NCUA Refuses to Discuss Possible Sale of Thousands of Taxi Medallions
Despite attempts made to gain clarification on the taxi medallion auction, the agency's official statement is "No comment."
NCUA officials are refusing to discuss reports that they are preparing to auction off as many as 3,500 taxi medallions that were used as collateral for loans.
Crain’s New York Business, citing anonymous sources, last week reported that the agency was getting ready to auction off taxi medallions from New York City and Chicago.
In the past, NCUA Chairman Rodney Hood said the agency was attempting to work with taxi drivers who were hit hard by declines in business. He added that effort had to be balanced with the need to maintain the Share Insurance Fund.
New York Credit Union Association President William Mellin and Democratic members of Congress also had urged the NCUA to be flexible in negotiating with drivers.
The New York City taxi industry has been devastated by ride-sharing companies such as Uber and Lyft. When the industry was thriving, many drivers and medallion owners were encouraged to take out huge loans using their medallions as collateral.
The New York Times investigated the taxi loan industry and the newspaper reported that many of the drivers were immigrants who may not have understood the terms of the loans.
Two credit unions with large concentrations of taxi loans, Melrose Federal Credit Union and LOMTO Credit Union were liquidated by the NCUA and merged into another credit union, Teachers Federal Credit Union.
But as part of the merger, that credit union did not assume control of taxi loans, leaving the NCUA with those loans. The agency said the failure of those credit unions cost the Share Insurance Fund more than $700 million.
The only taxi medallion auctions readily available are scheduled for this month at Matz Auctions, an auction house on Long Island. The company’s website states that it will auction six medallions on Jan. 29.
In his blog on Monday, Henry Meier, senior vice president and general counsel of the New York Association wrote that if the NCUA sells its medallions in bulk, the price will result in some credit unions having to write down the value of their medallion participation interest.
Meier, who said his blog represents his own opinion and not that of the association, added that it was unclear what impact the sale would have on efforts to negotiate with taxi drivers.
A longtime critic of the NCUA, Keith Leggett, who runs a blog called the Credit Union Watch, called on the agency to summarize the book value, appraised vale and sales prices of these loans.
Leggett is retired but served as senior vice president and senior economist at the American Bankers Association.
He pointed out that the FDIC publishes information about its loan sales. He said that if the NCUA fails to disclose the information, its Inspector General should do so.