Former Democratic NCUA Board Members File Lawsuit Against Trump Administration for Dismissals

April 29, 2025 TruthUSA

The legal dispute surrounding Trump’s dismissals could influence future conflicts regarding the independence of the NCUA, Federal Reserve, and other regulatory agencies.

Two high-ranking financial regulators dismissed by President Donald Trump launched a lawsuit on Monday seeking their reinstatement. They contend that their sudden terminations from the National Credit Union Administration (NCUA) Board breached federal law and the U.S. Constitution.

Todd Harper and Tanya Otsuka, both Democrats confirmed by the Senate for fixed terms on the NCUA Board, claimed in a 12-page complaint filed on April 28 in the U.S. District Court for the District of Columbia that Trump’s actions were “clearly unlawful” and left the federal credit union regulator without a quorum, thereby hindering its policymaking capabilities.

Their lawsuit argues that Trump lacks the authority to remove board members of independent agencies without cause, a safeguard established by the Federal Credit Union Act and acknowledged by decades of Supreme Court rulings. They asserted that the terminations, delivered in nearly identical emails on April 15 without any reasoning, contravened this legal framework.

“The one-sentence emails sent simultaneously to both Mr. Harper and Ms. Otsuka do not provide any rationale for their dismissal and do not attempt to justify a basis for cause. Nor can they,” the plaintiffs stated in their complaint, which defends their records and characterizes their dismissal as an act beyond the president’s authority.

The plaintiffs seek declaratory and injunctive relief to affirm their continued service, prevent federal officials from deeming their positions as vacant, and restore the board’s operational capacity.

The Epoch Times has contacted the Justice Department, which represents the defendants in this case, for comments.

White House spokesperson Karoline Leavitt defended the dismissals, stating that Trump “reserves the right to fire anyone he wants” within the executive branch.

After the firings, only Chairman Kyle Hauptman, a Republican, remains. The NCUA stated in a press release on April 18 that it can continue to perform all operational and statutory functions without a second board member, contesting claims made in the lawsuit regarding an alleged lack of quorum hampering the NCUA’s operations.

“The NCUA has always maintained that a single Board Member constitutes a quorum when no other Board Members are present,” the NCUA explained. “Chairman Hauptman and the leadership of the NCUA possess the necessary authorities to continue moving forward with the Administration’s priorities and our mission.”

“Together, we will ensure that America’s credit unions remain safe and sound, eliminate unnecessary regulatory barriers to their growth, and provide top-notch service to the public,” the NCUA added.

Harper and Otsuka are not the sole board members dismissed by Trump. Earlier this year, he terminated a Democratic member of the National Labor Relations Board in January and two Democratic commissioners at the Federal Trade Commission in March—decisions now under judicial review.

The dismissals of Harper, Otsuka, and other officials have raised concerns among consumer rights advocates, Democratic lawmakers, and financial analysts who warn that Trump’s actions could signal a broader effort to displace other independent financial regulators—including Federal Reserve Chair Jerome Powell, whose term extends until May 2026.

During his initial term, Trump frequently criticized Powell for interest rate policy and considered ways to dismiss him but ultimately refrained after legal advisors cautioned him about potential challenges. Analysts believe that these recent removals at the NCUA and other agencies suggest Trump may be laying the groundwork for a wider overhaul of financial regulatory authorities.

“The President seems to be moving closer to justifying the removal of Democrats from the Federal Reserve Board. By dismissing the two Democrats from the credit union regulator, he is creating a precedent allowing him total discretion over financial regulators, potentially including the Federal Reserve,” stated Jaret Seiberg, an analyst with TD Cowen Research Group, in a report.

In a statement, Adam Rust, director of financial services for the Consumer Federation of America, condemned the terminations of Harper and Otsuka as an example of “partisan politics” that jeopardizes the NCUA’s ability to meet the needs of over 142 million individuals and small businesses who trust credit unions with their finances.

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