ALEXANDRIA, Va.–NCUA is reporting it has sold the majority of its taxi-medallion loan portfolio to Marblegate Asset Management LLC. The agency did not disclose a sales price.
Greenwich, Conn.-based Marblegate Asset Management was founded in 2009 and said it primarily invests in North American middle market credit opportunities.
As CUToday.info reported here, NCUA had been soliciting bids for its entire taxi medallion loan portfolio, which included approximately 3,500 medallions from New York City and Chicago. The agency came to own the taxi medallions as the result of the failure of a half-dozen CUs that specialized in loans for medallions; at their peak medallions were selling for seven figures, but recently medallions have been selling for a fifth of their one-time high, leaving many borrowers significantly upside down in their loans.
The credit union failures and resulting conservatorships have cost the insurance fund nearly three-quarters of a billion dollars.
‘Most Appropriate Action’
“After thorough research and careful consideration, the NCUA determined this sale was the most appropriate action to meet its statutory obligation under the Federal Credit Union Act to achieve the least long-term cost to the National Credit Union Share Insurance Fund,” NCUA said in a statement. “Of equal importance, this sale also provides borrowers and their families greater certainty about the management of their loans. Private entities have specialized skills and greater resources and flexibility to work with borrowers in ways the NCUA cannot.”
In its statement NCUA said it has spent 18 months evaluating a “variety of approaches for resolving this portfolio,” including holding and servicing the loans, pooled sales, structured sales, and securitization.
“After careful consideration, investor outreach, and consultation with an independent financial advisor, the NCUA determined a single bulk sale was the best option to meet its statutory requirements and prevent any unnecessary volatility in the already stressed taxi medallion market,” the agency said.
Agency: ‘Appropriate Steps Taken’
NCUA said it took all appropriate steps during the sales process to make sure multiple bidders were involved to ensure a competitive price and maximize any potential recoveries to the Share Insurance Fund. NCUA further said it vetted the credentials of all bidders to identify potential buyers that demonstrated the capability and willingness to work with borrowers in a good-faith manner. The agency said it also contracted with a third party to perform extensive background investigations to confirm the reputation and other representations made by each prospective buyer.
“After this extensive review, the agency allowed two firms to advance to the final due diligence round. The agency then received two independent offers and selected Marblegate as the best, least long-term cost option to the Share Insurance Fund,” NCUA said. “The firm also demonstrated the best track record of working with borrowers in a good-faith manner. The NCUA fully expects them to work with borrowers consistent with the representations made during the selection process.”
In its statement, NCUA added, “There is nothing associated with this transaction that prevents a public-private partnership or any private investor from seeking to purchase these assets at a later date.”
NCUA said additional information can be found here.
Various Parties Had Urged Delay
Prior to the sale one member of Congress had earlier 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. New York City officials and groups representing taxi medallion owners had also called on NCUA to allow time for affected parties to work out some of the issues related to borrowers saddled with considerable debt.