By Ray Birch
WASHINGTON—A federal judge has ruled that former NCUA board members Todd Harper and Tanya Otsuka were unlawfully removed by President Donald Trump, ordering their immediate reinstatement.
The decision, issued Tuesday by the U.S. District Court for the District of Columbia, marks a significant legal victory for the two former regulators and is widely expected to be appealed to the Supreme Court.
Todd Harper and Tanya Otsuka.
The decision follows last’s week’s ruling by U.S. District Judge Loren AliKhan that President Trump’s removal of Federal Trade Commissioner Rebecca Kelly Slaughter was illegal, which was expected to have an impact on the Harper/Otsuka case.
In his 27-page ruling in the Harper/Otsuka case, U.S. District Judge Amir Ali cautioned that siding with the Trump administration’s argument would set a dangerous precedent—one that could allow a president to remove the Federal Reserve chair without cause.
“The overlap in powers wielded by the NCUA board and the Federal Reserve, and their common role as financial regulators, supports the conclusion that Congress can insulate NCUA board members from at-will removal,” Judge Ali stated.
Brandy Bruyere, partner at Honigman, LLP, told CUToday.info the court focused on legislative history to support the arguments that even though the FCU Act doesn't expressly protect NCUA board members from being terminated without cause, Congress intended this kind of function."For example, 1978 amendments switching from a single administrator to a board deleted language around serving at the President's will," she said. "I expect the government will appeal rather quickly and perhaps ask for a stay of the order to reinstate Harper and Otsuka. The issue of the President's authority to terminate board or commission members of independent federal agencies will ultimately end up before the Supreme Court. I've learned not to play too much fortune telling with outcomes at the Court, but there's a possibility that acts with clear language about removal being limited to cause, like the FTC Act, are distinguished from acts that are silent on the subject like the FCU Act. However, time will tell as these cases continue to work through the appeals process to the Supreme Court."
In a statement sent to CUToday.info, Harper termed the ruling “a real win for the 143 million Americans who rely on the National Credit Union Administration to protect their rights and insure their deposits. It’s also a win for all credit unions by maintaining the agency’s future independence. I look forward to once again working with my fellow board members and the outstanding team at the NCUA to ensure our credit union system and our economy remain safe, stable, sound, secure, and fair.”
Otsuka addressed the win and getting back to work at the agency.
“The court's decision is a victory for the rule of law and the millions of people who use credit unions. I look forward to getting back to work to make sure we have a safe and resilient financial system,” Otsuka said in a statement.
Vincent Levy, partner, Holwell Shuster & Goldberg LLP, which represents the two board members, said, “The Court’s decision today vindicates Congress’s judgment that the independence of financial regulators like the NCUA board is necessary to ensure the stability of our financial markets.”
In mid-April, the White House removed Democrats Harper and Otsuka, leaving Republican Kyle Hauptman as the sole remaining member. The NCUA has a board meeting scheduled for Thursday. However, Bruyere is not confident Harper and Otsuka will be able to attend.
"I do think the government will ask for a similar stay as requested in the Slaughter case, and it seems likely the result will be the same," said Bruyere.
As CUToday.info reported, a U.S. appeals court has temporarily paused a lower court order that had reinstated Democratic Federal Trade Commissioner Rebecca Slaughter, despite the White House's effort to remove her from office.
ACU Comments
"Judge Amir Ali deemed that Todd Harper and Tanya Otsuka’s removal as independent agency members was unlawful and ordered that they be reinstated, similar to other recent decisions in the U.S. District Court of the District of Columbia," said America’s Credit Unions President/CEO Jim Nussle. "America’s Credit Unions has been consistent in our support of an independent, three-person board at the NCUA, and we will know soon whether this matter will be stayed and appealed or if the NCUA will return to business as usual."
Warren Reacts
Elizabeth Warren (D-MA), ranking member of the Senate Banking, Housing, and Urban Affairs Committee, said, "The court’s decision to reinstate the illegally fired Board Members of the NCUA is a win for credit unions, consumers, and our economy. We will keep fighting to make sure the agency can do its job for the American people — and fighting back against the Trump Administration’s lawless actions.”