Trump-dismissed NCUA board members file lawsuit
The National Credit Union Administration (NCUA) finds itself in uncharted waters as recent firings have left it with only one board member, causing significant legal and operational challenges. This deviation from the agency’s historical structure raises questions about its independence and governance.
The ongoing legal battle stems from a lawsuit filed by two former Democratic board members, Todd Harper and Tanya Otsuka, who were dismissed and argue they could only be removed for cause. A district court agreed, ordering their reinstatement, but this order has been stayed pending appeal by the U.S. Circuit Court of Appeals.
This legal uncertainty creates risks for the NCUA's independence and governance, as concentrating all board powers in a single member disrupts traditional checks and balances. The situation may also lead to increased debate about whether the NCUA can continue operating as an independent agency or might become part of broader financial regulatory consolidation.
Operational challenges also abound, as the sole board member faces a heavier workload, including comprehensive rulemaking and membership decisions. This could potentially slow or complicate key regulatory actions.
Credit unions must watch closely as the court case proceeds and regulatory shifts unfold, affecting agency leadership and policies such as field of membership reforms and regulatory reviews. Pending court rulings could reverse board membership changes, restoring board quorum and traditional governance structures if court rulings favor the fired members.
The NCUA insures the deposits of the nation’s more than 4,000 credit unions, safeguarding $2 trillion in assets for 142 million Americans. Sen. Elizabeth Warren, D-MA, and Rep. Maxine Waters, D-CA, have written to NCUA Inspector General James Hagen requesting an analysis on how a one-member NCUA board can operate.
The lawsuit, filed by Vincent Levy, a Holwell Shuster & Goldberg partner, seeks to "vindicate Congress's intent" and "preserve the integrity of the financial markets." The legal action names Hauptman, NCUA Executive Director Larry Fazio, Treasury Secretary Scott Bessent, and Deputy Assistant to the President Trent Morse as defendants.
It's worth noting that Harper was originally appointed by Trump but was named chair by Biden in 2021, while Otsuka was appointed by Biden in 2023 and was set to serve until Aug. 2, 2029. The firings align with other moves Trump has made to fire Biden-era appointees at various federal agencies.
The Supreme Court has also weighed in on cases addressing NLRB and MSPB firings this month, effectively removing board members from their federal positions again. This further emphasises the importance of the ongoing legal battle at the NCUA.
[1] NCUA Board Faces Unprecedented One-Member Situation, Challenges (Source)
[2] NCUA Board Member Departure Could Lead to Regulatory Shifts for Credit Unions (Source)
[3] Federal Court Orders NCUA Board Members Reinstated (Source)
[4] NCUA Board Faces Uncertain Future as Lawsuit Challenges Removals (Source)
[5] NCUA Board Members Sue Trump Administration Over 'Patently Unlawful Removal' (Source)
- The ongoing legal dispute, centering around the removal of two NCUA board members, has ignited a debate in policy-and-legislation circles about the NCUA's independence and governance that is being closely followed in general-news.
- With the NCUA's board reduced to a single member and the legal uncertainty created by the lawsuit, the politics surrounding the agency's future, including potential regulatory shifts for credit unions, have taken center stage in both policy-and-legislation and general-news discussion.
