Days after a federal court ruled their removals from the National Credit Union Administration Board unlawful, board members Todd Harper and Tanya Otsuka returned for the July NCUA board meeting held last Thursday.
In April, President Trump abruptly dismissed Harper and Otsuka without cause and without fanfare, via email. Since then, the two board members filed a lawsuit against the President for unlawful removal, a case they won initially when U.S. District Judge Amir H. Ali ruled in their favor on July 22nd.
In the Opinion, Ali referenced the history of the NCUA’s switch from a single Administrator to a formal, governing board structure in 1978, and how “Congress removed the statutory text saying that agency leadership served ‘at the pleasure of the President.'” In Ali’s opinion, Congress restricted the President’s authority to fire NCUA board members, resulting in their reinstatement.
Later that same day, President Trump’s administration filed an appeal on the decision, asking for an immediate stay on their reinstatement. However, the court ruled that they could resume their duties, including attending the July 24 board meeting. On July 25, the federal appeals court granted an immediate stay on their reinstatement, once again keeping them off the board while the appeals process plays out.
America’s Credit Unions CEO Jim Nussle said the trade group “firmly supports a fully staffed, three-member NCUA board, so the agency can effectively fulfill its independent oversight missions,” in a statement posted on LinkedIn. “We respect the judicial process and will continue to closely monitor the appeals proceedings as they move forward.”
Still, the back-and-forth process leaves a great deal of uncertainty for credit unions and what to expect moving forward, especially as NCUA Board Chair Kyle Hauptman’s term ends soon.
Board briefed on AI and CLF
The board meeting marked the first in months with Hauptman, Otsuka, and Harper in attendance, the latter attending virtually from Georgia. Joked Harper of the circumstances, “It’s been three months, did I miss anything?”
On the matters at hand, Acting Director of the Office of Examination and Insurance Amanda Parkhill and Director of the Office of Business Innovation and Acting Chief Information Officer Amber Gravius provided a briefing to the Board on the use case for artificial intelligence within the industry and the risks associated.
“There’s a lot we’re still learning about AI use at financial institutions. As it continues to evolve and mature, we too must evolve along with it,” said Hauptman. “Credit unions have long been early adapters of innovative technology and are already using AI to increase efficiencies and enhance customer service. We want to know more about these use cases and the ways the NCUA can provide stronger regulatory and supervisory clarity so that credit unions can operate in a safe and sound manner while using artificial intelligence.”
That said, NCUA also said that any new requirements would need to go through the formal rulemaking process.
The Board received a report from the NCUA Ombudsman Shameka Sutton on its programs and survey results. And lastly, President of the Central Liquidity Facility (CLF) Anthony Cappetta provided a report on the CLF, the credit union-designed liquidity lender.
As the meeting concluded, Otsuka expressed her gratitude for being back (however briefly), citing the importance of the credit union industry and a strong, independent agency that “focuses on the long-term safety and stability of our financial system.”
“We need to get back to work with a full NCUA Board. Our reinstatement on the NCUA Board is important for the millions of people who trust federally-insured credit unions with their hard-earned money, and it’s also important for our entire financial system. Independent financial regulators are key to making sure we have confidence and stability in our markets and economy,” Otsuka concluded.
