NYC Officials Seek 'Mission-Driven Capital' to Purchase NCUA Taxi Loans

A leader of an effort to raise capital to purchase New York City taxi medallion loans said Wednesday that the NCUA and private lenders should delay medallion sales to give his group time to raise the necessary funds.

“If we were to have some time, we could generate some interest in this,” New York City Councilman Stephen Levin told CU Times in an interview.

Levin, a member of the council’s taxi medallion task force, added, “We want to work with the NCUA.”

Levin said members of the task force have talked with some “mission-driven investors” who might be willing to help purchase the loans.

Later this week, the taxi medallion task force will issue its report examining the crisis facing medallion owners and drivers who took out huge loans when the price of medallions was high. When the value of those medallions — which had been used as collateral — plunged, credit unions and banks faced huge losses and foreclosed on the loans.

Two credit unions, Melrose Credit Union and LOMTO Federal Credit Union, were liquidated and the NCUA was left with a large number of medallion loans. Those losses have cost the agency’s Share Insurance Fund more than $700 million.

There have been reports that the NCUA was preparing to sell more than 3,000 of those loans.

Levin said some lenders holding the loans have sold them at a discount, with the purchasers still being required to repay the full amount they borrowed.

“We know, anecdotally, that lenders are willing to close out those loans at a steep discount,” Levin said.

The average medallion loan was $700,000, he said. So, a debt collector might be willing to purchase that loan from a lender or the NCUA for $200,000, but the borrower would still be required to pay the $700,000.

Levin said “mission-driven investors” might be willing to purchase the loans from lenders and the NCUA for $200,000 but could require drivers to only repay the $200,000.

Drivers could be required to pay $900 a month, Levin said, adding that the medallions still are “revenue generating assets. People are still taking yellow cabs.”

Levin said he has had some preliminary discussions with the NCUA, which reportedly was prepared to sell its loans at an auction.

Publicly, the NCUA has remained noncommittal about its plans.

But Levin said the task force’s proposal should be attractive to lenders and the NCUA.

“I’m absolutely optimistic,” he said. “It’s going to take a lot of work.”