CUNA Asks NCUA to Delay Taxi Medallion Sales as Drivers Attend Board Meeting

CUNA and key credit union leagues are urging the NCUA to delay the sale of taxi medallions and to refrain from selling them to a single owner who likely would be able to purchase them at a discount.

The CUNA letter came as members of the New York Taxi Workers Alliance attended Thursday’s NCUA board meeting, holding signs saying, “Loan Forgiveness Now” and “Don’t Let Us Down.”

“We wanted the NCUA to see … the men and women who will be affected if these loans are sold to people who won’t do business with us,” Bhairavi Desai, executive director of the association, said.

The three NCUA board members recognized the taxi drivers and promised to take their concerns into account when the agency is developing a plan to deal with taxi loans it holds as a result of failed credit unions.

But at the same time, the CUNA letter criticized the NCUA for a lack of transparency about how it plans to handle the loans it holds as a result of the failure of credit unions that were heavily invested in taxi medallion loans — most notably Melrose Credit Union and LOMTO Federal Credit Union, both in New York City.

“Unfortunately, on this matter, the agency’s lack of transparency has fueled speculation and rumor that undermines confidence in the agency’s ability to manage the situation and willingness to consider a wide array of options that may be available to it,” the letter said.

The letter, addressed to NCUA Chairman Rodney Hood, was signed by CUNA President/CEO Jim Nussle and the leaders of the New York Credit Union Association, Illinois Credit Union League and CrossState Credit Union Association — the latter representing credit unions in Pennsylvania and New Jersey.

Cities in those states also have credit unions that loaned money to taxi drivers with medallions as collateral.

Recent reports have said that NCUA officials are contemplating selling the taxi medallions to a single buyer. However, taxi and city officials in New York City have urged the agency to delay the sale so they can try to put together a public-private partnership to purchase the loans.

Such a partnership would be able to allow medallion owners to continue to operate their cabs, while renegotiating the terms of the loan so that the owners are able to repay them.

The credit union associations said the sale of the entire NCUA portfolio of taxi loans would have a significant impact on credit unions and borrowers.

“Although this may be a quick and easy solution, a single buyer sale would almost certainly result in a lower sale price, which would negatively impact the Share Insurance Fund,” they said, adding that it could further depress the market value of loans.

Credit unions face reputational risk as a result of the taxi debacle and the sale of the entire loan portfolio at “fire-sale prices” would cause major harm to the taxi drivers, many of whom are immigrants, the industry officials said.

“Such direct harm to consumers would be antithetical to the credit union philosophy of people helping people,” they said.

The association leaders called on the NCUA to refrain from such a sale, and instead, engage with CUNA, state leagues and credit unions to find an acceptable solution.

For instance, they said, the NCUA could partner with credit unions to service the loans and make modifications that would allow borrowers to repay them.

At a minimum, they said the NCUA should consider delaying the sale of the portfolio to align with the same potential equity distribution from the corporate resolution.

At the end of Thursday’s NCUA board meeting, Chairman Rodney Hood recognized the taxi drivers and assured them the agency is trying to make loan modifications that will allow the drivers to repay their loans.

Board member J. Mark McWatters said having the drivers in attendance was “Democracy in action.”

He added, however, that he could not comment on what the agency is doing to solve the taxi medallion debacle.

Desai said that following the meeting, board members McWatters and Todd Harper spoke with the owner-drivers for about 20 minutes.

She said the board members wanted to know how long it might take for a public-private partnership to form, adding that the drivers said it would take “months, not days.”

Desai said the members listened to the drivers’ concerns.

“We definitely left feeling strong and optimistic,” she said. “We’re determined.”