

Supreme Court ruled that Myers “cannot be accepted as controlling [the] 

decision here.” 295 U.S. at 627. The Court recognized Congress’s power to 

create “quasi legislative or quasi judicial agencies” that could act 

“independently of executive control.” Id. at 629. It read Myers as “confined to 

purely executive officers” and stated a new principle: that Congress’s power to 

“preclud[e] a removal except for cause will depend upon the character of the 

office.” Id. at 631–32. 

Two decades later, the Supreme Court considered the removal of a 

member of the War Claims Commission, an adjudicatory body for claims of 

injury or property damage in the Second World War. Wiener, 357 U.S. at 350–

51. Unlike the FTC statute at issue in Humphrey’s Executor, the statute 

creating the War Claims Commission said nothing about removal. Id. at 352. 

One would think, therefore, that the President’s removal power would operate 

unrestricted, per Myers. On the contrary, Wiener adhered to Humphrey’s 

Executor’s distinction between purely executive officers and those meant to 

exercise independent judgment. Focusing on the “nature of the function that 

Congress vested in the War Claims Commission,” the Court read for-cause 

removal protection into the statute. Id. at 353–56. 

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Three decades after Wiener, the Supreme Court considered the 

constitutionality of the independent counsel authorized by the Ethics in 

Government Act of 1978. Morrison, 487 U.S. at 660. The independent counsel 

was appointed by a special three-judge panel upon a referral from the Attorney 

General, and the office held a panoply of prosecutorial powers. Id. at 660–63. 

The Attorney General could remove the independent counsel “only for good 

cause, physical disability, mental incapacity,” or other substantially impairing 

condition, with judicial review thereafter. Id. at 663. Because the independent 

counsel wielded the quintessentially executive power of criminal prosecution, 

one would expect the office’s insulation from presidential removal would be 

unconstitutional, under either Wiener’s “nature of the function” or Humphrey’s 

Executor’s “character of the office” inquiries. But that was not the Court’s 

conclusion. Morrison reasoned that Congress’s power “to impose a ‘good cause’-

type restriction on the President’s power to remove an official cannot be made 

to turn on whether or not that official is classified as ‘purely executive.’” Id. at 

689. Instead it applied a new test: whether “the Act, taken as a whole, violates 

the principle of separation of powers by unduly interfering with the role of the 

Executive Branch.” Id. at 693. The Court ruled that the independent counsel 

statute did not cause such interference. Indeed, it listed the Attorney General’s 

ability to remove the independent counsel for cause among the mechanisms 

adequately preserving presidential control. Id. at 693, 696. 

Appellants thus confront a precedential barrier they cannot surmount: 

three cases affirming good-cause tenure in a variety of circumstances; and a 

fourth case affirming it again while invalidating a form of double good-cause 

tenure not present here.4

 

4 The concurring opinion tries to sidestep the precedential barrier by turning to 

scholarship on the Decision of 1789 and other primary sources that reveal founding-era 

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Appellants’ approach is to draw attention to a purportedly “unique 

constellation of independence-enhancing features” in the FHFA’s design. This 

claim derives from phrases that the Court used in Free Enterprise Fund. E.g., 

561 U.S. at 483 (asking whether two “separate layers of protection may be 

combined”); id. at 510 (describing the PCAOB members’ “good-cause removal” 

as “only one of a number of statutory provisions that, working together, produce 

a constitutional violation”) (emphasis added). The majority opinion picks up on 

this language, deeming the FHFA’s structure unconstitutional due to the 

“combined effect” of its “unique constellation of insulating features.”5 But these 

phrases in Free Enterprise Fund were used to describe the novel problem of 

two-layered good-cause tenure. The Court was clear that the problematic 

novelty at issue in Free Enterprise Fund was in contrast to the long-standing 

legitimacy of single-layered good-cause tenure: 

As explained, we have previously upheld limited restrictions on 

the President’s removal power. In those cases, however, only one 

level of protected tenure separated the President from an officer 

exercising executive power. It was the President—or a subordinate 

he could remove at will—who decided whether the officer’s conduct 

merited removal under the good-cause standard.

The Act before us does something quite different. It not only 

protects Board members from removal except for good cause, but 

withdraws from the President any decision on whether that good 

cause exists. That decision is vested instead in other tenured 

officers—the Commissioners [of the SEC]—none of whom is 

subject to the President’s direct control. The result is a Board that 

 

viewpoints on presidential removal power. The concurring opinion relies on one side of a

vigorous scholarly debate about these materials. Amici scholars have helpfully shown 

another, quite different side. See Brief of Harold H. Bruff, Gillian E. Metzger, Peter M. Shane, 

Peter L. Strauss, and Paul R. Verkuil, as Amici Curiae in Support of Defendants-Appellees, 

Collins v. Mnuchin, No. 17-20364 (5th Cir. Jan. 17, 2019). 

5 See Collins v. Mnuchin, 896 F.3d 640, 661, 670 (5th Cir. 2018) (per curiam). The en 

banc majority opinion incorporates the panel opinion’s analysis. See Section VIII(A).

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is not accountable to the President, and a President who is not 

responsible for the Board.

The added layer of tenure protection makes a difference.

591 U.S. at 495 (emphasis added). Thus, to import Free Enterprise Fund’s 

phrases describing novel structures into this case is to erase the distinction 

those descriptions were meant to draw.6

Appellants’ challenge rests on a tenuous interpretation not only of Free 

Enterprise Fund but also of the scholarly literature on administrative agency 

design.7 Appellants argue, and the majority opinion agrees, that various 

otherwise unremarkable agency design features, through undescribed 

alchemy, combine to make the FHFA Director unduly insulated from 

presidential control. But upon a closer look, these assertions are little more 

than debatable empirical claims––hardly the firm footing judges need to take 

the bold step of declaring Congress’s agency design choices unconstitutional. 

