The National Credit Union Administration is tasked with regulating America’s $2.3 trillion credit union industry and providing deposit insurance for the 142 million members of 4,455 federally-insured credit unions. Two weeks ago, the Trump administration fired Tanya Otsuka and Todd Harper, the two Democrats serving on the independent federal agency’s three-person board.

After suing Trump for unlawful termination, Harper is now urging community development credit union leaders to start rallying their own statewide credit union industry groups to defend the independent federal credit union regulator and its bipartisan board.

“The best policy comes from having a broad, disparate group of people coming to the table and bringing their ideas,” Harper told a hotel convention room full of credit union professionals on Tuesday during an impromptu fireside chat with Cathie Mahon, CEO of Inclusiv, a national network of credit unions focused on community development.

“I’m worried that we’re going to lose that in the credit union system and that the credit union system is not going to have a voice and not have an independent agency,” he told the fired-up crowd at the network’s annual convening, hosted in Cleveland this year. “It’s risky, it’s ill advised and it’s imprudent.”

Under the Federal Credit Union Act, the National Credit Union Board must consist of three members, nominated by the President and confirmed by Congress, and no more than two members may come from the same political party. The pair have obtained pro-bono representation for their lawsuit against Trump.

Harper and Otsuka’s unprecedented firing leaves Republican Kyle Hauptman as the sole remaining board member. Harper himself was first appointed to the board by the Trump administration during its first term, before being named board chair under the Biden administration in 2021. His current board term was set to end in 2027; Otsuka’s term was set to end in 2029.

With no ability to meet its legally-mandated two-member quorum, lawmakers and credit union professionals are left asking how the agency will be able to accomplish its mission. But that may be precisely the point.

The costs of regulatory consolidation

The move by the White House to fire Harper and Otsuka is seen as a first step toward consolidating the regulation of credit unions into a single regulatory regime that would also govern federally-insured banks.

Credit union industry voices have been speaking out against such a sweeping change, saying firstly that it would be entirely illegal without passing legislation from Congress to overturn the Federal Credit Union Act, but also that it would spell doom for financial institutions that are, by definition, not-for-profit financial cooperatives — which regulators of primarily for-profit banks would be hard-pressed to understand and regulate appropriately.

As a cautionary tale, the credit union industry has pointed to the aftermath of the Great Financial Crisis more than a decade ago, when Congress eliminated the Office of Thrift Supervision, throwing thousands of smaller and local financial institutions under the regulation of the Office of the Comptroller of the Currency, which by that point had come to focus mainly on larger banks.

“It’s been a process of educating [the Office of the Comptroller of the Currency] about us,” Jill Sung, CEO of Abacus Federal Savings Bank, told Next City in 2021. “Now over the years, because of advocacy, they have more of an understanding of us, and I don’t know whether it’s political or not, but it seems like they don’t want to have that image of being against small banks.”

Harper expressed concern that credit unions, especially the smallest credit unions, which focus on the smallest loans in communities with the least access to any alternatives besides predatory lenders, won’t be able to survive such a tumultuous period of educating for-profit banking regulators about the differences between conventional banks and credit unions.

Although there are roughly equal numbers of conventional banks and credit unions across the country, the average-size conventional bank is about 10 times larger than the average-size credit union.

“Credit unions are often doing the smallest to small business loans, they’re the ones that are making sure that the baker who needs two ovens gets those new ovens, they’re making sure that the pizzeria that had a fire, gets the repaired so that it can reopen,” Harper told Next City.

“If we don’t have credit unions providing that credit to Main Street, we’re going to see those businesses go away.”

Harper had paid his own way to be in Cleveland with Inclusiv, whose members he credited with providing valuable perspective on a wide array of credit union regulatory issues during his time as a board member and previously as a staffer at the National Credit Union Administration.

“It took a lot of courage to come out of the closet, but it was [a decision considered] over many years’ time,” said Harper, who was the first openly-LGBTQ member of the board. “Over a period of two weeks, [making a decision to sue the President] has been a harder decision than coming out of the closet to come forward and do. Because you’re challenging the president of the United States, and you are challenging what is right by the law.”

This post was originally published on Next City.