President Joe Biden might dismiss Fannie Mae and Freddie Mac
The future of Fannie Mae and Freddie Mac, the two companies dominating the U.S. mortgage market now lies in the hands of President Joe Biden. In its Wednesday ruling, the Supreme Court stated that the President has the authority to fire its regulator.
President Donald Trump appointed a libertarian economist in 2019 who sought to reduce the government’s role in housing since he assumed office. The current ruling offers President Biden a chance to replace him.
The much-awaited decision found the courtroom in a split. The panel pointed out that the Federal Housing Finance Agency itself was unconstitutional due to the provision that the president could only remove its director for a cause and not at will.
Fannie and Freddie had sued the Government to revoke the 2012 decision that sent the company’s profits directly to the treasury. The court unanimously dismissed the charge.
The case has been sent back to the Court of Appeals for the Fifth Circuit for further proceedings to determine any remedies that the shareholders are entitled to receive on their constitutional claim.
Fannie and Freddie have sent up to $300 billion in profits to the government since their federal takeover. The company sells securities to investors by bundling up mortgages it has bought. Currently, Fannie and Freddie stand behind approximately half of the $11 trillion U.S. residential mortgage market.