The majority opinion for the en banc D.C. Circuit addressing the 

constitutionality of the Consumer Financial Protection Bureau has already 

surveyed the dubious empirical propositions on which Appellants and the 

majority opinion depend. See PHH Corp. v. Consumer Fin. Prot. Bureau, 881 

 

6 For a thoughtful discussion of the significance that novelty should have in 

constitutional analysis of agency design, see Leah M. Litman, Debunking Antinovelty, 66 

DUKE L.J. 1407 (2017). 

7 See, e.g., Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (And 

Executive Agencies), 98 CORNELL L. REV. 769 (2013); Rachel Barkow, Insulating Agencies: 

Avoiding Capture Through Institutional Design, 89 TEXAS L. REV. 15 (2010). One can only 

imagine the feelings of scholars who were motivated by the “urgent need” for better 

institutional design against the threat of agency capture, Barkow, 89 TEXAS L. REV. at 18, 

upon seeing their work turned into a constitutional cudgel against that design. 

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F.3d 75, 92–110 (D.C. Cir. 2018).8 That wheel need not be reinvented here,9

but a few points may usefully be added.

The majority opinion gives weight to the purportedly insulating effect of 

the FHFA’s single-headed structure, but that structure may just as readily 

promote accountability as inhibit it, by spotlighting the obstacle in the way of 

the President’s will. The majority opinion values the internal checks of a multimember structure, particularly when bipartisan balance is required, but such 

structures tie a President’s hands as much as free them. If the constitutional 

concern here is undue interference with presidential control, an agency 

structure requiring the President to appoint a political opponent can hardly be 

said to enhance presidential sway. Such a structure could not be said to have 

constitutional significance either. The Supreme Court never suggested in Free 

Enterprise Fund that the internal dynamics fostered by the PCAOB’s multimember structure might avoid a constitutional violation.10 The dubiousness of 

these various claims in turn makes their “combined effect” yet more 

questionable.11

 

8 The majority opinion expresses no disagreement with the en banc D.C. Circuit’s 

analysis affirming the constitutionality of the CFPB, instead identifying “salient distinctions” 

between the CFPB and FHFA. Collins, 896 F.3d at 673. With that lack of disagreement I 

quite agree.

9 Cf. Consumer Fin. Prot. Bureau v. Seila Law LLC, 923 F.3d 680, 682 (9th Cir. 2019), 

petition for cert. docketed (June 28, 2019) (No. 19-7) (likewise declining to “re-plow the same 

ground”).

10 A common argument from parties and judges skeptical of agency insulation is that 

the multi-member structure of the FTC––a “body of experts”––was an essential part of the 

Court’s decision in Humphrey’s Executor affirming the FTC’s structure. See, e.g., PHH Corp., 

881 F.3d at 98–99 (majority opinion’s explanation of challengers’ argument); id. at 143, 150–

51 (Henderson, J., dissenting). But that quote appeared in Humphrey’s Executor’s treatment 

of a preliminary statutory issue, not in its constitutional analysis. Compare 295 U.S. at 621–

26 (statutory); id. at 626–32 (constitutional); see PHH Corp., 881 F.3d at 98–99 (making this 

observation). 

11 Relatedly, it is debatable that the FHFA’s features are in fact unique. One scholarly 

treatment of “indicia of independence” identified seven salient features, of which the FHFA 

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As I suggested at the outset, Appellants have not elaborated how forcause removal protection itself is an undue barrier to presidential control, 

rather than a useful tool thereof, as Morrison held. 487 U.S. at 696. In this 

connection, it warrants mention that Humphrey’s Executor and Wiener, in 

which the removed officials prevailed, were suits for backpay in the Court of 

Claims, not emergency suits for injunctions to block removal. See Wiener, 357 

U.S. at 350–51; Humphrey’s Executor,12 295 U.S. at 618–19. No one has put 

forward an example of the President being blocked from removing an official 

at the FHFA Director’s level. Thus, the actuality of the protection in practice 

is anyone’s guess.13

Moving from generalities to specifics, the FHFA does not exhibit undue 

insulation. As Judge Costa’s opinion explains, the FHFA undertook every 

action at issue here by agreement with the Secretary of the Treasury, a purely 

executive officer serving at the pleasure of the President. The President thus 

had direct control via the bargaining power of the Secretary. 

Moreover, two unusual features present in Free Enterprise Fund are not 

present here. First, the statutory grounds for removal of PCAOB members set 

 

and eight other agencies had five, ten agencies had six, and four agencies had seven. See

Datla & Revesz, 98 CORNELL L. REV. at 825. 

12 Humphrey had died; hence that case’s unusual name.

13 Justice Scalia’s noted dissent in Morrison delved into the difficult political dynamics 

likely to engulf presidential removal of an official statutorily protected against removal 

without cause. See 487 U.S. at 702–03 (intuiting that “[t]he context of this statute is acrid 

with the smell of threatened impeachment,” and noting the “bitter power dispute” giving rise 

to the case). Concededly, we have a duty to determine the constitutionality of statutes. See 

Zivotovsky ex rel. Zivotovsky v. Clinton, 566 U.S. 189, 197 (2012) (relating removal 

jurisprudence to the political-question doctrine). But, to the extent we find ourselves basing 

constitutional reasoning on hypothesized trajectories of interbranch politics, it is cause for 

reflection on the wisdom of what we are doing. For a nuanced and somewhat contrary view 

of how such hypothesizing might be factored into adjudication, see Adrian Vermeule, 

Conventions of Agency Independence, 113 COLUM. L. REV. 1163 (2013). 

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an “unusually high standard.” 561 U.S. at 502–03.14 By contrast, the FHFA’s 

authorizing statute, as noted above, says merely that the Director shall serve 

a five-year term “unless removed before the end of such term for cause by the 

President.” 12 U.S.C. 4512(b)(2). Though this provision is the centerpiece of 

Appellants’ constitutional claim and of the majority opinion’s constitutional 

remedy, no party and no part of the majority opinion suggests what this text 

should mean. It is at least quite plain that the text sets a lower bar than the 

PCAOB statute.15 Second, members of the PCAOB were removable only by 

formal order of the SEC, and such orders are subject to judicial review. Free 

Enter. Fund, 561 U.S. at 502 (citing 15 U.S.C. § 78y(a)(1)). The President would 

thus have to persuade not only the SEC commissioners but also an Article III 

court that removal was appropriate. No such obstacle exists here. 

