NCUA Accused of Unfairly Punishing Melrose CU Taxi Medallion Borrowers
A group of New York House Democrats is accusing the NCUA of unfairly punishing members of Melrose Credit Union who have loans backed up by taxi medallions—treatment they say is driving many members into bankruptcy.
NCUA was appointed as conservator of the credit union in February, after the New York Department of Financial Institutions placed the credit union into conservatorship. The New York agency cited several unsafe and unsound practices at the credit union, which had $1.5 billion in loans backed by taxi medallions.
The value of those medallions has been plunging as a result of ride-sharing services such as Uber and Lyft.
In a letter to NCUA Chairman J. Mark McWatters, the Democrats, led by Rep. Grace Meng, said that the NCUA is forcing loans to be repaid rapidly and in full. That practice has driven 35 borrowers into bankruptcy and will result in a smaller portion of loans being repaid, they said.
The House members ask agency officials to examine how other types of lenders have addressed problems associated with medallion-backed loans in their portfolio. Other lenders have permitted medallion owners to modify debt-servicing through reductions in interest rates, deferred interest and extended amortizations, they added.
“The overwhelming majority of taxi medallion owners wish for nothing more than the opportunity to repay the money they borrowed in order to purchase a medallion, the traditional underpinning of the taxicab business in New York City,” the House members said, in their letter.
“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,” they continued.
The Democrats asked the agency to work with medallion owners on a case-by-case basis and to stop the practice of increasing interest rates, demanding that homes be used as additional collateral, refusing loan assumptions by third-parties and requiring additional guarantors such as spouses being added to the loans.
“NCUA must do what it can to stop the bleeding,” Meng said, in explaining the rationale behind the letter. “The agency should seek to protect medallion owners as much as it possibly can.”
The Democratic letter follows a May letter sent to McWatters by a New York taxicab driver group known as “Committee for Taxi Safety.”
In that letter, the committee accuses Melrose and the NCUA of refusing to work with medallion owners and taking a “one-size-fits all” approach with the drivers.
The letter also accused the NCUA of staging “an assault” on the taxicab industry.
An NCUA spokesperson on Thursday confirmed that the agency had received the letter from the Democrats, was reviewing it and will respond appropriately.
In addition to Meng, the New York Democrats signing the letter were Reps. Joe Crowley, Adriano Espaillat, Hakeem Jeffries, Carolyn Maloney, Gregory Meeks, José Serrano and Nydia Velázquez.