NCUA Is Refusing to Negotiate With Taxi Drivers Facing Financial Ruin: NYC Mayor

The NCUA is failing to negotiate with beleaguered taxi drivers who borrowed money from credit unions that have been taken over by the agency, New York City Mayor Bill de Blasio charged this morning.

Mayor de Blasio released the findings of a 45-day review of the taxi industry by several city agencies that followed a New York Times investigation that found that many taxi drivers had been victimized by loan brokers who helped them through the loan process.

The report did not recommend, as some city officials had hoped, that New York provide financial assistance to the drivers.

The report details the financial hardships suffered by the taxi drivers, many of whom are immigrants.

In many cases, medallion brokers helped drivers negotiate loan details, but often failed to adequately explain the terms of the loans.

“For current drivers, the largest single issue they face is an unaffordable level of debt,” the report stated. “The average median debt owed by surveyed drivers is approximately $500,000, well above the prices medallions regularly sell for today on the secondary market.”

The report stated that a driver survey found that “credit unions taken over by the NCUA are often the least willing to work with drivers struggling to afford their monthly loan payments.”

NCUA officials had no immediate comment on the report.

By comparison, the report found that a bank, Signature Bank, which had the second-highest percentage of taxi loans, was the most likely to renegotiate driver loans.

Monthly loan payments total between $2,500 and $4,000 a month, the report said, adding that many drivers need assistance in trying to renegotiate their loans.

The value of taxi medallions purchased by drivers has plunged, largely as a result of the growth in ride-sharing services.

Two New York City credit unions, Melrose Credit Union, and LOMTO Federal Credit Union were taken over by the NCUA largely as a result of their heavy investment in taxi medallions. A third, Bay Ridge Federal Credit Union, was involved in an emergency merger.

The agency reported last year that the Share Insurance Fund lost more than $780 million last year, since credit unions that assumed control of the failing institutions did not assume control of the taxi loans.

Of those responding to requests for information about their loans, nearly two-thirds of the drivers responding said they had loans with a credit union that had been taken over by the NCUA.

More than a quarter of the borrowers said they had done business with Melrose.

Melrose required high monthly loan payments and had the second-highest interest rate—an average of 4.5%

The report calls for tighter regulations governing medallion brokers and states that city officials must continue to advocate on drivers’ behalf to renegotiate more affordable loan terms.

Senate Minority Leader Charles Schumer (D-N.Y) charged in May that lackluster oversight by the NCUA led to credit unions taking advantage of borrowers.

And the agency’s Inspector General said that the agency needs to tighten its supervision of credit unions with a high concentration of one type of loan, such as taxi loans.

NCUA Chairman Rodney Hood responded to Schumer, saying that the proliferation of ride-sharing services caused the crisis in the taxi loan business. However, the agency has agreed to tighten supervision of credit unions with high concentrations of one type of loan.