Update 4/28 – 1:40 PM: Jim Nussle, America’s Credit Unions President and CEO said the following: “America’s Credit Unions is closely reviewing the lawsuit filed by former NCUA Board members Todd Harper and Tanya Otsuka challenging their dismissals. Our position remains firm in that credit unions’ federal regulator should be an independent, bipartisan board. As the administration has yet to propose nominations to fill the two current vacancies, we continue to engage the NCUA to gain further insights as to what initiatives or actions Chairman Hauptman will take as a one-member board. Recently, we have seen similar legal challenges across various federal agencies that have experienced similar dismissals. We will continue to act in the best interest of our member credit unions and their 142 million members.”
In an extraordinary legal challenge, former National Credit Union Administration (NCUA) Board Members Todd Harper and Tanya Otsuka filed a lawsuit Monday seeking to overturn what they call unlawful dismissals by former President Trump. The case, filed in the U.S. District Court for the District of Columbia, argues the firings jeopardize the independence Congress designed into federal financial regulation.
The lawsuit comes amid growing scrutiny of turmoil at the NCUA, as the agency faces questions about its future governance and stability.
“You Stand Up and Push Back”
Harper, a former NCUA Chairman, framed the lawsuit as a defense of both credit union consumers and the broader financial system.
“Having grown up in a neighborhood next to Chicago’s industrial East Side, I learned early on that when someone begins a fight, you stand up and push back for what’s right,” Harper said in a statement. “What’s right is protecting consumers and their deposits by maintaining an independent, three-member NCUA Board guided by expert judgment in line with the Federal Credit Union Act’s mandates.”
According to Harper, the unprecedented decision to remove two sitting, Senate-confirmed Board members without cause risks injecting partisanship into financial oversight — and endangers the credit union movement’s mission of serving members of modest means.
No Precedent for Forced NCUA Board Dismissals
The lawsuit hinges on a stark legal reality: there is no precedent for forcibly removing NCUA Board members before their terms expire.
Independent agencies like the NCUA were deliberately structured by Congress to insulate them from political pressure, modeled after organizations like the FDIC and Federal Reserve. Fixed terms and bipartisan membership requirements are meant to preserve stability, even across changing administrations.
“In creating the NCUA, the FDIC, and the Federal Reserve, Congress adopted organizational protections to insulate financial institution regulation and supervision from partisan politics,” Harper said. “Dismantling the system of checks and balances established by Congress…is risky, ill-advised, and imprudent.”
Ongoing political shifts have intensified pressure on the credit union regulator, raising concerns about how future boards may be influenced.
Legal scholars have already noted that dismissing independent board members without cause could run afoul of key Supreme Court precedents, including Humphrey’s Executor v. United States, which protected independent agency officials from at-will presidential removal.
When Dennis Dollar Stood Alone
The NCUA has operated with an incomplete board before — but never under similar circumstances.
In 2001, Dennis Dollar temporarily served as the only NCUA Board member after a series of term expirations and delayed Senate confirmations. However, no members were dismissed during that time. The vacancies arose naturally, and Dollar, acting under emergency authority, openly acknowledged the arrangement was not ideal.
Today’s situation is fundamentally different: Harper and Otsuka were actively removed, not allowed to serve out their Senate-confirmed terms. Their lawsuit aims to prevent such removals from becoming a new, destabilizing norm.
Why the Fight Over the NCUA Board Matters
Beyond the immediate impact on the NCUA, the lawsuit could set a major precedent for all independent federal agencies. Harper warns that without action, credit unions could lose their distinct regulatory identity and face consolidation with banks — undermining decades of financial protection for working-class Americans.
“Credit union members need a strong, independent watchdog,” Harper said. “Our failure to take these actions could pave the way to the demise of our nation’s vibrant credit union movement focused on meeting the credit and savings needs of members, especially those of modest means.”
Meanwhile, credit union leaders are already strategizing around how to adapt to potential regulatory instability, while NCUA staff messages attempt to reassure the industry that oversight remains strong.
The case over the NCUA Board dismissals is likely to move quickly, with potential ripple effects across the entire landscape of U.S. financial oversight.