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An ongoing legal challenge filed by former NCUA Board members Todd Harper and Tanya Otsuka continues to escalate, raising broad constitutional questions about the limits of presidential authority and the independence of federal financial regulators.
The lawsuit, filed in April, contends that President Donald Trump unlawfully removed Harper and Otsuka, both Senate-confirmed members, from their positions on the three-member board of the NCUA without cause, leaving Chairman Kyle Hauptman as the sole board member.
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“The government hasn't yet responded to our lawsuit, so we don't know which argument they will make,” said Vincent Levy, an attorney with Holwell Shuster & Goldberg LLP, who represents Harper and Otsuka.
In an interview with CU Times Monday, Levy said the case rests on both statutory interpretation and constitutional precedent. “Basically you have a Supreme Court decision endorsing multi-member boards with staggered terms that are nonpartisan experts, and saying that it’s constitutional to have those boards and the members of those boards removable only for cause,” Levy explained, referring to the 1935 Humphrey’s Executor decision.
Congress adopted that same structure when reforming the NCUA Board in 1978, eliminating language that had previously allowed the administrator to serve at the pleasure of the president. “That was removed,” Levy noted.
He warned that the implications go beyond credit unions. He said the same functioning principles governing the NCUA apply with other federal agencies “like the FDIC and the Fed. The independence of these governing bodies is viewed as particularly important... not just for the NCUA, not just for the credit union industry, but for the broader economy and government.”
Levy added, “The way I see it is that the president is removing all these officers to get Humphrey’s Executor and those authorities overturned.”
Humphrey’s Executor v. United States (1935) is a landmark U.S. Supreme Court case that upheld limits on a president’s ability to remove certain federal officials. Specifically, the Court ruled that Congress can create independent agencies whose leaders cannot be fired by the president without cause (such as inefficiency, neglect of duty or malfeasance), protecting these agencies from political interference. The case involved President Franklin D. Roosevelt’s attempt to fire a commissioner of the Federal Trade Commission simply because of policy disagreements. The Court said this violated the law because the FTC was intended to be independent.
In their lawsuit, Harper and Otsuka cited Humphrey’s Executor to argue that President Trump’s firing of them from the NCUA Board was illegal. Like the FTC in Humphrey’s Executor, the NCUA Board is an independent regulatory body created by Congress. Board members serve staggered terms and can only be removed "for cause" and not merely because of political disagreements. Harper and Otsuka argued that their sudden termination without cause violates the statutory protections Congress set up to preserve the NCUA’s independence, and undermines trust in the financial regulatory system.
The government’s response is due May 7. “We’ll just have to see how things play out,” Levy said.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
