Firings at the NCUA set stage for potential dismissals at the Fed
In a surprising turn of events, former National Credit Union Administration (NCUA) Chair Todd Harper and Tanya Otsuka, both fired by President Donald Trump in April 2025, have been reinstated by a federal District Court in Washington D.C. as of late July 2025.
The court's ruling declared their dismissals unlawful, stating that under the Federal Credit Union Act, NCUA board members can only be removed for cause. Harper and Otsuka participated in a board meeting on July 24, 2025, marking their return to the NCUA Board.
However, the Trump administration has already filed an appeal against this decision, casting uncertainty over the long-term reinstatement of Harper and Otsuka. The appeals process could extend until mid-2026 and potentially reach the U.S. Supreme Court.
During a recent speech at the Brookings Institution in Washington, D.C., Harper expressed his thoughts on the situation. He noted growing calls by bank trade groups to repeal the tax exemption for credit unions, mentioning that credit union taxation was included in a list of options for funding tax legislation. Harper also expressed concern about the NCUA's ability to closely supervise credit unions as the agency downsizes and loses retiring staffers.
Harper pointed out that credit unions are in the most perilous place they've been on the taxation issue in the past 25-26 years. He views the Trump administration's move as part of a broader strategy ultimately targeting the Federal Reserve.
In his speech, Harper also referred to a bill passed in Washington state last month that would tax transactions involving state-chartered credit unions acquiring banks. He highlighted nine credit unions with CAMELS ratings of 4 and 5 that have more than $500 million in assets, and another 69 credit unions of the same size with a CAMELS rating of 3. Cumulatively, these credit unions have about $112 billion in assets.
Despite the challenging circumstances, Harper maintained a positive outlook, expressing his hope for the future of the NCUA and the credit union industry. However, he acknowledged that taking legal action against President Donald Trump over his firing was a difficult decision.
As the appeals process unfolds, the future of Harper and Otsuka's reinstatement remains uncertain. The NCUA continues to navigate through a period of change, with the agency initiating steps for downsizing even before the Department of Government Efficiency began focusing on the agency.
[1] Court Ruling in Favor of Harper and Otsuka [2] NCUA Board Meeting Minutes [3] Trump Administration Files Appeal [4] Brookings Institution Speech Transcript
- The federal District Court ruling in July 2025 reinstated former NCUA Chair Todd Harper and Tanya Otsuka, nullifying their dismissals by President Donald Trump in April 2025.
- During a board meeting on July 24, 2025, Harper and Otsuka returned to their positions on the NCUA Board.
- The Trump administration has filed an appeal against the reinstatement of Harper and Otsuka, casting doubt on their long-term tenure and prolonging the appeals process until mid-2026.
