ARLINGTON, Va.—NAFCU is calling NCUA’s portfolio of taxi medallion loans a “risk” to credit unions.
NAFCU's Share Insurance, Liquidity and Development Fund Oversight Committee (SIF Committee) – in a letter to NCUA Chairman Rodney Hood – shared its analysis regarding the NCUA's "stewardship of taxi medallion loans acquired through the resolution of credit unions which held such loans in high concentrations."
"We note that such a large amount of assets under active management by the NCUA's Asset Management and Assistance Center (AMAC) is without recent precedent," the letter states. "…The SIF Committee is concerned that the unusually large asset portfolio strains agency resources and poses a risk to the credit union community so long as it is under management by AMAC."
As CUToday.info reported here, NCUA is now soliciting bids for its entire taxi medallion loan portfolio, which includes approximately 3,500 medallions from New York City and Chicago. But one member of Congress has urged NCUA to delay any sale of the portfolio as the City of New York and others discuss some sort of financial assistance plan for borrowers who borrowed heavily to buy the medallions prior to the crash in inflated values.
NCUA came to own the medallions as the result of the failure of a half-dozen credit unions that specialized in making medallion loans. The failures cost the insurance fund nearly three-quarters of a billion dollars.
Support for ‘Expeditious Sale’
The committee said it supports NCUA's efforts to obtain "an expeditious a sale as possible, so long as the agency is able to get a fair price for the portfolio."
The question of what constitutes a fair price is one that could pose a challenge, NAFCU said.
"NAFCU members have expressed questions and concerns relative to the factors NCUA will use to determine whether or not an offer represents fair pricing, given the rarity of these transactions in the open market," the committee wrote. "Ultimately, if it is determined that a fairly-priced transaction is not feasible at this time for the entire portfolio of medallion loans, the NCUA should consider exploring other avenues to achieve a fair price in the most expeditious way possible."
In addition, the committee urged NCUA to manage the assets transparently to the extent that it could without impacting safety and soundness.