Finally, the nature of the FHFA’s function and the character of the 

Director’s office matter, even though Morrison downgraded Wiener’s and 

Humphrey’s Executor’s inquiries from a determinative to a subsidiary level. 

See Morrison, 487 U.S. at 691. The majority and dissenting opinions on 

Appellants’ statutory claims cover the relevant ground. As their discussions 

make clear, the FHFA Director wields no prosecutorial power as the 

independent counsel in Morrison had. The Director has powers of regulation 

 

14 “A [PCAOB] member cannot be removed except for willful violations of the 

[Sarbanes–Oxley] Act [of 2002], Board rules, or the securities laws; willful abuse of authority; 

or unreasonable failure to enforce compliance—as determined in a formal Commission order, 

rendered on the record and after notice and an opportunity for a hearing. [15 U.S.C.] § 

7217(d)(3); see § 78y(a). The Act does not even give the Commission power to fire Board 

members for violations of other laws that do not relate to the Act, the securities laws, or the 

Board’s authority. The President might have less than full confidence in, say, a Board 

member who cheats on his taxes; but that discovery is not listed among the grounds for 

removal under § 7217(d)(3).” 561 U.S. at 503.

15 See Datla & Revesz, 98 CORNELL L. REV. at 788 (“Statutes that specify that an 

appointee cannot be removed except for ‘good cause’ confer the weakest protection,” in 

contrast to statutes enumerating specific grounds).

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and enforcement, like the PCAOB, though only over the government-sponsored 

enterprises, Fannie Mae and Freddie Mac, and affiliated entities. See Free 

Enter. Fund, 561 U.S. at 485–86 (PCAOB’s powers); 12 U.S.C. § 4631 

(Director’s cease-and-desist proceedings). This appeal does not arise from the 

use of those powers, nor has any party shown us examples of their misuse. 

Instead, this appeal arises from the FHFA’s conservatorship function,16 a role 

one would be hard-pressed to characterize as near the heart of executive 

power.17 To the extent that the Supreme Court’s removal doctrine has been 

animated by a concern for preserving presidential control over the core of that 

power, this is not a case that should stir us to act. 

***

Regarding Appellants’ constitutional claim against the FHFA, I see only 

reasons for caution and skepticism, and none for action. Neither the 

Constitution’s text, nor the Supreme Court’s constructions thereof, nor the 

adversary process in this litigation has given us much ground on which to 

declare the FHFA’s design unconstitutional. If so thin a record may be made 

the basis for invalidating Congress’s considered response to a major crisis in 

American life, I am apprehensive about the responsible use of our nullification 

power henceforth.

 

16 The Secretary of the Treasury, an appellee in this matter, relies on our caselaw 

distinguishing the “non-governmental” power wielded by agencies acting as conservators or 

receivers of struggling financial institutions from the power wielded by agencies acting as 

regulators. See, e.g., United States v. Bezborn, 21 F.3d 62, 68 (5th Cir. 1994) (concerning the 

Resolution Trust Corporation, a model for the FHFA’s design). 

17 Cf. A. Michael Froomkin, Note, In Defense of Administrative Agency Autonomy, 96 

YALE L.J. 787, 809–12 (1987) (identifying a given power’s enumeration in Article I versus 

Article II as the key criterion in determining whether Congress may insulate from 

presidential control an agency acting pursuant to that power). 

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GREGG COSTA, Circuit Judge, joined by STEPHEN A. HIGGINSON, Circuit 

Judge, dissenting in part:

In a separation-of-powers case, our vigilance should first be directed at 

the constitutional limits on our own power. Raines v. Byrd, 521 U.S. 811, 819 

(1997) (“[O]ur standing inquiry has been especially rigorous when reaching the 

merits of the dispute would force us to decide whether an action taken by one 

of the other two branches of the Federal Government was unconstitutional.”). 

We have failed in that duty. In concluding that unravelling the Net Worth 

Sweep is not the remedy for the allegedly unconstitutional insulation of the 

FHFA, the court recognizes that the President has always maintained 

“oversight” of the Net Worth Sweep. Majority Op. (Remedy) 58. But that 

conclusion does not just resolve the final question for the constitutional claim. 

It also answers the first question any case poses: Is there jurisdiction? 

The answer is “no” because presidential control of the Net Worth Sweep 

means there is no connection between the good-cause removal provision for 

FHFA Directors that plaintiffs challenge and the injury from the New Worth 

Sweep they allege. In other words, the limitation on the removal power did not 

cause their injury.

The requirement that an alleged constitutional defect caused the 

plaintiff’s injury is part of the threshold standing inquiry—the standing lingo 

is “traceability”—that ensures we are only deciding constitutional issues when 

they arise in “cases” or “controversies.” Raines, 521 U.S. at 818–19. For

numerous reasons described below (some of which are recognized in the court’s 

remedial ruling), the Net Worth Sweep is not traceable to the for-cause 

limitation on the President’s power to remove the FHFA Director. In deciding 

whether Congress has violated the separation of powers at the behest of 

plaintiffs who lack standing, we violate the separation of powers ourselves. See 

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Clapper v. Amnesty Int’l, 568 U.S. 398, 408 (2013) (“The law of Article III 

standing . . . is built on separation-of-powers principles.”).

This is not just a case in which plaintiffs fail to prove standing; the 

history and nature of the Net Worth Sweep, as well as the Shareholders’ own 

allegations, disprove standing. Let us count the ways the record refutes the 

required causal link.

