WASHINGTON—On Tuesday, President Donald Trump signed a broad executive order placing independent agencies under White House control—a move that significantly expands his authority but is expected to face substantial legal challenges.
If the order survives legal challenges, it could be the first step in moving to merge NCUA into the Treasury Department and could also impact the balance of state and federally chartered CUs, one former NCUA chairman believes.
This action marks Trump’s latest effort to extend presidential power beyond the limits observed by previous administrations.
In the order Trump states:
“The United States Government spends too much money on programs, contracts, and grants that do not promote the interests of the American people. For too long, taxpayers have subsidized ideological projects overseas and domestic organizations engaged in actions that undermine the national interest. The American people have seen their tax dollars used to fund the passion projects of unelected bureaucrats rather than to advance the national interest. The American people have a right to see how the Federal Government has wasted their hard-earned wages.
“I therefore direct the heads of executive departments and agencies (agencies) to take all appropriate actions to make public, to the maximum extent permitted by law and as the heads of agencies deem appropriate to promote the policies of my Administration, the complete details of every terminated program, cancelled contract, terminated grant, or any other discontinued obligation of Federal funds. Agencies shall ensure that such publication occurs in accordance with all applicable laws, regulations, and the terms and conditions of the underlying contract, grant, or other award.
America’s Credit Unions pointed out, “Of utmost importance to credit unions, the order clarifies that the president by and through the attorney general is the final arbiter of legal interpretations of statutes agencies follow. This could impact interpretations of the Federal Credit Union Act, including preemption.”
ACU also said the order also calls for the director of the Office of Management and Budget on an ongoing basis to:
- Review independent regulatory agencies' obligations for consistency with the president's policies and priorities
- Consult with independent regulatory agency chairmen and adjust such agencies' apportionments by activity, function, project, or object, as necessary and appropriate
Legal Battles Brewing
“Should this executive order survive legal scrutiny by the courts, it would change the rulemaking and interpretive legal process dramatically. While we are already living in a post-Chevron world where agencies are given little deference to how they interpret statutes, this would be a totally new era linking agency action to the sitting president,” said Carrie Hunt, chief advocacy officer at America’s Credit Unions.
NCUA rules would still have to be agreed to by the full NCUA board, ACU noted.
The Defense Credit Union Council responded, saying it is monitoring the situation and analyzing the order’s impact on the NCUA and its member credit unions.
“We expect this issue will be heard by the courts and await their actions. Regardless, DCUC has long advocated for a strong and independent NCUA and will continue to do so moving forward,” said DCUC Chief Advocacy Officer Jason Stverak.
Washington credit union advocate John McKechnie said that on the surface the President’s order is "seismic."
"It takes away any appearances of independence at federal agencies such as NCUA, and the White House will have significant control over policy in the future," McKechine told CUToday.info. "But I also would caution against over-interpretation. In the past, presidents have had practical influence over all independent regulators, including NCUA. A president has, in most instances, nominated their choices for regulatory boards who align with his policies, and those regulators have carried out his agenda. There are also regulations that have to undergo OMB review. No agency is an island already. No question this will make them less so."
NCUA Merged Into Treasury?
Former NCUA Chairman Michael Fryzel told CUToday.info that President Trump’s order would have a major impact on the regulation of federally chartered and federally insured credit unions.
"Existing and any proposed regulations will be reviewed by the Office of Information and Regulatory Affairs for substance and Office of Management and Budget for costs," Fryzel explained. "Current and proposed regulations will be reviewed to determine if they are in line with the President's position on government regulation. Existing ones could be changed or eliminated and any suggested new ones, not moved forward."
Fryzel said the order is consistent with previous ones impacting other financial regulators, and could be the first step in moving to merge NCUA into the Treasury Department.
"State regulators need to monitor the implementation of the order, as it could lead to numerous conversions of credit unions from federal to state charter as well as from federally to privately insured," Fryzel said. "As the President has repeatedly said, he was elected to change the way things were being done. His order impacting credit unions is another step in that direction."
Another former NCUA Chairman, Dennis Dollar, sees a legal battle ahead.
“There is no doubt this will be litigated, as integral to the congressional designation in the law of an independent agency is that it has a bipartisan board and is not tied to any administration or political party," stated the Dollar Associates principal. "That’s what independent was designed to mean when Congress set up those agencies in the law. That said, President Trump is obviously pushing back on that historical designation as he is on a wide range of governmental precedents and longstanding interpretations.
"His intention seems to be to use the mandate of his election in order to change government as we know it," Dollar continued. "That is not necessarily a bad exercise for our extremely bloated federal government to go through from time to time. There will be give and take as always in Washington, but challenges to the status quo can be healthy and hopefully bring about better government once things settle in. That is, of course, to be seen."
Dollar said the courts will work this matter out, "Or else Congress will clarify just how independent the independent agencies will be going forward. In the meantime, his order on regulatory pre-submission of any proposed rules to his ORA will have an impact on new rules until the courts decide on this or Congress acts. After four years of regulatory activism under the Biden administration, this will slow down that activism dramatically, even at agencies like NCUA that still has a Democrat majority board, or at the CFPB, whose staff is almost entirely Biden administration holdovers.”