Taxi Sale: More Questions Than Answers

Excuse me?

That easily could have been your response to the news that the NCUA suddenly agreed to auction off thousands of taxi medallions to little-known hedge fund Marblegate Asset Management LLC.

On Feb. 19, the agency posted the surprise announcement that it was selling the taxi medallion loans it holds as a result – in part – of the failure of Melrose Credit Union and LOMTO Federal Credit Union.

The sale had been rumored for weeks, but the agency gave no indication the sale was imminent.

The agency simply posted information that supposedly gave background about the taxi loans and the decision.

I say “supposedly” because the announcement failed to address many of the major questions surrounding the decisions.

And maddeningly, agency officials admitted that and said they weren’t going to say anything more.

CUNA and others said the answers failed to address the main issues surrounding the sale.

Questions abound, such as:

• How many taxi loans were sold to Marblegate and for how much?
• Why was the process cloaked in so much secrecy?
• On what basis did the NCUA, a federal agency, decide to use a secret process to award a bid that involved hundreds of millions of dollars?
• How did the NCUA choose the 23 groups that were invited to bid?
• Who were the six or so groups that eventually were invited to bid?
• How were they selected?
• Just who is Marblegate?
• What criteria was used to decide to award the bid to Marblegate?
• When did the agency decide to do this?
• Why didn’t agency officials tell members of a New York City Taxi Medallion Task Force that this was the direction they were driving in? The task force wanted time to put together a public-private partnership to purchase the loans.
• NCUA board members said they received assurances from Marblegate that the company would deal fairly with taxi drivers whose loans the firm now owns. Was that assurance in writing? What did it say?
• How many taxi loans does the NCUA still hold?
• What is the agency planning to do with those loans?

On and on.

Some folks, CU Times included, have filed requests under the Freedom of Information Act asking for information that might address some of those questions.

The agency is evaluating those requests.

The NCUA is a federal agency that is supposed to have some level of accountability. Credit unions fund the agency. The taxi credit union failures cost the Share Insurance Fund almost $800 million.

Was the sale of the taxi medallions a good idea or simply a federal agency trying to unload its problems?

Right now, we don’t know.

And we should know.

Dead on Arrival

It’s become a ritual to declare that a president’s budget is “Dead on Arrival” when it reaches Capitol Hill in February every year.

The presidential budgets are supposed to provide details about the administration’s priorities and how they are going to be funded.

But the budgets have deteriorated into political documents that propose cuts and spending increases that Congress isn’t going to accept.

Administration priorities are paid for through sleight of hand and embarrassingly rosy economic assumptions.

Take a look at the Community Development Financial Institutions program. Each year, the Trump Administration proposes to eliminate the program and each year Congress provides the program with at least as much as it received the year before.

It’s the kind of program that members of Congress love. They can point at some credit union that receives a CDFI grant and claim credit for it (even if they voted against the bill that provided the funding).

Last year, Treasury Secretary Steven Mnuchin told a House Appropriations Committee subcommittee that, given the strong support for the program, Treasury would re-examine its opposition.

Clearly, he was tired of getting beaten up about the funding. He also said Treasury had not done any new research to indicate that the program was not working.

And so, when this year’s budget was rolled out, you might have expected something new.

Not a chance. The budget called for the CDFI program to be eliminated.

Nobody could take that seriously, given the congressional support for the program.

This is nothing new and I’m not singling out the Trump Administration here. This is no rant against President Trump or his administration. They’re not alone in his mess.

Bush’s budgets were dead.

Clinton’s budgets were dead.

The second Bush’s budgets were dead.

And so were Obama’s.

That’s a lot of dead budgets.

But this year, Senate Budget Committee Chairman Mike Enzi (R-Wy.) took an extra step.

He said he wasn’t even going to hold a hearing on the Trump budget. In doing so, he deprived Democrats and some Republicans the opportunity to rant about how unrealistic the budget is.

Congress is supposed to have a budget process. It involves enacting a budget resolution and separate appropriations bills.

Congress seldom follows the process. Instead, the House, Senate and president usually engage in high stakes haggling on federal funding just to keep the lights on in much of the federal government past the Sept. 30 end of the fiscal year.

The NCUA and CFPB aren’t part of the budget process, since they’re independently funded.

But much of the federal government is funded through that broken process. You wouldn’t make decisions about your own household budget that way, if you could avoid it.

With some political will, Congress and whoever is president can avoid it.

And they should.

David Baumann is a correspondent-at-large for CU Times. He can be reached at dbaumann@cutimes.com.