For starters, the Acting Director of the FHFA who agreed to the Third 

Amendment was subject to full removal power. See 12 U.S.C. § 4512(f) 

(allowing Acting Directors with no limits on the President’s ability to remove 

them). Recognizing the problem for this lawsuit if the FHFA was not insulated 

from presidential control at the Net Worth Sweep’s inception, the majority 

opinion contends that the for-cause limit on removal also applies to Acting 

Directors. Maj. Op. 48. This novel reading is a stark departure from textualist 

principles. Unlike the tenure protection the statute provides the FHFA’s 

Senate-confirmed Directors, 12 U.S.C. § 4512(b)(2), it does not impose a forcause limitation on the removal of Acting Directors. 12 U.S.C. § 4512(f). “[I]t 

is a general principle of statutory construction that when Congress includes 

particular language in one section of a statute but omits it in another section 

of the same Act, it is generally presumed that Congress acts intentionally and 

purposely in the disparate inclusion or exclusion.” Barnhart v. Sigmon Coal 

Co., Inc., 534 U.S. 438, 452 (2002) (quotations omitted).

That Congress created the FHFA as “an independent agency,” Majority 

Op. at 48 (citing 12 U.S.C. § 4511(a)), is no license for us to graft onto the 

statute a for-cause limitation on removal of Acting Directors that Congress did 

not include.1 As the Office of Legal Counsel recently pointed out, “Congress 

 

1 The court is looking in the wrong place for the removal power over Acting Directors 

when it states that Section 4512(f) “does not explicitly address removal.” Majority Op. at 48. 

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does not, by purporting to give tenure protection to a Senate-confirmed officer, 

afford similar protection to an individual who temporarily performs the 

functions and duties of that office when it is vacant.” Designating an Acting 

Director of the Bureau of Consumer Financial Protection, 41 Op. O.L.C. ___, 

2017 WL 6419154, Slip Op. at 11 (Nov. 25, 2017). The D.C. Circuit agrees that 

courts should not create for-cause removal restrictions for officers Congress 

does not explicitly protect. Swan v. Clinton, 100 F.3d 973, 988 (D.C. Cir. 1996) 

(refusing to assume certain officials retained removal protection after their 

terms expired because the statute allowing those officials to continue in a 

“holdover capacity” made no mention of such protection). No authority has 

ever read in tenure protection for acting officials not subject to Senate 

confirmation.2 

Doing so for the first time here is particularly problematic because 

penciling in a for-cause limitation on the removal of Acting Directors creates a 

constitutional issue. In interpreting statutes, we are supposed to avoid 

constitutional difficulties, not create them. Edward J. Bartolo Corp. v. Fla. 

 

That power comes from the Constitution, not Congress. Myers v. United States, 272 U.S. 52, 

163–64 (1926). One would thus search in vain for a statute giving the President authority to 

remove the Attorney General, the Secretary of Defense, or any other cabinet secretary.

2 Wiener v. United States read in tenure protection only for Senate-confirmed officials, 

not for acting officials, who in another respect are already exclusively the product of 

presidential power because they do not go through the advice-and-consent process. 357 U.S. 

349, 350 (1958). And unlike the FHFA statute and the CFPB statute OLC addressed, Wiener 

was not a case in which Congress extended for-cause protection to one kind of officer and not 

to another. The “expressio unius est exclusio alterius” canon thus had no role in Wiener. 

Instead, it was addressing a complete silence as to removal. Here there is no “congressional 

failure of explicitness”—Congress explicitly gave tenure protection only to Senate-confirmed 

Directors. Id. at 352. Finally, Wiener predates Morrison v. Olson’s shift in removal power 

cases from a focus on the nature and function of the office in question (that is, whether the 

officer performing purely executive functions and therefore in need of greater presidential 

control) to one about the degree to which the president’s prerogative is impaired. See 487 

U.S. 654, 691 (1988). The “intrinsic judicial character” of the War Claims Commission made 

its members one of the stronger candidates for tenure protection under the then-governing 

conception of removal power. Wiener, 357 U.S. at 355.

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Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568, 575 (1988) (“[W]here 

an otherwise acceptable construction of a statute would raise serious 

constitutional problems, the Court will construe the statute to avoid such 

problems unless such construction is plainly contrary to the intent of 

Congress.”).

Why turn these cardinal rules of statutory construction upside down? 

Because the implication is quite clear when the statute governing Acting 

Directors is read according to its plain language: If the FHFA agreed to the 

Net Worth Sweep when its leader was fully accountable to the President, then 

any injury that policy caused is not traceable to the for-cause removal 

limitation the Shareholders seek to challenge. Indeed, this may be why none 

of the numerous other statutory challenges to the Net Worth Sweep that courts 

of appeals have decided included the constitutional claim about the removal 

power. See Jacobs v. FHFA, 908 F.3d 884 (3d Cir. 2018); Saxton v. FHFA, 901 

F.3d 954 (8th Cir. 2018); Roberts v. FHFA, 889 F.3d 397 (7th Cir. 2018);

Robinson v. FHFA, 876 F.3d 220 (6th Cir. 2017); Perry Capital LLC v. 

Mnuchin, 864 F.3d 591 (D.C. Cir. 2017). As for the only other case that 

challenged the removal power in connection with the Net Worth Sweep, a court 

dismissed it for lack of standing, recognizing that the policy came from an 

Acting Director subject to full presidential control. Bhatti v. FHFA, 332 F. 

Supp. 3d 1206, 1213–14 (D. Minn. 2018), appeal docketed, No. 18-2506 (8th 

Cir. July 16, 2018).

The role of a presidentially accountable FHFA official in agreeing to the 

Net Worth Sweep is enough to reject traceability. But there is more. 

The Shareholders’ allegations confirm that the Third Amendment was 

not the product of any improper insulation of the FHFA from presidential 

control. In fact, their theory is the opposite—that the Third Amendment was 

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a “deliberate strategy” of the Obama Administration. The complaint often 

refers FHFA and Treasury collectively as “the Agencies,” not as independent 

actors. The Shareholders allege that “those Agencies initiated a long-term 

policy of seeking to seize control of Fannie and Freddie.” They further contend 

that the Net Worth Sweep was part of “the Administration’s plans to keep 

Fannie and Freddie in perpetual conservatorship.” 

