Presidential Power on Trial: The NCUA Board Removal Case That Could Reshape Agency Independence

In a stunning development that could fundamentally alter the balance of power between the President and independent federal agencies, two removed National Credit Union Administration (NCUA) Board members filed a federal lawsuit yesterday challenging their termination by President Trump.

A Constitutional Showdown Begins

The case, Harper v. Trump, challenges the President's unprecedented removal of two Senate-confirmed NCUA Board members in the middle of their fixed terms. Todd Harper and Tanya Otsuka were dismissed via identical one-sentence emails without explanation or cause. According to their complaint, this action disregards nearly 50 years of precedent - no President has ever before removed an NCUA Board member whose term had not yet expired.

The Stakes: More Than Just Credit Unions

While this case directly affects the NCUA's ability to regulate credit unions serving 142 million Americans and safeguarding over $2 trillion in assets, its implications extend far beyond. The lawsuit represents a constitutional clash between competing visions of executive power.

The plaintiffs' position rests on a nearly century-old Supreme Court precedent. In Humphrey's Executor v. United States (1935), the Court established that Congress can create independent agencies whose leaders are protected from at-will presidential removal. This decision has shaped our administrative state for generations, enabling agencies to operate with some insulation from political pressure.

However, recent Supreme Court decisions have begun narrowing this precedent, expanding presidential control over various agencies. The NCUA case could become the next battlefield in this ongoing constitutional conflict.

A Regulator Designed for Independence

Congress restructured the NCUA in 1978, replacing a single administrator who explicitly served "at the pleasure of the President" with a three-member Board serving staggered six-year terms. This restructuring deliberately removed language about presidential removal power and imposed bipartisan membership requirements.

The NCUA's unique structure strengthens arguments for its independence. The National Credit Union Share Insurance Fund is owned by credit unions themselves rather than the federal government, suggesting the agency functions more as an independent overseer than a direct administrator of federal resources.

Practical Consequences: Operating Without a Quorum

The removals have left the NCUA Board without the statutory quorum required for action. With only Chairman Kyle Hauptman remaining, the plaintiffs argue the agency cannot carry out its congressionally mandated functions. This creates real-world consequences for credit union regulation at a time when financial system stability remains a priority.

Six Legal Theories for Victory

The complaint presents multiple claims, including statutory violations, Administrative Procedure Act challenges, and constitutional separation of powers arguments. This multi-faceted approach gives courts several potential grounds for ruling without necessarily resolving all constitutional questions.

The Long Path Ahead

This case will likely take 3-5 years to reach a Supreme Court decision if it progresses through all levels of appeal. Its outcome could significantly impact dozens of independent agencies with similar structures, potentially reshaping the administrative state for decades to come.

The plaintiffs are represented by Holwell Shuster & Goldberg LLP, a boutique litigation firm founded by a former federal judge, taking on the full resources of the federal government in this high-stakes constitutional battle.

As this case unfolds, it bears watching not just for those interested in credit union regulation, but for anyone concerned with the structure of government, the separation of powers, and the future of independent agency expertise in American governance.

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