NYC Taxi Union Leader Seeks Driver Bailout, Says NCUA's Silence Is 'Sharpening the Despair'

Contending that the NCUA is doing nothing to help New York City taxi drivers unable to repay huge loans, city and business officials are trying to form a public-private partnership to purchase loans and help the drivers, the executive director of the New York Taxi Workers Association told CU Times on Wednesday.

Many of those loans are held by the NCUA as the liquidating agent for credit unions that failed as a result of their heavy concentration of taxi loans.

The NCUA is not working directly with drivers who are saddled with huge debts, Bhairavi Desai, executive director of the association said in an interview with CU Times.

Referring to NCUA officials, she said. “They’re sitting somewhere in Virginia not understanding the human toll.”

She added, “The silence of the NCUA is only sharpening the despair.”

The NYTWA is a labor union that represents 21,000 drivers and is affiliated with the AFL-CIO.

An NCUA spokesperson disputed the claim that the agency is not working with borrowers.

“Our team knows very well that behind every loan is a family,” the agency spokesperson said. “Where we can, and within our authority under the law, the NCUA is working, through our servicer, with borrowers on an individual basis to provide relief including restructuring loans to reduce payments and interest rates. Since the closure of the taxi medallion credit unions, we have refinanced or modified loans for more than 600 borrowers. We will continue to work diligently to find individual solutions that are sensitive to the needs of medallion holders and their families, that respect their privacy, and also meet our statutory obligations.”

The New York Times reported Thursday that a city government Taxi Medallion Task Force is on the verge of endorsing a public-private partnership to help beleaguered drivers who are unable to repay their loans.

Desai, a member of that task force, said her union has been campaigning for such a partnership and that after careful examination, the task force appears ready to adopt the plan.

Anticipating that move, the union has been taking applications from drivers who need help, with the assistance of Kirkland Ellis, a law firm, she said.

The applications state that the goal is to convince the city or a private investors to purchase the taxi loans and refinance them so that drivers will not be required to pay more than $900 a month—an amount that would allow them to remain in business.

Many of those loans could be purchased directly from the NCUA.

The proposal could take some financial help from the city. But until now, New York Mayor Bill de Blasio has said the city could not afford a taxi driver bailout.

So far, the union has screened 1,100 applicants for the program.

“It’s an opportunity for mission-oriented investors,” Desai said, referring to the potential public-private partnership.

The New York taxi industry has been ravaged by ride-sharing companies; when the industry was thriving, drivers, many of them immigrants, were convinced to take out huge loans with their medallions as collateral.

Two large credit unions, Melrose Federal Credit Union and LOMTO Credit Union were liquidated by the NCUA as a result of their heavy concentration in taxi loans.

But as part of that merger, the taxi loans remained with the NCUA.

NCUA Chairman Rodney Hood has said that the agency is trying to help drivers by renegotiating the terms of their loans but added that the agency has a responsibility to protect the Share Insurance Fund. That fund lost more than $700 million as a result of the failure of the taxi credit unions.

According to recent reports, the NCUA may be preparing to auction off more than 3,000 medallions it has a result of bad loans.

The NCUA has refused to discuss a possible auction.

The agency said that because the assets involve personal financial information, it is unable to comment on any specifics about its resolution strategy

Desai said that the rumors of that auction have contributed to the urgency of developing a public-private partnership that would purchase the loans.

She said that if the medallions are auctioned off, that purchaser would be less likely to negotiate with any public-private partnership and instead, would continue to squeeze the borrowers.

Policymakers are pushing other efforts to help the drivers. Legislation has been introduced in the New York Assembly to establish a medallion guaranty program and to establish a taxi predatory lending task force.

In addition, in the House, Rep. Gregory Meeks (D-N.Y.) introduced legislation Wednesday to allow drivers whose debts have been discharged to exclude that assistance from their gross income.

In explaining the response to the taxi crisis, the NCUA said that it is obligated to minimize losses to the Share Insurance Fund.

Taxi loans, the NCUA said, are business and commercial loans that work differently than personal loans. The agency collects and evaluates financial information about a business’s cash flow before modifying a loan.

That process is time-consuming and requires frequent contact with the borrower, according to the agency.

In addition, the value of the taxi medallions used as collateral has fluctuated, the agency said.

Finally, the structure of the city’s taxi business makes an analysis of loans even more complicated, since there are four separate types of businesses in the city: Owner-drivers who own a cab and drive their cabs full time; drivers who lease their cab and medallion to others to perform additional shifts; corporate mini-fleet owners who own more than one medallion and large fleet owners who have ownership interests in several management companies.