Scales of justice on a law book
NCUA Board Members Todd Harper and Tanya Otsuka urged a federal judge Thursday to reject the Department of Justice’s request to delay their court-ordered reinstatement, arguing that such a stay would harm the agency, destabilize the credit union system and contradict more than three centuries of legal precedent limiting executive control over financial regulators.
The filing came two days after the court ruled their April removal by President Trump was unlawful. The DOJ has appealed that ruling and asked for a stay, asserting that the President retains broad authority to remove executive officers unless Congress clearly restricts that power.
Harper and Otsuka’s attorneys countered that the NCUA’s structure, functions and statutory evolution show Congress intended to insulate board members from at-will removal, similar to the protections afforded to the Federal Reserve and FDIC.
Their filing traced the legal foundation for independent financial regulators back to 17th-century England. In 1672, King Charles II triggered a financial crisis by defaulting on loans in what became known as the “Stop of the Exchequer.” The crisis led to reforms ensuring that those overseeing institutions like credit unions, then known as “Friendly Societies," could not be removed without cause. According to the filing, “the monarch’s unfettered control over financial institutions had caused one of the worst financial crises in recorded history.”
That tradition, they noted, was adopted by the Founders and carried forward into the design of modern U.S. institutions like the Federal Reserve and NCUA.
A stay, they argued, would deprive the NCUA Board of a quorum and impair its ability to set key policies, including renewing the 18% interest rate cap for federal credit unions. Internal agency analysis warned that allowing the cap to expire could threaten over 1,100 credit unions.
The court has not yet ruled on the stay motion. Harper and Otsuka returned to the agency this week and participated in Thursday’s board meeting, following their court-ordered reinstatement.
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