Former National Credit Union Administration Director Robert H. Swan was handed a defeat last week in his lawsuit seeking his reinstatement.
Judge Ricardo M. Urbina, writing for the U.S. District Court for the District of Columbia, ruled late Friday that the White House acted lawfully when it ousted Mr. Swan, whose term expired in August.
"The court has carefully reviewed the NCUA statute and has found no express restriction on the President's authority to remove members of the NCUA board," Judge Urbina wrote.
The conflict began April 12 when the White House appointed banking lawyer Yolanda T. Wheat to replace Mr. Swan. The White House used a "recess appointment" to install Ms. Wheat while the Senate was not in session.
Mr. Swan refused to leave and sued President Clinton to reverse his ouster, claiming the administration lacks authority to remove board members of independent agencies.
NCUA Board Chairman Norman E. D'Amours was unavailable to comment because of illness Monday, but in a brief written statement issued Friday, he said: "We are pleased that Mrs. Wheat will remain on the NCUA board."
Observers noted that the court decision contains ample ammunition for an appeal.
For example, the decision does not specifically address Mr. Swan's charge that under NCUA rules, he should not have been discharged until his successor was approved by the Senate.
"This decision is vulnerable to attack for not addressing the very language that Swan hung his hat on," said Ron Glancz, a partner at Washington law firm Venable, Baetjer, Howard & Civiletti.
Mr. Swan's attorney, Richard Willard, said he will meet with his client over the next several days to decide whether to file an appeal.