Treasury’s role provides even more proof that the Net Worth Sweep is 

not traceable to the for-cause removal limitation. The necessary and ongoing 

involvement of an agency not suffering from any alleged constitutional defect 

is an unusual feature in a separation-of-powers case.3 Ever since Treasury 

was established in 1789 as the third department in the executive branch,4 its 

secretary has been subject to at-will removal. So even if the President could 

not express any disapproval of the Net Worth Sweep policy through the FHFA 

once a Senate-confirmed Director replaced the Acting Director, the Treasury 

Secretary was always an outlet for any such views. Yet Treasury has 

continued to accept the dividends for each of the past 27 quarters (since the 

Third Agreement was signed in August 2012), showing that Treasury’s 

leadership has not viewed the Net Worth Sweep as out of step with the 

preferred policy of either the Obama or Trump Administration. If that stance 

 

3 Indeed, the Treasury Secretary is the lead defendant in this case, demonstrating 

that the executive branch is enforcing the policy that the Shareholders contend is the product 

of an improperly insulated bureaucrat.

4 The First Congress created Treasury on September 2, 1789. An Act to Establish the 

Treasury Department, 1 Stat. 65, Ch. 12, 65–67 (1789). Earlier in that first year of the 

republic, the State Department (then called the Department of Foreign Affairs) was created 

on July 27 and the War Department on August 7. An Act for Establishing an Executive 

Department, to Be Denominated the Department of Foreign Affairs, 1 Stat. 28, Ch. 4, 28–29 

(1789); An Act to Establish an Executive Department, to Be Denominated the Department of 

War, 1 Stat. 49, Ch. 7, 49–50 (1789).

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ever changes, all it would take is for the President to direct the Treasury 

Secretary to stop accepting the dividends.

Looking at the government officials involved in both the creation and 

continuation of the Net Worth Sweep leads to one conclusion: The injury 

Shareholders complain about in no way flows from any limits on the 

President’s ability to influence FHFA policy.

Nor can the Shareholders rely on “regulated entity” standing. That 

doctrine describes removal power cases in which courts have found standing 

because the party bringing the challenge is under investigation. Free Enter.

Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 487–88 (2010); 

Morrison v. Olson, 487 U.S. 654, 667–68 (1988); PHH Corp. v. Consumer Fin. 

Prot. Bureau, 881 F.3d 75, 82 (D.C. Cir. 2018). But those cases were brought 

by the individuals or corporations subject to agency authority. In contrast, the 

FHFA is not “overseeing” or regulating the Shareholders. To the extent it is 

engaged in ongoing oversight of anything, it is of the government sponsored 

entities. Corporate law distinguishes between a corporation and its 

shareholders for standing purposes; a shareholder, or even a majority of them, 

cannot litigate in the shoes of the corporation.5 See Dole Food Co. v. Patrickson, 

 

5 A derivative suit is the notable exception. As noted in the majority opinion, our sister 

circuits have determined that the FHFA, not the Shareholders, has sole authority to bring a 

derivative suit. Maj. Op. 21–22. See also Roberts, 889 F.3d at 408; Perry Capital, 864 F.3d 

at 624. And while two circuits have found an exception in an analogous situation—when the 

FDIC as conservator of a bank has a conflict of interest with respect to a particular claim—

no such exception to HERA’s grant of “all rights, titles, powers, and privileges of the regulated 

entity, and of any stockholder” to the FHFA as conservator appears in the statutory text. 12 

U.S.C. § 4617(b)(2)(A)(i); Roberts, 889 F.3d at 409–10.

But those issues arise in the context of whether Shareholders can bring their statutory 

claim. The majority opinion concludes that this is a direct shareholder action. That analysis 

does not carry over to standing for the constitutional claims based on regulated entity status. 

For that, it has always been the entity being regulated—not its shareholders—that has 

standing to challenge the structure of the regulating agency.

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538 U.S. 468, 474-75 (2003) (“A basic tenet of American corporate law is that 

the corporation and its shareholders are distinct entities. An individual 

shareholder, by virtue of his ownership of shares, does not own the 

corporation's assets . . . .” (citations omitted)); Fox v. Harbottle, 2 Hare 461 

(Eng. 1843) (seminal corporate law case holding that the proper plaintiff in an 

action alleging an injury to the corporation is the corporation). Think of the 

potential for chaos if the law were otherwise. Any shareholder of a 

corporation—for major ones like Wal-Mart or GE we are talking about tens of 

thousands of potential plaintiffs—could claim to represent the company 

despite shareholders holding widely varying views on issues affecting the 

corporation. Consistent with the long-established rule that a business entity 

has to litigate on its own behalf, no case has recognized that the shareholders

of a regulated entity have standing to bring constitutional challenges to the 

structure of the regulator. That astonishingly expansive view of regulated 

entity standing cannot be the law.

So if Shareholders have standing at all, it must be founded on harms the 

Net Worth Sweep directly inflicts on them. On that score, while the standing 

requirements are sometimes relaxed in separation-of-powers cases,6 they are 

not removed. See Bond v. United States, 564 U.S. 211, 225 (2011) (continuing 

to require that a plaintiff must show an “actual or imminent harm that is 

concrete and particular, fairly traceable to the conduct complained of, and 

likely to be redressed by a favorable decision”). The Supreme Court has 

 

6 One important way standing is relaxed is that we do not require the branch of 

government whose powers are being encroached to bring the separation-of-powers claim. 

Because structural limitations in the Constitution protect individual liberty, affected 

individuals can bring such claims. See Bond v. United States, 564 U.S. 211, 222–23 (2011) 

(discussing the rationale). But that does not mean they don’t have to be affected by the 

allegedly unconstitutional law.

