By Ray Birch
WASHINGTON—The Supreme Court's landmark decision giving President Trump broad authority to remove members of independent federal agencies likely makes it even more difficult for former NCUA Board Members Todd Harper and Tanya Otsuka to win reinstatement, according to several legal experts.
Speaking during a media briefing Monday, Ann Petros, vice president, policy engagement and credit union operations at America's Credit Unions, said the court's ruling in Trump v. Slaughter strengthens arguments already being made by the Administration in the former NCUA board members' lawsuit because, unlike the Federal Trade Commission statute at issue before the Supreme Court, the Federal Credit Union Act does not explicitly provide "for-cause" removal protections for NCUA board members.
Given that the Supreme Court invalidated the FTC Act’s removal protections, that omission from the FCU Act makes it even more likely the U.S. Court of Appeals for the District of Columbia Circuit will reject Harper and Otsuka's request to be restored to the board, she said.
Ann Petros
Petros said the Supreme Court's decision reaches far beyond the FTC, emphasizing that the justices carefully traced presidential removal authority back to the Constitution's framers before concluding that the 1935 Humphrey's Executor precedent no longer supports shielding executive branch officials from presidential removal. While the NCUA differs from the FTC in some respects—including lacking its own administrative law judges and independent litigation authority—the agency still examines federally insured credit unions, issues regulations and pursues enforcement actions, creating what Petros described as significant parallels with the court's analysis.
Petros also highlighted what she called one of the ruling's most notable features: the Supreme Court carved out a different path for the Federal Reserve. While allowing Trump to remove FTC commissioners, in a separate case – Trump v. Cook – the court left Federal Reserve Gov. Lisa Cook in office while litigation over her attempted removal proceeds, stressing the Fed's unique historical role and independence in monetary policy. Petros said that distinction underscores that the court views the Federal Reserve differently from most independent agencies, while signaling that the broader administrative state will continue to move toward greater presidential control.
Calling the decision one of the most consequential administrative law rulings in decades, Petros compared it to the significance of Humphrey's Executor itself. Although America's Credit Unions continues to support a fully staffed, bipartisan three-member NCUA board for the sake of continuity, she acknowledged the ruling could make leadership turnover more common across federal agencies following changes in presidential administrations. Even so, she said the credit union industry's focus now shifts to ensuring the NCUA remains able to operate effectively and safeguard the cooperative system regardless of future changes in board leadership.
Swinging Regulatory Pendulums
Brandy Bruyere
Brandy Bruyere, Partner at Honigman, LLP, told CUToday.info the decision will likely mean numerous federal agencies that were previously independent under long-standing precedent become “swinging regulatory pendulums,” which has been the source of criticism of the CFPB over the years.
“For example, for the first half of the Biden Administration, the majority of the NCUA board were appointed by the first Trump Administration,” Bruyere pointed out. “It took time for the regulatory posture of the NCUA to fully shift. If every newly elected president can fire the last administration’s NCUA board appointees, that may mean a deregulatory agenda moves more rapidly but also means swifter regulation next time a Democrat is in the White House.
“In other words, Bruyere said, “this starts to look like the CFPB over the past decade—lots of regulations and guidance, then a couple of years to roll that back when the presidency changes political parties, then undoing the rollback for a couple of years,” she said. “Credit unions may benefit from some initial regulatory relief in the short term, but in the long run, the regulatory pendulum seems primed to swing erratically which may not have an ongoing benefit to the industry. Both regulation and deregulation take time and effort to implement, now parties may be lobbying for general stability from the regulators.”
Bruyere added that it will be interesting to see how the Court distinguishes the Federal Reserve, for which they left the door open.
“Much of the opinion about the FTC hinged on the fact that the FTC can make regulations, investigate parties and enforce regulations, and file civil suits on behalf of the federal government – all activities other independent agencies like the NCUA do on a day-to-day basis,” she said. “While the Court indicated the Federal Reserve may be distinguishable because of the ‘tradition of the First and Second Banks of the United States,’ other independent regulators do not seem to have similar roles or functions that are outside the work typically conducted by the Executive Branch.”
POLITICO took a firm stance, saying the ruling “effectively ends” Harper and Otsuka's legal challenges.
“It also paves the way for the White House to nominate another Republican to the board: By law, no more than two members of a political party can serve on NCUA's governing body,” POLITICO reminded.
As CUToday.info has reported, John Crews has been nominated by the Trump Administration to replace Kyle Hauptman as NCUA chairman. Hauptman was appointed by Trump to the Public Company Accounting Oversight Board and has stated he will remain at NCUA until his replacement is confirmed.
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