House Dem Calls for Moratorium on Foreclosure of NYC Taxi Loans

The NCUA should place a moratorium on foreclosures of loans made to New York City taxi drivers, Rep. Carolyn Maloney (D-N.Y.) said Thursday.

“That would be the moral and decent thing to do,” she said at a House Financial Services Committee hearing on debt collection.

Many taxi drivers in New York City took out large loans based on their taxi medallions, which once were worth as much as $1 million. As a result of ride-sharing services, such as Uber and Lyft, the value of those medallions has plunged.

However, the New York Times reported in May that some lenders, including credit unions, engaged in predatory behavior in an effort to convince taxi drivers, including many immigrants, into taking out loans.

“This is criminal behavior,” Rep. Alexandria Ocasio-Cortez (D-N.Y.), said during the hearing.

Several credit unions, notably Melrose Credit Union and LOMTO Federal Credit Union, made a large number of taxi loans and have been liquidated by the NCUA. They were merged into other credit unions, but the NCUA assumed many of the taxi loans.

The agency’s Inspector General said that if the agency should have taken action sooner against credit unions that had a large concentration of taxi loans.

The loans taken out by taxi drivers should be refinanced, Bhairavi Desai, executive director of the New York Taxi Workers Alliance, a labor union representing taxi medallion owners, told the committee.

She said, for instance, that a $600,000 loan now has a real value of about $150,000. Medallion owners likely would be able to afford payments on such a loan.

Desai said that drivers are “deeply in crisis” and are “handcuffed to the wheel,” driving long shifts, seven days a week.

Meanwhile, lenders freely made loans to vulnerable drivers even as the value of the taxi medallion dropped, she said.

Desai, who also is a member of a New York City task force created to investigate the crisis, said that the city’s taxi and limousine commission continued to auction off medallions.

NCUA Chairman Rodney Hood said the agency is trying to work with individual drivers to make their loan payments more affordable, in an August interview with the CU Times.

“My heart goes out to all of those taxicab drivers,” he said, later adding, “We want to provide individually tailored solutions to those borrowers who want to work with us.”

 “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.

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.