ALEXANDRIA, Va.–Eight members of New York’s congressional delegation have sent a letter to NCUA asking it to take a more flexible approach with credit unions that make taxi medallion loans.
The letter, addressed to Chairman J. Mark McWatters, follows the conservatorship of Melrose Credit Union earlier this year and the ongoing depreciation of taxi medallions, calls on the agency to rethink its demand that loans be "rapidly repaid, in full.”
The letter was first reported by Crain’s New York. Rep. Grace Meng (D) led the effort.
The letter to McWatters was spearheaded by Queens Rep. Grace Meng.
“The practice of requiring these loans to be rapidly repaid, in full, has already resulted in the bankruptcy of thirty-five borrowers, and will likely result in a smaller portion of outstanding loan amounts being recovered than otherwise would be,” the letter states. “Should this occur, American taxpayers could be forced to cover avoidable losses created by NCUA policy.
“… We ask that you recognize the unique income-generating nature of the underlying asset – taxi medallions – and examine the ways in which other lenders have addressed the holding of medallion-backed loans within their portfolios,” the letter continues. “If the NCUA continues to unfairly punish borrowers who have, through no fault of their own, been impacted by changes to a traditionally-regulated industry, the result will be the assumption of medallions that will decline even further in value. This decline will diminish the recovery efforts of your agency, and will further harm the ability of existing medallion holders to make a living. We urge you to work with medallion owners, on a case-by-case basis, and to cease the practices of doubling interest rates, demanding homes be offered as additional collateral, refusing loan assumptions by willing third-parties, and requiring additional guarantors such as spouses be added to loans.”
The letter was also signed by Reps. Joseph Crowley, Adriano Espaillat, Carolyn Maloney, Gregory Meeks, José Serrano, Nydia Velázquez and Hakeem Jeffries.