President Biden to replace Mark Calabria as head of FHFA

Update: The Federal Housing Finance Agency announced late Wednesday that President Biden has appointed Sandra Thompson as the agency’s acting director. Thompson has served as the deputy director of the Division of Housing Mission and Goals (DHMG) since 2013.

U.S. President Joe Biden will replace the leader of the Federal Housing Finance Agency following a ruling by Supreme Court judges that its current structure is unconstitutional.

The White House is reportedly now seeking to appoint a successor to FHFA Director Mark Calabria (pictured), a government spokesperson told CNBC. The official said that in light of the Supreme Court’s decision, President Biden wants to find a new head of the housing agency that better reflects the administrations’ values.

The FHFA is an important body that oversees mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Bank System.

Biden’s decision to oust Calabria followed a 7-2 ruling in the Supreme Court Wednesday that the FHFA should be more accountable to the Oval Office. Previously, it was only possible for the U.S. President to replace the agency’s director “for cause”.

The ruling means that Biden and future presidents will have the authority to remove the FHFA’s head at any time.

The Supreme Court found that the U.S. President must be able to remove not just officers who disobey his commands, but also those who he finds to be “negligent and inefficient” and those who exercise their discretion in a way that is “not intelligent or wise”. It also enables him to remove those who have different views on policy and those that support a different political party and are “dead set against” the President’s agenda.

Calabria is a Trump-era holdover and stronger supporter of the former President. He spent much of his time at the helm of the FHFA trying to end government control over Fannie Mae and Freddie Mac, entities that he criticized regularly. But he was unable to come up with a plan on how best to orchestrate such a complex and risky move, and Trump-ear Treasury Secretary Steven Mnuchin blocked his efforts.

President Biden is known to be against ceding the housing agencies to private control. He has previously said the FHFA works to address a number of key priorities, including bridging the racial homeownership gap.

“The President’s removal power serves important purposes regardless of whether the agency in question affects ordinary Americans by directly regulating them or by taking actions that have a profound but indirect effect on their lives,” Supreme Court Justice Samuel Alito wrote in the ruling. “And there can be no question that the FHFA’s control over Fannie Mae and Freddie Mac can deeply impact the lives of millions of Americans by affecting their ability to buy and keep their homes.”

Despite wanting to hold on to his post, Calabria put out a statement that acknowledged the court’s decision and wished his successor luck.

“I respect the Supreme Court’s decision and the authority of the President to remove the Federal Housing Finance Agency Director,” he said in the statement, which was posted on the FHFA website. “It has been the honor of a lifetime to serve as Director of the Federal Housing Finance Agency alongside world-class staff.

However, Calabria couldn't resist having one last pop at Fannie and Freddie.

"Much work remains. When the housing markets experience a significant downturn, Fannie Mae and Freddie Mac will fail at their current capital levels," he said. "I wish my successor all the best in fixing the remaining flaws of the housing finance system in order to preserve homeownership opportunities for all Americans.”