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loosened the standing inquiry when it was not possible to know if the allegedly 

unconstitutional structure of an agency caused the challenger’s injury. See 

Free Enter. Fund, 561 U.S. at 512 n.12. Given the usual difficulty of proving 

that “counterfactual world,” plaintiffs do not have to prove that causation is 

more than a possibility when the alternative reality is unknowable. Id; see also 

Landry v. F.D.I.C., 204 F.3d 1125, 1131 (D.C. Cir. 2000) (explaining the 

traceability requirement is relaxed when it is “difficult or impossible for 

someone subject to a wrongly designed scheme to show that the design . . . 

played a causal role in his loss”).7 But it is one thing to give plaintiffs the 

benefit of the doubt when we cannot know if a properly structured agency 

would have taken the same action. It is quite another to ignore the traceability 

requirement when there is no doubt that the alleged constitutional error did 

not cause the plaintiffs’ injury. That is the case here. We know the Net Worth 

Sweep is a presidentially-sanctioned policy because a Treasury Secretary and 

Acting Director of FHFA subject to full removal authority adopted the policy, 

and the presidentially-controlled Treasury has continued to enforce it. If there 

is standing even in this situation when real world events disprove traceability, 

then there is nothing left of the Article III limitation.8

 

7 In its standing discussion, court cites another line from Free Enterprise—that “the 

separation of powers does not depend on the views of individual Presidents, nor on whether 

‘the encroached-upon branch approves the encroachment.’” Majority Op. 44 (quoting Free 

Enter. Fund, 561 U.S. at 497 (quoting New York v. United States, 505 U.S. 144, 182 (1992))). 

But the Supreme Court did not make that comment in discussing standing. It instead was 

directed at the merits, pointing out that presidential acquiescence in a limit on removal power 

does not eliminate the constitutional defect. Free Enter. Fund, 561 U.S. at 496. The standing 

inquiry requires us to answer not whether “the encroached-upon branch approves the 

encroachment,” but instead whether the encroachment caused the injury.

8 Two other cases the Shareholders rely on are inapposite. Noel Canning arose

directly from an enforcement action brought by the challenged agency, so standing was not 

even discussed. N.L.R.B. v. Noel Canning, 573 U.S. 513 (2014). Beyond that, the case 

involved an unconstitutional appointment, not an improperly insulated agency. That is an 

important distinction—any action an improperly appointed agency official takes is “void ab 

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Because presidential control over the creation and enforcement of the 

Net Worth Sweep refutes any link between it and the challenged limits on 

presidential oversight of the FHFA, Shareholders have little more claim to 

litigate the structure of that agency than any taxpayer would. Hein v. Freedom 

from Religion Found., 551 U.S. 587, 609–10 (2007) (recognizing that taxpayer 

standing generally does not exist). If they could be parties to this case, most 

taxpayers would present a different perspective on the Net Worth Sweep. It 

has helped repay the roughly $190 billion taxpayers lent to bail out Fannie and 

Freddie before the 2008 financial collapse—a key component of the recovery 

from the Great Recession given the outsized role of Fannie and Freddie in the 

housing market.9 Plaintiffs who invested before the collapse would have lost 

their entire investment were it not for the bailout. Those who have invested 

since have paid “pennies on the dollar” in a speculative play based on hopes 

 

initio.” Noel Canning v. N.L.R.B., 705 F.3d 490, 493 (D.C. Cir. 2013), aff’d, 573 U.S. 513 

(2014). Whereas a lack of authority permeates every agency action, a lack of oversight only 

injures a regulated party if the required oversight would have made a difference. Compare 

Lucia v. S.E.C., 138 S. Ct. 2044, 2055 (2018) (vacating and remanding decision of an 

improperly appointed ALJ) with Free Enter. Fund, 561 U.S. at 508 (rejecting the “broad 

holding” that improper insulation rendered the challenged agency “and all power and 

authority exercised by it in violation of the Constitution” (quotation omitted)).

Bowsher v. Synar may provide even less assistance. 478 U.S. 714 (1986). For one, as 

Judge Higginson points out, that case is less about limiting the President’s ability to control 

an agency and more about placing executive authority in the hands of a legislative officer. 

Higginson Op. at 3. And in any case, unlike here, in Bowsher there was evidence that the 

constitutional defect prevented the President from carrying out his preferred policy. See Brief 

for the United States, Bowsher v. Synar, 478 U.S. 714 (1986), 1986 WL 728082, at *44–51. 

Indeed, the central purpose of the statute challenged in Bowsher was to tie the President’s 

hands and force him to sequester funds hand-selected by a Comptroller General who 

answered directly to Congress. Bowsher, 478 U.S. at 718. So standing for union members 

whose cost of living adjustments were withheld as a result of sequestration was easily 

satisfied—their money was sequestered at the behest of a Comptroller General who never 

should have had that authority in the first place. Id. at 721.

9 Shareholders point out that now, more than a decade later, the dividends have repaid 

the billions lent. But looking only at the principal ignores the return one would expect based 

on the risk the enormous sum would not be repaid and the time value of money.

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that either the Treasury Department would change the Net Worth Sweep 

policy or that the courts would undo it for them. See Robert Stowe England, 

Against All Odds: The Long Bet on Fannie Mae and Freddie Mac, Institutional 

Investor, Sept. 6, 2013.10 The former may happen. Treasury is reviewing 

whether to end the conservatorship, yet another reminder that the President 

has always held full policymaking authority over this issue. Andrew 

Ackerman, Administration Nears Plan to Return Fannie, Freddie to Private 

Ownership, WALL ST. J., May 30, 2019.11 But if we were to grant Shareholders 

that relief based on their separation-of-powers claim, they would be receiving 

not just a financial windfall. Unravelling the Net Worth Sweep because of 

limits on the removal power that had nothing to do with the creation or 

continuation of that financial policy would also be giving Shareholders a 

constitutional windfall.

 

10 Available at https://www.institutionalinvestor.com/article/b14zbcy3kts0t7/againstallodds-the-long-bet-on-fannie-mae-and-freddie-mac. 11 Available at https://www.wsj.com/articles/administration-nears-plan-to-returnfannie-mae-freddie-mac-to-private-ownership-1155925207.

