The legal challenge to Trump’s dismissals could shape future battles over independence of the NCUA, Federal Reserve, and other agencies.
Two senior financial regulators ousted by President Donald Trump filed suit Monday seeking reinstatement, arguing that their abrupt firings from the National Credit Union Administration (NCUA) Board violated federal law and the U.S. Constitution.
Todd Harper and Tanya Otsuka, both Democrats confirmed by the Senate to fixed terms on the NCUA Board, alleged 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 “patently unlawful” and left the federal credit union regulator without a quorum, paralyzing its policymaking authority.
According to their lawsuit, Trump cannot remove independent agency board members without cause, a protection embedded in the Federal Credit Union Act and recognized by decades of Supreme Court precedent. Harper and Otsuka alleged that the terminations, delivered via near-identical emails on April 15 with no stated reason, violated that framework.
“The identical, one-sentence emails sent to both Mr. Harper and Ms. Otsuka at the same time on the same day say nothing about the reasons for the termination, and do not attempt to assert a basis for cause. Nor could they,” the pair wrote in their complaint, which defends their record and describes their firing as an act done outside presidential authority.
The plaintiffs are seeking declaratory and injunctive relief that would recognize their ongoing service, block federal officials from treating their positions as vacant, and restore the board’s ability to function.
The Epoch Times has reached out to the Justice Department, which is representing the defendants in the case, with a request for comment.
White House spokesperson Karoline Leavitt has defended the dismissals, saying that Trump “reserves the right to fire anyone he wants” within the executive branch.
Following the firings, only Chairman Kyle Hauptman, a Republican, remains. The NCUA said in an April 18 statement that it can continue to perform all operational and statutory requirements without a second board member, disputing the allegations raised in the lawsuit that the alleged lack of a quorum has paralyzed the NCUA’s ability to operate.
“It is the NCUA’s long-held view that a single Board Member constitutes a quorum when there are no other Board Members,“ the NCUA stated. ”Chairman Hauptman and NCUA’s leadership are equipped with the required authorities to continue implementing the Administration’s priorities and fulfilling our mission.”
“Together, we will ensure America’s credit unions are safe and sound, address any unnecessary regulatory barriers to their prosperity, and provide excellent service to the public,” the NCUA added.
Harper and Otsuka are not the first sitting board members removed by Trump. Earlier this year, 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—actions that are now being challenged in court.
The firings of Harper and Otsuka and other have raised alarm among some consumer rights advocates, Democratic lawmakers, and financial analysts, who have warned that Trump’s moves could foreshadow a broader effort to remove other independent financial regulators—including Federal Reserve Chair Jerome Powell, whose term as Fed chair runs until May 2026.
During his first term, Trump frequently criticized Powell over interest rate policy and explored ways to remove him, but ultimately refrained after legal advisers warned of likely legal challenges. With the removals at the NCUA and other agencies, analysts say Trump may now be laying the groundwork for a broader reshaping of financial regulatory bodies.
“The President appears to be moving closer to justifying removal of Democrats on the Federal Reserve Board. By firing the two Democrats from the credit union regulator, the president is establishing the precedent that he has total discretion over financial regulators, which could include the Federal Reserve,” Jaret Seiberg, an analyst with TD Cowen Research Group, wrote in a report.
In a statement, Adam Rust, director of financial services for the Consumer Federation of America, criticized the termination of Harper and Otsuka as a takeover by “partisan politics” that “compromises the ability of the NCUA to fulfill its obligation to serve the needs of 142 million individuals and small businesses who have entrusted credit unions with their hard-earned money.”