President Donald Trump has fired Todd Harper and Tanya Otsuka, the National Credit Union Administration’s two Democratic board members, the ousted regulators confirmed Wednesday.
The move arguably neutralizes the NCUA board, which has just one remaining member, Republican Chair Kyle Hauptman. The NCUA can still perform its supervisory and enforcement duties, America’s Credit Union, a credit union-focused trade group, said in a post Thursday. But without a quorum of two members, the board cannot vote to implement any policy changes or approve new enforcement actions.
An NCUA board meeting, originally set for Thursday, was canceled.
Harper, who served as NCUA board chair throughout former President Joe Biden’s term, called his removal “wrong,” in a Wednesday post on LinkedIn.
“This ill-conceived and politically motivated decision to fire me before the end of my term upsets [an] important regulatory balance and will harm consumers,” Harper wrote, adding that bipartisanship “leads to better and measured policymaking.”
“Today is a sad day for our country and the credit union system,” Harper said.
Harper’s term wasn’t set to expire until April 2027. Trump nominated him to serve on the NCUA board in 2019. He ascended to chair in 2021 and returned to his board seat in January, when Hauptman assumed the leadership role.
Otsuka, whom the Senate confirmed to an NCUA board seat in 2023, was set to serve until August 2029.
“Last night, President Trump informed me by email that my ‘position on the National Credit Union Administration is terminated, effective immediately,'” Otsuka said in a Wednesday statement. “This is yet another attempt to undermine the rule of law and blatantly ignore Congress and our democratic values.”
White House spokesperson Karoline Leavitt, however, defended Harper and Otsuka’s removal.
“President Trump is the chief executive of the executive branch and reserves the right to fire anyone he wants,” Leavitt said in a statement.
What this means for regulators
The removals stand to serve as a testing ground for how Trump may approach other regulatory agencies governed by bipartisan boards – namely, the Federal Reserve.
“The President appears to be moving closer to justifying removal of Democrats on the Federal Reserve Board,” Jaret Seiberg, an analyst at TD Cowen, wrote Wednesday in a note. “By firing the two Democrats from the credit union regulator, the President is establishing the precedent that he has total discretion over financial regulators.”
Aaron Klein, a senior fellow at the Brookings Institution, said Trump isn’t limiting his sights on Democrats at the Fed.
“This is a prelude to them firing Jay Powell,” Klein told American Banker, referring to the central bank’s Republican chair. “If they can fire any Senate-confirmed, previously-considered-independent regulator, they can fire them all.”
Powell and Trump have had a tempestuous working relationship – with the president, during his first term, openly advocating for Powell’s firing.
“Not permitted under the law,” Powell said in November, after Trump’s reelection, in response to a reporter’s question on the subject. Powell, at the time, also said he would not resign if Trump were to ask.
Trump resumed his anti-Powell rhetoric Thursday in a post on Truth Social, saying the central bank chair’s “termination cannot come fast enough!”
“The [European Central Bank] is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’” Trump wrote. “Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now.”
Powell has long championed the Fed’s independence from presidential influence, yet Trump has been steadfast in using all manner of media outlets to make his opinions known on policy matters.
Others ousted
Harper and Otsuka are not the first sitting board members at government agencies to be ousted by Trump. The president fired a Democratic member of the National Labor Relations Board in January and two Democratic commissioners at the Federal Trade Commission in March. Both matters are being challenged in court.
Powell, in response to a reporter’s question Wednesday, said he didn’t think the NLRB case would apply to the Fed.
“It’s a situation that we’re monitoring carefully,” he said, according to Reuters.
At risk, potentially, are board seats reserved for any regulator aligned with Democrats. The Federal Deposit Insurance Corp. board, for example, typically operates with three majority-party members and two in the minority. As of now, the board has no Democrats: Recent Vice Chair Travis Hill has become acting chair, and the Office of the Comptroller of the Currency and Consumer Financial Protection Bureau, whose leaders hold FDIC board seats, have switched to Republican control. The vice chair role is vacant, as is the fifth board seat, once filled by Jonathan McKernan, Trump’s nominee to lead the CFPB on a permanent basis.
The NCUA board firings raised an alarm among consumer advocates.
“The president can’t just fire people the Congress confirmed for years-long terms,” Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said in a statement Wednesday. “The Constitution isn’t a set of suggestions. It’s a framework for responsible government built on co-equal branches with carefully balanced responsibilities and interwoven accountability.”
Todd Phillips, a law professor at Georgia State University and former FDIC attorney, also cited the Constitution in comments to Bloomberg.
“The president’s authority to remove officials is grounded in the Constitution’s requirement that ‘he shall take Care that the Laws be faithfully executed,’” Phillips said. “Removing two NCUA Board Members stops the agency from being able to enforce the law.”
At the very least, “it certainly means that there won’t be any innovation coming,” David Zaring, a financial regulation professor at the University of Pennsylvania’s Wharton School, told American Banker.
Recognizing a pattern
Sen. Elizabeth Warren, D-MA, in a statement Wednesday, called the NCUA board firings “the latest attempt by Trump to skirt the rule of law, undermine independent agencies, and illegally purge the government of those who work for the American people.”
Adam Rust, director of financial services for the Consumer Federation of America, similarly noted what he saw as Trump’s pattern of testing the law’s boundaries.
“It puts people at risk when partisan politics takes precedence over common sense,” Rust said in a statement.
America’s Credit Unions, in a statement Wednesday, noted it “has consistently supported a strong, independent regulator for our industry.”
“While today’s news brings a bit of uncertainty to the NCUA, credit unions can rest assured that America’s Credit Unions will continue to engage the Trump Administration and Members of Congress on the unique structure and needs of credit unions to ensure the industry can effectively serve its 142 million members and support a thriving national economy,” Jim Nussle, the trade group’s outgoing CEO, said Wednesday.
Harper said his firing “undermines the independence, balance and important work of the NCUA.”
“If a President can fire an NCUA Board member at any time, how will we maintain public trust in our nation’s financial services regulatory system?” he said.
Otsuka, too, called the NCUA’s independence “critical to maintaining confidence and stability in the financial system.”
“I am just the latest public servant the President has attempted to remove,” she said. “I intend to keep fighting for the rule of law and to protect the millions of Americans who put their hard-earned money in credit unions insured by the NCUA.”
