WASHINGTON—NCUA selling its portfolio of taxi medallion loans is not an appropriate step at this time, as it may harm not only the credit unions holding taxi medallion loans but ultimately all federally insured credit unions due to the effect on the NCUSIF, CUNA and three credit union leagues told the agency in a comment letter.
The letter was sent at the same time representatives of New York City’s taxicab medallion community was on hand at the NCUA Board meeting on Thursday.
As CUToday.info reported here, the agency is soliciting bids for its entire taxi medallion portfolio of approximately 3,500 medallions on which credit unions made loans before those same CUs failed and were placed into conservatorship.
“We urge the NCUA to refrain from such a sale and to instead engage with CUNA, the state leagues, and credit unions—both those directly and indirectly involved. Such collaboration could bring about a more creative solution than simply selling the entire loan portfolio to a single investor at a significant loss,” wrote CUNA in a letter to NCUA. “While such a sale may be the quickest and easiest approach for the agency, it is not in the best interest of credit unions and their members, including borrowers who took out loans to obtain taxi medallions.”
The Reasons Given
The signatories—CUNA, the CrossState Credit Union Association, the Illinois Credit Union League, and the New York Credit Union Association—urged NCUA to refrain from selling its entire taxi medallion loan portfolio to for-profit debt buyers for several reasons:
- Selling to a single investor, while quickest and easiest for the agency, would almost certainly result in a lower sale price, which would have a direct impact on the Share Insurance Fund
- Unloading the entire portfolio would establish a depressed market value of the loans, which would likely result in a significant devaluation of similar loans held by credit unions
- Reputational risk to NCUA and the entire credit union industry associated with the taxi medallion crisis is significant, and all future activity by the agency will certainly be scrutinized. Any harmful impact on consumers—that could otherwise be avoided—will likely be highlighted by the media and only result in additional reputational harm
More Input Urged
The letter called for NCUA to seek stakeholder input on potential resolutions and consider holding a public hearing on its plans to resolve this situation.
“An alternative to the sale of this portfolio could involve partnering with credit unions to service the loans, work out loan modifications with the borrowers, and over time reduce the agency’s—and the Share Insurance Fund’s—exposure to these loans,” the letter reads. “Such a step would better ensure a stable and orderly transition from the crisis we face today to a more positive future for the borrowers.”
A member of Congress also wants NCUA to put a moratorium on any plan to sell the portfolio, as CUToday.info reported here.