What this case decided

The Supreme Court ruled that a job protections for the head of a federal agency are unconstitutional, as the Constitution guarantees the president the right to dismiss them for any reason - even if that agency does not have significant regulatory or enforcement authority.

How did this case come about?

After over-investing in risky mortgages leading to the 2008 Great Recession, mortgage-backing organizations Fannie Mae and Freddie Mac required billions of dollars from the federal government in order to stay solvent.

In return, the organizations were placed under conservatorship of the Federal Housing Finance Agency (FHFA). The FHFA negotiated a settlement that required the organizations to return $124 billion to the U.S. Treasury in 2012.

In an effort to return the money to themselves, private shareholders of the organizations sued. They claimed that the FHFA was unconstitutional because the head of the agency could not be fired by the president without cause.

They requested that the agency's actions be invalidated, and that the $124 billion be returned to them.

Agency actions were legal, but president can fire head

The court ruled that the structure of the FHFA violated the Constitution's separation of powers, and that the president must be able to dismiss its head without cause.

In his majority opinion, Justice Samuel Alito wrote that the FHFA director was properly appointed, so there was no basis for concluding he did not have authority to take any actions he took.

The ruling said that the plaintiffs may have had a case had a president tried and failed to remove the agency's head, but no president had.

More information

For more information, read this Slate article.