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WILLETT, Circuit Judge, joined by JONES, SMITH, ELROD, HO, 

ENGELHARDT, and OLDHAM, Circuit Judges, dissenting in part:

In my view, the proper remedy for Count IV is to vacate the Third 

Amendment. I respectfully dissent from the court’s decision to instead grant a 

prospective remedy.

I

When a plaintiff with Article III standing challenges the action of an 

unconstitutionally-insulated officer, that action must be set aside. In Bowsher 

v. Synar, the Supreme Court held the Comptroller General could not prescribe 

budget reductions because he was not removable by the President.1 “Once an 

officer is appointed, it is only the authority that can remove him, and not the 

authority that appointed him, that he must fear and, in the performance of his 

functions, obey.”2 The Comptroller General exercised executive power: His role

required him to “interpret” the law and “exercise judgment” in applying it.3

Because he did so outside the President’s supervision, the Court set aside his 

sequestration order. The Court affirmed the district court’s judgment “that the 

presidential sequestration order issued . . . pursuant to the unconstitutional 

automatic deficit reduction process be, and hereby is, declared without legal 

force and effect.”4

Synar’s remedial approach applies here. It is the only Supreme Court 

case that presented the issue. In Myers v. United States, the Court upheld a 

postmaster’s removal, so it had no need to grant relief against past government 

 

1 478 U.S. 714, 736 (1986).

2 Id. at 726 (quoting Synar v. United States, 626 F. Supp. 1374, 1401 (D.D.C. 1986)).

3 Id. at 733.

4 Synar, 626 F. Supp. at 1404, aff’d, 478 U.S. at 736.

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action.5 In Morrison v. Olson, the Court found no constitutional defect in the 

independent counsel’s removal protection, so it granted no relief.6

In Free Enterprise Fund, the Court held the Public Company Accounting 

Oversight Board’s double for-cause removal protection unconstitutional.7 But 

no Board action had become final against the plaintiff, an accounting firm.8 So 

the Court “excised” the offending removal protection from the statute going 

forward.9 The plaintiff had standing for prospective relief because the 

challenged agency “regulate[d] every detail of an accounting firm’s practice.”10 

The unconstitutionally-insulated regulator inflicted an ongoing injury. 

Here, in contrast, FHFA generally regulates the GSEs, not their 

shareholders. And the Third Amendment, which became final in 2012, caused 

the Shareholders’ injury. So I disagree with Judge Duncan’s view that Free 

Enterprise Fund, or any Supreme Court decision, counsels against a vacatur 

remedy in this case. And the Shareholders’ lack of “regulated party” standing 

separates me from Judge Haynes’s remedial theory.

Despite having no occasion to vacate agency action, Free Enterprise Fund 

reinforces Synar’s principle that an unconstitutionally-insulated officer may 

not exercise executive power. “[T]he Framers sought to ensure that ‘those who 

are employed in the execution of the law will be in their proper situation, and 

the chain of dependence be preserved; the lowest officers, the middle grade, 

and the highest, will depend, as they ought, on the President, and the 

President on the community.’”11 “By granting the Board executive power 

 

5 272 U.S. 52, 176 (1926); see id. at 106.

6 487 U.S. 654, 691–92 (1988).

7 Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 496 (2010).

8 Id. at 490.

9 Id. at 509.

10 Id. at 485.

11 Id. at 498 (quoting 1 Annals of Cong. 499 (J. Madison)).

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without the Executive’s oversight, this Act subverts the President’s ability to 

ensure that the laws are faithfully executed—as well as the public’s ability to 

pass judgment on his efforts. The Act’s restrictions are incompatible with the 

Constitution’s separation of powers.”12

II

Unconstitutional protection from removal, like unconstitutional 

appointment, is a defect in authority. Appointments Clause decisions routinely 

set aside agency action. In Lucia v. SEC, the Court held that administrative 

law judges must be appointed by a “head of department,” not by staff.13 As 

remedy, the Court granted a new hearing before a different ALJ.14 It 

disapproved curing the defective appointment by a quick (already-issued) 

ratification of the ALJ’s appointment.15 Similarly, in NLRB v. Noel Canning, 

the Court held that three NLRB Members were unconstitutionally appointed 

without Senate advice and consent.16 It affirmed the Court of Appeals’s 

decision that the NLRB order, issued without a properly-appointed quorum, 

was “invalid.”17

These cases are apt because there, as here, a defect in authority made 

agency action unlawful. In debating the first executive agencies, James 

Madison insisted the President naturally had “the power of appointing, 

overseeing, and controlling those who execute the laws.”18 Unlike judicial 

 

12 Id.

13 138 S. Ct. 2044, 2051 (2018). 14 Id. at 2055.

15 Id. at 2055 nn. 5&6.

16 573 U.S. 513, 519 (2014) (interpreting U.S. CONST. art. II, § 2, cl. 3, Recess 

Appointments Clause).

17 Id. at 521; see id. at 557.

18 1 Annals of Cong. 463 (1789).

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power or (arguably) legislative power, executive power can be delegated.19 But 

if an unconstitutional removal protection breaks the “chain of dependence” 

between the officer and the President, the delegation breaks down too.20 An 

unconstitutionally-insulated officer lacks authority to act.21

Treasury contends that when agency action is held unlawful, vacatur is 

not mandatory but subject to equitable remedial authority.22 And it maintains 

that the case for such relief here is weak. The Shareholders waited four years 

to sue; vacatur might disrupt the GSEs’ operations or the housing market 

generally; and the Shareholders wielded 20/20 hindsight to target an initially 

risky, but now astute, Treasury bargain. It also says the case for equitable 

relief here is worse than Synar, where the statutory fallback provision was 

ready at hand.23

These arguments do not defeat vacatur here. Appointments Clause cases 

refute the point that vacatur is too disruptive. As a remedial matter, Lucia

granted the petitioner a new hearing based on an appointment defect that was 

 

19 See Mistretta v. United States, 488 U.S. 361, 424 (1989) (Scalia, J., dissenting) (citing 

Wolsey v. Chapman, 101 U.S. 755 (1880); Williams v. United States, 42 U.S. 290 (1843)) 

(“Although the Constitution says that ‘[t]he executive Power shall be vested in a President of 

the United States of America,’ Art. II, § 1, it was never thought that the President would 

have to exercise that power personally. He may generally authorize others to exercise 

executive powers, with full effect of law, in his place.”).

