Hood Defends Taxi Loan Sale as Agency Defends Secretive Nature of Deal
“The Federal Credit Union Act gives the liquidating agent broad authority to carry out an orderly liquidation to achieve the least cost."
NCUA Chairman Rodney Hood on Tuesday continued to defend the agency’s decision to sell the taxi medallion loans it held, even as agency officials defended the secretive nature of the sale.
“I firmly believe that this sale will help holders and their families because it will provide them with greater certainty over the management of their loans,” Hood said at CUNA’s Governmental Affairs Conference.
Last week, the NCUA announced it was selling the taxi medallion loans it held as liquidating agent for federal credit unions Melrose and LOMTO, which failed due to their heavy concentration of taxi loans.
The agency said it was selling the loans to Marblegate Asset Management but refused to provide information about the number of loans or the selling price.
“The Federal Credit Union Act gives the liquidating agent broad authority to carry out an orderly liquidation to achieve the least cost,” an agency spokesperson said.
The spokesperson added, “The agency determined that [public disclosure of the sale details] could affect the agency’s approach, negotiations and sales process for potential sales of its remaining taxi medallion holdings in the future.”
When pressed on where the law allows the agency to conduct such a secretive sale, the spokesperson suggested that a reporter file a Freedom of Information Act request. CU Times already had filed such a request.
In his speech, Hood did not mention a request from New York City officials, House Democrats and CUNA to delay the sale to allow a public-private partnership to form. That group would have then purchased the loans from the agency, in an effort to give drivers and medallion owners the opportunity to repay their loans at a reasonable rate.
Hood said that on Jan. 22, he received a letter suggesting that the agency hold the loans and allow credit unions to purchase the distressed assets.
Hood said the agency decided to sell the loans in bulk.
Hood said the agency contacted 23 qualified firms with experience in the sale of distressed assets. Six of those firms submitted bids and after an extensive review, the agency allowed two to go through the rest of the process.
“Holding these medallion assets beyond a reasonable period could have the NCUA repeat these mistakes of the past,” he said. “Moreover, a financial advisor team built a comprehensive record as to why we needed to sell these assets in bulk to maximize the value of the assets while treating the borrowers in good faith.”
The agency spokesperson said the NCUA board has delegated authority to its Asset Management and Assistance Center to make such sales.
As a result, a formal vote by the board was not required, although board members were briefed on the sale.