NY Credit Union Association Chief Says Taxi CUs Followed Federal Rules
“... we have no reason to believe these credit unions operated outside the boundaries of state and federal regulations.”
New York credit unions with heavy concentration of taxi loans operated within federal regulations and their members were devastated by new and unforeseen technology that placed them at a competitive disadvantage, the president/CEO of the New York Credit Union Association said Wednesday.
In a letter to Senate Majority Leader Charles Schumer, William Mellin asked the senator to examine all the causes of the taxi loan debacle and not just focus on credit unions that made the loans. He blamed city taxi regulators for much of the financial crisis facing the taxi industry and the credit unions that served them.
Schumer, in a letter to NCUA Chairman Rodney Hood, charged that lax oversight led to the problems highlighted in a New York Times series that reported that the NCUA and others allowed credit unions to make predatory loans to taxi medallion owners who might not be aware of the risks.
In his letter, Mellin said that he was “troubled” by the Times series but said that the taxi industry was disrupted by an innovative competitor—ride-hailing companies such as Uber and Lyft.
“Had New York City subjected these tech companies to the same or similar licensing and financial requirements as the city’s taxis, medallion owners and lenders would likely be far better off than they are today,” Mellin wrote.
He added that four credit unions made most of the loans, adding that those four have been merged into well-performing credit unions.
“It’s important to note that in spite of these losses, we have no reason to believe these credit unions operated outside the boundaries of state and federal regulations,” he wrote.
Mellin said that several credit unions are working with members who took out loans with taxi medallions as collateral are attempting to modify their loans, reducing monthly payments and extending the length of the loans.
The NCUA’s Inspector General reported earlier this year that losses at two of the credit unions—Melrose Credit Union and LOMTO Federal Credit Union—could have been mitigated if examiners had identified problems at the institutions earlier.