Taxi medallion loan concerns. (Source: Shutterstock)
New York House Democrats want to know what financial regulators are doing to avoid another crisis like the taxi medallion debacle that left drivers with debts they cannot possibly repay.
The 11 Democrats, led by Rep. Alexandria Ocasio-Cortez (D-N.Y.), say that under the watch of the regulators, financial institutions took advantage of drivers for years.
"As you are aware, media reports have described how predatory business practices ruined the livelihoods of many taxi drivers in the region, while generating large profits for financial institutions under your supervision, as well as brokers, fleet owners and debt collectors," the Democrats wrote.
And they added, "What makes all this more troubling is that regulators appeared to be aware of risky lending practices years earlier."
The Democrats criticized the NCUA for stating that it will completely implement recommendations from its Inspector General by the end of 2020, "about a year and a half from now, leaving borrowers vulnerable to similar predatory behavior unless NCUA and other appropriate regulators act with more urgency in this matter."
The letter was sent to the NCUA, the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency.
NCUA Chairman Rodney Hood defended the agency in an interview with CU Times on Friday.
"We at the NCUA really didn't cause the crisis," he said, adding that the credit unions that specialized in taxi medallion loans were well-capitalized for years.
And he pledged to work with cab drivers who are saddled with loans they will not be able to repay.
"My heart goes out to all of those taxicab drivers," he said, alter adding, "We want to provide individually tailored solutions to those borrowers who want to work with us."
Hood said that when the NCUA took over the credit unions, including Melrose Credit Union and LOMTO Federal Credit Union, no members lost their insured deposits.
He said the takeover of the credit unions was accomplished with "no major hits" to the agency's Share Insurance Fund.
NCUA officials said in March that credit union failures had cost the Share Insurance Fund $792.5 million, with much of that cost attributable to the taxi medallion credit unions.
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