President Trump had the right to fire two Democratic NCUA board members because federal law affords them no protection from being ousted, the administration argued in federal court.
"Because Congress has not enacted any statutory restrictions on the President's authority to remove NCUA Board Members, they are removable at will," the administration said in a brief filed in the U.S. Court of Appeals for the District of Columbia.
Judge Amir H. Ali, of the U.S. District Court for the District of Columbia held that Harper and Otsuka could only be removed for cause and that Trump had fired them illegally.
Because no stay had been issued by the time of a July meeting, the two participated in that meeting.
After that meeting, the Appeals Court issued a stay, removing Harper and Otsuka from the board while the appeals court considers the case.
The administration contended that Judge Ali erred in adopting an "overbroad" reading of Humphrey's Executor, a 1935 case that afforded FTC commissioners protection from firing at will, arguing that the NCUA wields much more executive power than the 1935 FTC did.
Judge Ali also held that the NCUA must have absolute freedom from executive interference because it is charged with regulating financial institutions. In responding, the administration noted that the Treasury Secretary and the Comptroller of the Currency are removable at will and also have significant responsibilities overseeing financial institutions.
The administration also said that in the past, when principal officers have challenged their removal from office, they have sought legal remedies such as back pay, not reinstatement.
Finally, the administration said that if the government prevails after a review, any actions taken by the NCUA with the plaintiffs as reinstated board members will be called into question, "upsetting expectations and risking placing regulated parties in a whipsaw."
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