How Does the Recent Supreme Court Ruling on Presidential Removal Power Affect the NCUA?

On June 29, 2026, the Supreme Court’s 6-3 decision in Trump v. Slaughter fundamentally altered the landscape of federal regulatory oversight. By overruling the 90-year-old precedent set in Humphrey’s Executor v. United States (1935), the Court held that “for-cause” removal protections for commissioners at most independent agencies are unconstitutional, as they impermissibly shield executive officers from the President’s oversight. Let us take a look into this complicated issue, as it currently stands, and we will be sticking to the facts and avoiding bias or opinion. Is the NCUA still an independent agency? It depends on how you define independent agency and how much independence you think they should have in contrast to the executive branch that they work for. As it stands though it looks like agencies created to be “independent” of the Executive Branch and the political parties won’t be as independent as they used to be.

For credit union executives, this raises a central question: Does the NCUA remain an independent agency? The short answer is that while the NCUA is still designated as an independent agency by statute, its practical “independence”—in terms of insulation from presidential policy shifts—has been significantly diminished. Because the Court ruled that the President must have the authority to remove leaders of agencies exercising executive power, the NCUA board now operates under a framework where leadership can be replaced at the President’s will rather than only for “inefficiency, neglect of duty, or malfeasance”. While the Federal Reserve maintained its protected status in a companion ruling (Trump v. Cook), the NCUA was not afforded the same unique carve-out, signaling a shift toward closer alignment between agency enforcement priorities and the sitting administration.

The Past

In 1935, the Supreme Court heard the case of Humphrey’s Executor v. United States. After President Hoover appointed Humphrey as a commissioner of the FTC, and he was confirmed by the Senate he later asked for the resignation of Humphrey over their disagreements of Roosevelt’s New Deal policies. Humphrey refused to acquiesce the role and this led to Roosevelt firing him. The FTC Act only allowed the president the authority to remove a commissioner if he can show “inefficiency, neglect of duty, or malfeasance in office.” The case was brought by the executor of Humphrey’s to recover the lost salary since Humphrey had died shortly after the dismissal.

The court was unanimous in its finding that the FTC Act was constitutional and that Humphrey was wrongfully terminated. They went on to state that the Constitution never gave the “illimitable power of removal” to the president of the United States. The case presented by the defense was Myers v. United States (1926) that granted the right of the executive to remove officers that were “units of the executive department”. Justice Sutherland dismissed this and argued that the FTC was a regulatory body created by Congress to perform “quasi-legislative and judicial functions“. So, therefore the precedent established in Myers did not apply in this situation. It would seem that the precedent established in Humphrey also won’t apply in most situations now.

The Core of the Ruling: Trump v. Slaughter

For decades, many independent agencies were structured with “for-cause” removal protections for their board members. This meant the President could only remove a commissioner for “inefficiency, neglect of duty, or malfeasance in office,” rather than for political or policy disagreements.

In Trump v. Slaughter, the Supreme Court ruled 6-3 that these “for-cause” protections for Federal Trade Commission (FTC) commissioners are unconstitutional. The Court concluded that because these agencies exercise executive power, their heads must be subject to the President’s authority to remove them at will. This decision effectively overturns the 1935 Humphrey’s Executor precedent that had long served as the foundation for agency independence.

What This Means for the NCUA

The NCUA was established as an independent agency in 1970, governed by a three-member board appointed by the President and confirmed by the Senate. Like other independent bodies, its board members historically operated under the assumption of insulation from direct political removal.

The Trump v. Slaughter decision also serves as the final legal resolution to the challenges brought by former board members Todd Harper and Tanya Otsuka regarding their April 2025 dismissals. Because their legal arguments for reinstatement relied heavily on the precedent established by Humphrey’s Executor, the Supreme Court’s decision to overturn that precedent effectively closed the window for their return to the board. Consequently, the NCUA enters a new phase of leadership transition, with the industry now focused on the process of confirming new board members to restore full oversight capacity.

Key takeaways for credit union leadership:

• Reduced Insulation: Agencies previously considered “independent” are now more susceptible to changes in leadership following presidential transitions.
• Policy Alignment: You should anticipate that regulatory and enforcement priorities may shift more rapidly in response to new presidential administrations, as agency heads will be more directly aligned with the executive branch.
• Board Stability: While the legal landscape has shifted, the industry continues to advocate for a full, three-person board to ensure consistent oversight and stability for credit unions.

A Note on Exceptional Cases

It is worth noting that the Supreme Court also issued a decision in Trump v. Cook on the same day, which upheld the “for-cause” removal protection for the Federal Reserve. The Court distinguished the Federal Reserve from other agencies based on its “unique historical status and role” within the national economy. However, the Slaughter ruling established a broad standard for most other independent agencies, confirming that the default expectation is now executive control.

Looking Ahead

While this ruling changes the legal relationship between the President and agency leadership, it does not currently change the fundamental regulatory requirements or daily operations for credit unions. The NCUA retains its mission to charter, insure, and supervise credit unions, and your compliance obligations remain in effect. As the administration moves to fill vacancies and the NCUA continues its regulatory work, credit union executives should monitor how these leadership transitions influence the agency’s upcoming supervisory and rulemaking priorities.

Legal Disclaimer

The information provided in this article is for general informational and educational purposes only and does not constitute legal, financial, or regulatory advice. While we strive for accuracy, the legal landscape regarding federal agency oversight is evolving; therefore, this content may not reflect the most current legislative or judicial developments. Readers should not act or refrain from acting based on this content without consulting with qualified professional counsel regarding their specific situation. We disclaim all liability for actions taken or not taken based on any or all the contents of this article.