For the months of July and August, there were 7 arm's length transactions, of which 5 were foreclosures.
Six transactions were between $550,000 and $620,000 with three transactions at $620,000. While it appears that taxi medallion values might be stabilizing, taxi medallion pries are significantly below their 2014 values of $1 million.
However, one transaction appears to be an outlier at $350,000. But if New York City taxi medallion prices follow the trends seen in other cities, this $350,000 transaction may become more prevalent in the future.
The evidence indicates that the value of the collateral backing taxi medallion loans have become significantly impaired and the credit unions holding these loans will eventually need to take impairment charges to reflect the decline in the value of the collateral.
Dr. Leggett,
ReplyDeleteWe are worried about assessments.
What qualifies these as "arms length" sales?
We are surprised a "non interested" party would pay more than $2-300,000 because the revenue produced by taxis must be depressed given Lyft and uber.
By non interested we mean, a new buyer not already vested in the problem.
Anything you can tell us?
CUNA and Nafcu are clueless or not talking.
There are some who believe foreclosure sales are not arm's length sales.
DeleteI've heard that recent bids have been between $300,000 and $350,000.
Dr Leggett, Did NCUA miss something? I am thinking concentration risk? These taxi credit unions loaded up on these medallion loans and then sold 'em down river to other credit unions in a "loan participation" package. The package is now "toxic waste" and there will be a toxic waste bill. This bill will come to the credit unions by way of assessment.
ReplyDeleteWhile NCUA issued two letters to credit unions about taxi medallion lending in 2014 and 2015, I don't believe the agency acted in a proactive manner to limit concentration risk.
DeleteA July enforcement action against Melrose had instructed the credit union to reduce its exposure to taxi medallion loans.
How does melrose progressive Quorom and all the others reduce their concentration when the bid is .35-.50 on the dollar?
DeleteHere is how.
Assessments, lots of assessments.
NCUA mouthpiece just said that there is $6-7B in credit unions.
Can the credit union community place an assessment on the NCUA? They have been reading these quarterly call reports - observed the massive taxi scam loan to share ratio blow out over 100% & sat passive. Looks like another mini- Corporate Credit Union screw job by the regulator to the regulated. We need a new regulator.
ReplyDelete