The U.S. District Court for the District of Columbia. Credit: Diego M. Radzinschi/ALM
Former NCUA Board Members Todd Harper and Tanya Otsuka filed a lawsuit this week challenging their removal by President Donald Trump, calling it an unlawful breach of statutory protections designed to safeguard the independence of federal financial regulators.
In the complaint, filed in U.S. District Court, Harper and Otsuka argued their terminations violate the Federal Credit Union Act, which provides fixed six-year terms for Board members and allows removal only for cause. "The decision of the White House to fire me before the completion of my term is wrong," Harper said. "It violates the bipartisan statutory framework adopted by Congress to protect credit union members and their deposits."
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The lawsuit seeks declaratory and injunctive relief, asking the court to reinstate them to their positions, restore lost wages and block agency actions taken without a quorum. Their removal left only one Board member, Chairman Kyle Hauptman, raising governance concerns about the NCUA's ability to lawfully conduct business.
"Congress created the NCUA Board to be independent, because whether your money is safe in a credit union shouldn’t have anything to do with politics," Otsuka said in a statement. "Weakening financial watchdogs like the NCUA puts people’s money at risk and makes it harder and more expensive to pay your bills, start a new business, or buy a home."
Vincent Levy, a partner at Holwell Shuster & Goldberg LLP representing the former Board members, emphasized the broader stakes: "The termination of Todd Harper and Tanya Otsuka from the NCUA Board violates Congress’s intent in creating an independent financial regulator. This lawsuit seeks to vindicate Congress’s intent and to preserve the integrity of the financial markets."
Harper, first appointed by Trump in 2019 and later confirmed to a full term under President Biden, and Otsuka, confirmed in 2023, were both serving terms not set to expire until 2027 and 2029, respectively. Their lawsuit argued that removing Board members without cause threatens the stability Congress intended when it established staggered, protected terms for regulators overseeing trillions in deposits.
"Our failure to take these actions could pave the way to the consolidated regulation of credit unions and banks and lead to the demise of our nation’s vibrant credit union movement," Harper warned.
The case could have significant implications not only for the NCUA but for the independence of federal financial regulators across the government.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