20 Free Enter. Fund, 561 U.S. at 498 (quoting 1 Annals of Cong. 499 (J. Madison)); see 

Kisor v. Wilkie, 139 S. Ct. 2400, 2413 (2019) (opinion of Kagan, J.) (“[A]gencies . . . have 

political accountability, because they are subject to the supervision of the President, who in 

turn answers to the public.”).

21 See Free Enter. Fund, 561 U.S. at 498; Neomi Rao, Removal: Necessary and 

Sufficient for Presidential Control, 65 ALA. L. REV. 1205, 1242 (2014) (“Removal . . . provides 

the constitutionally requisite presidential control.”).

22 Cf. Abbott Labs. v. Gardner, 387 U.S. 136, 155 (1967) (stating in APA context that 

“the declaratory judgment and injunctive remedies are equitable in nature, and other 

equitable defenses may be interposed”); see also Weinberger v. Romero-Barcelo, 456 U.S. 305, 

311–19 (1982) (holding that traditional equitable principles apply to injunctive relief unless 

Congress intervenes to guide the courts’ discretion).

23 Cf. 478 U.S. at 734–36.

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common to every single SEC ALJ.24 Noel Canning held an NLRB order invalid 

because of three defective appointments, which infected all the Board’s actions 

during those Members’ tenure.25 If setting aside agency action was proper in 

those cases, it is proper here. FHFA and Treasury have other tools to arrange 

their affairs going forward. The FHFA Director, constitutionally supervised by 

the President, generally can enter new agreements or ratify past ones that are 

not challenged here. As for the Third Amendment, it must be aside. The 

Shareholders have invoked judicial review of agency action that injured them 

in fact and violated the separation of powers.26

Treasury’s cases urging equitable discretion are distinguishable. They 

discuss prospective remedies like prohibitory or mandatory injunctions, not 

vacatur of agency action that violated the separation of powers.27 In contrast, 

neither Synar, Lucia, nor Noel Canning discusses equitable-discretion 

principles or applies the four-factor test for granting an injunction.

III

Although setting aside agency action is not subject to the four-factor 

injunction standard, it remains an equitable remedy. Doing so here is like 

rescinding a contract. “A transfer by an agent, trustee, or other fiduciary 

 

24 138 S. Ct. at 2049, 2055.

25 573 U.S. at 520–21, 557.

26 See Bond v. United States, 564 U.S. 211, 223 (2011) (“If the constitutional structure 

of our Government that protects individual liberty is compromised, individuals who suffer 

otherwise justiciable injury may object.”); Synar, 478 U.S. at 736 (setting aside sequestration 

order because “the powers vested in the Comptroller General . . . violate the command of the 

Constitution”). 27 See North Carolina v. Covington, 137 S. Ct. 1624, 1625 (2017) (per curiam)

(reversing special-election injunction in redistricting case); Winter v. Nat. Res. Def. Council, 

Inc., 555 U.S. 7, 12 (2008) (reversing preliminary injunction against Navy sonar training); 

eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 394 (2006) (holding that traditional fourfactor test applies to injunctions against patent infringement); Weinberger, 456 U.S. at 320 

(holding that Federal Water Pollution Control Act did not mandate injunctions against its 

violation).

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outside the scope of the transferor’s authority, or otherwise in breach of the 

transferor’s duty to the principal or beneficiary, is subject to rescission and 

restitution.”28 The Third Amendment is the smallest independent agreement 

that caused the Shareholders’ injury, so that is what to rescind. When a 

contract is rescinded, restitution is generally in order, and the plaintiff may 

also need to return benefits it received.29 I would recognize the district court’s 

authority, on remand, to decide the parties’ rights and duties to restore their 

rightful position. So I don’t share Judge Haynes’s concern that this remedy 

resembles a “pick-and-choose approach” and grants Shareholders a windfall.

* * *

The Shareholders are entitled to declaratory judgment that the Third 

Amendment exceeded FHFA’s lawful authority because the agency adopted it 

outside the President’s supervision.30 This analysis also supports an injunction 

vacating the Third Amendment.31 In light of recent developments, I would

remand Count IV to the district court for entry of a judgment consistent with 

this opinion.32

 

28 RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 17 (AM. LAW 

INST. 2011).

29 See id. (“The transferee is liable in restitution to the principal or beneficiary as 

necessary to avoid unjust enrichment.”).

30 See Free Enter. Fund, 561 U.S. at 513 (holding petitioners were entitled to 

declaratory relief that PCAOB standards “will be enforced only by a constitutional agency 

accountable to the Executive”); see also Kisor, 139 S. Ct. at 2413 (opinion of Kagan, J.) 

(“[A]gencies . . . have political accountability, because they are subject to the supervision of 

the President, who in turn answers to the public.”).

31 See Synar, 478 U.S. at 736, aff’g Synar, 626 F. Supp. at 1404 (ordering “that the 

presidential sequestration order issued . . . pursuant to the unconstitutional automatic deficit 

reduction process be, and hereby is, declared without legal force and effect”).

32 FHFA’s newly appointed Director has publicly indicated he is considering 

renegotiating FHFA’s agreements with Treasury. Andrew Ackerman & Ben Eisen, Push to 

Overhaul Fannie, Freddie Nudges Up Mortgage Costs, WALL STREET J. (June 25, 2019, 

https://www.wsj.com/articles/trump-push-on-housing-finance-nudges-up-mortgage-costs11561474203?mod=searchresults&page=1&pos=2).

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