It's been almost a year since NCUA Board Members Todd Harper and Tanya Otsuka were fired because they were Democrats. With this action, the NCUA joined the long list of independent agencies from which Democratic board members were removed; actions that, it is argued, clearly violate existing statutes and potentially the Constitution.
Almost a year later, credit unions are once again stuck in the back seat of a top-down convertible going through the car wash – much like the aftermath of the Mortgage Meltdown. When it comes to the existential debates taking place over the extent of Presidential power, the appropriate regulation of digital currencies and the role that non-depository institutions should play in our financial system, credit unions are an afterthought; yet the industry will bear the brunt of these policy changes.
The only thing we know for sure is that in the coming months we will see some of the most dramatic policy shifts since the creation of federal credit unions during the heart of the Great Depression.
Here is a list of the most important questions facing the industry that may get answered in the coming months.
1. Are independent agencies unconstitutional?
Officially, we still do not know the answer to this question. Then again, by the same standard, I can't be 100% certain that the sun will rise in the East tomorrow. However, if the questions and past statements of six Supreme Court justices are any indication, the answer is yes. As a result, the removal of Harper and Otsuka will most likely be upheld as a constitutionally authorized response to an unlawful statutory framework, handing President Trump and future Presidents an amount of power that Congress never intended them to have.
In the short term, credit unions will continue to enjoy the benefits of conservative board members like Kyle Hauptman, who see the NCUA's primary obligation as cutting back on overly prescriptive regulations while continuing to emphasize safety and soundness. But under the new rules of the game, what one President gives, another one can take away. So much for regulatory consistency.
2. Can one person constitute a quorum on the NCUA Board?
Currently, the NCUA is being run by a single board member. The question is whether this is legal. 12 U.S.C.A. § 1752a (West) provides that a majority of the Board constitutes a quorum. As a matter of basic logic, how can one person constitute both a board and a majority of that board for rulemaking purposes? The statute further provides that the Chairman is responsible for directing the implementation of policies adopted by the Board.
Although reasonable minds can differ, it is questionable whether a quorum can consist of a single individual on a three-person board. As argued in this Bloomberg opinion piece, "Congress created certain agencies as multimember bodies to ensure deliberation and the consideration of multiple viewpoints – goals that quorum rules promote."
It is possible we will never receive a definitive legal answer. If so, a three-person board could effectively disappear through noncompliance. Why would a President put three people in charge of following his directives when he can simply hold one person accountable?
Alternatively, if a one-person board is successfully challenged, it raises questions about actions taken by the NCUA for the past year. The longer the NCUA continues with a single board member, the more it is forced to fit a square peg into a round hole.
3. What is the obligation of the Executive Branch to fund agencies it doesn't like?
For many credit unions, there may be a certain satisfaction in watching the curtailment of the CFPB. But the broader implications should not be underestimated. While Acting Director Russell Vought has not claimed the authority to formally close the CFPB, he has openly sought to reduce its staff and limit its activities to only those explicitly mandated by statute.
The creation of the CFPB was the culmination of a major legislative initiative. If the Executive Branch can effectively neutralize an agency created by Congress, what prevents a future President from taking similar action against other agencies?
It may be a long shot, but under this theory of executive power, a President could determine that maintaining a separate regulator for credit unions is unnecessary and seek to starve the agency of funding – or use that threat to force structural reforms.
4. How much are federal credit unions shielded from state laws?
When Treasury Secretary Salmon Chase shepherded the National Bank Act through Congress during the Civil War, one of his primary goals was to standardize currency and incentivize state banks to adopt federal charters. A key component of that framework was ensuring that states could not impose inconsistent regulatory burdens on federally chartered institutions. Courts developed strong presumptions against the application of certain state laws to national banks.
The Federal Credit Union Act, enacted in 1934, had different priorities, primarily expanding access to financial services during a time of economic hardship and discrimination. Nevertheless, credit unions have historically argued that federal credit unions enjoy similar preemption protections as national banks.
That assumption is now being tested in Ill. Bankers Ass'n v. Raoul (2026), currently on appeal to the Court of Appeals for the Seventh Circuit. The case involves Illinois legislation requiring financial institutions to exclude taxes and tips when calculating interchange fees and to reimburse merchants for overcharges.
Even if robust preemption wasn't at stake, the case would be extremely important. If the legislation is upheld, expect similar measures to be introduced in a state legislature near you quicker than you can say interchange fees. But add on the fact that many of the approximately 2,686 federally chartered credit unions operate under the belief that they are largely exempt from state-level regulation, particularly in states like California, New York and Illinois, and this becomes an even bigger deal.
In a worst-case scenario, if the Seventh Circuit upholds the lower court's ruling, credit unions could face widespread compliance obligations previously thought inapplicable. Meanwhile, national banks would continue to benefit from broader preemption, potentially placing credit unions at a structural disadvantage that would require legislative correction.
5. Are open banking regulations ever going to take effect?
One of the CFPB's final major actions before the transition in administration was to finalize regulations requiring financial institutions to enable third-party access to account information – without charge – when authorized by the member.
Why does this matter? Because this type of data portability is inevitable. In the smartphone era, consumers expect seamless access to their financial information. It simplifies everything from estate planning to auto purchases to mortgage applications. It is also a top priority for the fintech sector.
However, the timing and final form of these requirements remain uncertain. In a status report filed with a federal district court, the CFPB indicated it would issue an interim final rule, but none has yet been released. While this may be a delay tactic, the broader trend toward data portability is unmistakable.
At some point – whether under a new administration or congressional pressure – these requirements will become law. Without a strategy to retain members, a credit union risks becoming little more than a passive holder of funds while fintechs capture the customer relationship.
6. What role can credit unions play in digital innovation?
If circumstances were different, the most pressing issue might be the rise of stablecoins and their impact on financial services. The passage of the GENIUS Act reflects bipartisan support for stablecoins, and Chairman Hauptman has made clear that ensuring NCUA readiness is a priority.
But there are far more questions than answers. Will consumers demand access to stablecoins? Will smaller credit unions be able to compete – perhaps by collaborating or offering ancillary services such as the safekeeping of digital credentials? Or will digital currencies ultimately introduce systemic risks without delivering meaningful benefits?
Only time will tell.
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