Geoff Bacino, CEO, Bacino & Associates
Fired NCUA Board members Tanya Otsuka and Todd Harper filed suit in the US District Court in DC, claiming that their removals were “patently unlawful”. The suit alleges that the Otsuka and Harper firings violated the 1978 Credit Union Modernization Act. Can Otsuka and Harper be successful with their case? Most of the other lawsuits in cases like the NCUA case have been decided in favor of the White House. As mentioned last month, the Supreme Court may be willing to let the firings at other agencies – the Federal Trade Commission, the National Labor Relations Board and the Merit System Protection Board – stand. This would not bode well for the Otsuka and Harper lawsuits.
Harper contends that some of the trade associations have not been vocal in support of the lawsuit. This is the correct reaction on the part of the trade groups. Every group has been supportive of a multi-member Board…but it would not be proper for them to come out in support for specific Board members. There is a need for an independent regulator, but this is apart from the particular person(s) involved. If a trade group contributed to the legal defense fund of an individual, what’s to stop that group from asking for preferential treatment if that individual was in a position to impact their credit unions?
FOR (Friend of the Report) Bruce Jolly offered the following thought on the firings, “While the statute provides for Senate approval of the Board members, it is silent on the removal. In other words, Congress didn’t add a for cause requirement. The Supreme Court seems reluctant to create law not found in the statute.”
There had been an understanding that a sitting Board member could not be re-nominated for a successive term but that was reversed by the Biden Administration when Harper was re-nominated for a second consecutive term in 2021. Might the Trump Administration choose to reinstate just Otsuka and contend that Harper’s renomination was outside the statute?
In agency business, Chairman Kyle Hauptman held a board meeting on May 22nd. Precedent was set for a single board member holding a meeting when former Chairman Dennis Dollar did the same thing in 2002. While the legal question of whether the agency can approve regulations is still undecided, it is important that the Chairman continue the work of the agency.
It appears that the work of that agency will also be accomplished with fewer NCUA employees. At the May Board meeting, it was reported that the agency reached its goal of cutting 20% or around 250 employees. The result will most likely be fewer exams for CAMEL 1 and 2 credit unions and a consolidation of duties for all NCUA employees.