Breaking News! NCUA Board Members ordered Reinstated

Breaking News!

US District judge Amir Ali, a Biden appointee, has ruled that Trump’s firings of the two democrats, Todd Harper and Tanya Otsuka, from the NCUA Board was illegal and has ordered them reinstated. What is important about this ruling, as I have indicated in the past, is that it explicitly means that Trump cannot fire a sitting governor of the Federal Reserve, including chairman Jerome Powell. Just like at the Fed, the members of the NCUA Board are appointed by the president and confirmed by the Senate to fixed terms – in the case of NCUA 6 years. I was appointed by President Carter to the first NCUA Board created by a congressional act – the Financial Institutions Act of 1978. Ali wrote in his opinion “The overlap in powers wielded by the NCUA Board and the Federal Reserve, and their common role as financial regulators, supports the conclusion that Congress can insulate NCUA Board members from at-will removal.”

The administration had argued that Trump had the authority to fire the appointees and the courts had no authority to order their reinstatement. Although Trump had fired other appointees and those firings have been upheld by the courts, NCUA was the only agency structured like the Fed with congressional granting of independence from the White House. Maybe this will end Trump’s incessant whining about threatening to fire Jerome Powell. One can only hope.

Prior to the establishment of the NCUA Board, the agency was governed by a single administrator that served at the pleasure of the president. Harper, ironically was appointed by Trump in 2017 to an unexpired term and named chairman by Biden in 2021. Harper’s term as a board member expires in 2027 while Otsuka’s term expires in 2029. When Trump was elected, Harper stepped down as chairman but kept his seat as a board member. Trump then appointed the republican member Kyle Hauptman as chairman. What is interesting is that the NCUA Board has generally had two members of the same party as the president. Since both Harper and Otsuka are democrats it may be that Trump would then try to fire only one of them and appoint a republican arguing to be following the intent of the congress.

The Justice Department may not appeal to the Supreme Court given its earlier ruling regarding the Fed. Perhaps the only recourse is for the president to urge congress to re-write the laws governing appointments to independent agencies like the Fed and NCUA. However, the likelihood of passage is slim given the senate filibuster. So sorry Mr President but nice try.