Despite Growing Pleas, NCUA Won’t Guarantee Delay of Taxi Loan Sales

Despite pleas from members of Congress and New York City officials, the NCUA will not promise to delay taxi medallion loan sales to give city officials time to form a public-private partnership to purchase the loans.

“It is the agency’s intention to carry out an orderly liquidation of these legacy assets in a manner that protects borrowers, ensures broader financial stability, and is consistent with federal law and prior liquidations,” NCUA Chairman Rodney Hood wrote in a Jan. 29 letter to Rep. Carolyn Maloney (D-N.Y.).

Maloney had asked Hood to place a moratorium on sales until city officials can find investors to purchase the loans. CUNA and several state credit union leagues made similar pleas. They now have been joined by more than a dozen New York House members in asking for the moratorium.

Hood declined to make that promise, although Bhairavi Desai, executive director of the New York Taxi Workers Alliance, who met with agency officials on Tuesday, said that she believes the agency is willing to work medallion owners and city officials.

In their letter, the House members warned NCUA officials about selling the loans in bulk.

“Crucially, such a sale would debase the reputations of credit unions and other financial institutions that engaged in taxi medallion lending,” the House members, led by House Consumer Protection and Financial Institutions Chairman Gregory Meeks (D-N.Y.), wrote. “These institutions should be working directly with the indebted drivers to find a more feasible solution for all.”

A city council task force last week asked the NCUA to delay the sale of the taxi medallions it holds until task force leaders can find private investors who would purchase the loans at a discount. Such an effort led by “mission-driven investors” could cost more than $500 million.

Those purchasers would then pass that discount onto beleaguered drivers who have seen their business evaporate as a result of ride-sharing services.

If the NCUA sells the loans at auction, they might be purchased by companies at a discount without any guarantee that drivers would benefit from the discount.

The medallion debacle brought about the crash of two major medallion credit unions, LOMTO Federal and Melrose Credit Union. While those two credit unions were liquidated and sold to another institution, the NCUA was left holding the loans.

Recent reports that the NCUA may be preparing to auction off the loans and that it would not ensure that any discount would be passed onto the drivers has resulted in a flurry of activity.

“There is no strong reason for the NCUA to rush to sell these loans, and there are myriad reasons for the agency to take a different path,” the House members wrote.

The House members criticized how the agency is handling the taxi loans.

“The NCUA should seek to be more transparent about its plans with Congress and should carefully consider any attempts to unload its taxi medallion portfolio,” they wrote. “We ask that the agency should respond to this letter promptly and explain why it seeks to embark on a plan that would prove so destructive to so many taxi drivers.”

In his reply to Maloney, Hood said it is important to remember that the NCUA has a legal obligation to protect sensitive personal information.

Hood said the NCUA has modified or refinanced more than 600 loans taken out by medallion owners or drivers. And the NCUA is working on an individual basis to help borrowers, he added.

Desai, taxi medallion owners and drivers were among those who met with senior agency officials Tuesday and stressed the need for a process for renegotiating the loans.

She said she believes that NCUA officials were receptive to that message.

“They were sensitive and respectful of our position,” she said. “Our delegation did walk out of the room feeling confident.”

The NCUA did not respond to requests for comments about the meeting with the New York Taxi Workers Alliance.