A US District Court Judge in the District of Columbia has ruled that President Trump’s removal of a sitting member of the Federal Trade Commission (FTC) that had been nominated by President Biden and confirmed by the US Senate was improper and has ordered the FTC Commissioner reinstated.

Rebecca Kelly Slaughter is the FTC Commissioner that had been removed by President Trump.  Her District Court victory in an attempt to be reinstated may or may not have some impact – or at least indication – on what another US District Court Judge may rule on the lawsuit filed seeking reinstatement from their dismissal by former NCUA Board Members Todd Harper and Tanya Otsuka.

The reason the Slaughter ruling may or may not be indicative of what could happen in the Harper-Otsuka legal challenge is twofold.

First, the ruling on the Slaughter FTC case is going to be appealed by the Trump administration.  Even if the ruling is upheld through the Court of Appeals and perhaps even to the US Supreme Court, the appeal process will leave the question up in the air for at least another year possibly.

And who knows what the outcome of the appeals will be.  So, that within itself, leaves the question of any precedent for the Harper-Otsuka lawsuit somewhat in doubt.

Secondly, the FTC statute had language specifying that a FTC Commissioner could only be removed for “inefficiency, neglect of duty or malfeasance” in office.  The Federal Credit Union Act has no such provision establishing criteria for removal from office.

Neither does the Federal Credit Union Act have a provision allowing for removal at all.

So the question will come down to whether, even if the FTC removal of Slaughter is determined on appeal to be improper because the qualifying criteria for removal has not been met, the lack of any specific grounds for removal from an NCUA Board Member position means that the President can remove someone from the NCUA Board at will or if a protection is to be presumed since there is no removal procedure at all.

It will be an interesting legal question.  And it is not yet decided as the FTC case was filed before the NCUA case, and the NCUA case is yet to be decided.

Either way, regardless of the federal District Court ruling on the Harper-Otsuka dismissal when it comes, the certainty of appeal means that the one-member NCUA Board is likely to stay in place for at least the foreseeable future.

Our guess is that Chairman Kyle Hauptman will be the NCUA Board at least through the fall.

The question is whether, with his term expiring in August 2025, he will be allowed by President Trump to remain as the holdover NCUA Chairman until the Harper-Otsuka lawsuit is finalized or if President Trump will nominate a successor to Chairman Hauptman.

There is smart money on both sides of that question.  We will continue to monitor it for you as additional developments occur.  Stay tuned.

Until next time,

Dennis Dollar