Trump fires two board members from credit union regulator, raising fears about the Fed's independence
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President Trump fired the two Democrats on the three-member board of the National Credit Union Administration, which regulates the nation's credit unions.
Why it matters: These latest firings, on the heels of similar dismissals at other agencies believed to be independent, is sparking concern that the Federal Reserve's independence is under threat — a matter of enormous consequence to the stability of financial markets.
- "The President appears to be moving closer to justifying removal of Democrats on the Federal Reserve Board," per a note from TD Cowen Wednesday afternoon.
- "Trump is knocking down independent financial watchdogs like dominoes and the last one in the line is the Federal Reserve," said Emily Peterson-Cassin, corporate power director at Demand Progress Education Fund, a liberal group.
Current Fed chair Jerome Powell's term expires in May 2026. He was appointed by Trump and is a Republican himself. But replacing him is something "we think about ... all the time," Treasury Secretary Scott Bessent told Bloomberg Monday, noting that interviews with candidates to replace Powell will begin as soon as this fall.
- Powell played down the threat to the Fed's political independence during an interview at the Economic Club of Chicago on Wednesday.
- "Generally speaking, Fed independence is very widely understood and supported in Washington — in Congress, where it really matters," he said.
The big picture: NCUA is just the latest regulator with oversight of banks and businesses to be stripped of Democrats.
- "After today's firings, there are no Democrats on the boards for NCUA, the FDIC and the FTC even though all three were designed to be bipartisan commissions. At the SEC, Caroline Crenshaw is the only Democrat remaining. Her term ends in December," per TD Cowen.
Between the lines: Strictly partisan financial regulation is hardly a win for the finance industry.
- "Regulations are better and more likely to be moderate enough to survive elections if they emerge from bipartisan boards," TD Cowen points out.
Zoom in: NCUA board members Tanya Otsuka and Todd Harper, who was appointed by Trump in 2019, were let go Tuesday night.
What they're saying: "The decision of the White House to fire me before the completion of my term is wrong," said Harper in a statement Wednesday on LinkedIn.
- In 2021, President Biden renominated Harper for a full term on the NCUA board; the Senate confirmed his appointment in a bipartisan vote the next year.
- His term was set to expire in April 2027.
The other side: "President Trump is the chief executive of the executive branch and reserves the right to fire anyone he wants," White House press secretary Karoline Leavitt said in an emailed statement.
Editor's note: This article was updated with comments from Fed chair Jerome Powell and with additional information throughout.
