Yesterday, I reported on San Francisco Federal Credit Union's lawsuit suing the San Francisco Municipal Transportation Agency (SFMTA) over taxi medallion loans.
The complaint also suggests that the credit union provided more than 80 percent financing of taxi medallion loans.
Taxi medallions were being sold for $250,000 by SFMTA.
In paragraph 87 of the complaint, the credit union reported that it offered down payment assistance loans to people, who did not have $50,000 in cash for the down payment (20 percent of the purchase price).
This indicates that for some medallion loans the loan-to-value ratio exceeded 80 percent, once you include the amount of the down payment assistance loan with the amount of the medallion financed by the credit union.
This would suggest a higher loss rate on some defaulted taxi medallion loans.
Common thread in the unfolding taxi loan devastation...
ReplyDelete...local and federal government dysfunction.
Cities control medallions like a cartel.
Immigrants try to make a living for themselves and their family (then get caught up in a skyrocketing medallion market value due ONLY to the cartel controlling the supply side).
Federal regulator NCUA dead asleep at the wheel allowing credit unions to >80% financing while loading the balance sheet to 70-75% asset concentration in taxi loans. Then allowing them to sell over a billion in participations to other credit unions like Typhoid Mary.
While also letting them borrow hundreds of millions from corporates who will not be paid back.
All this shifted into third and then fourth gear AFTER THE CORPORATE MELTDOWN OF 2010.
A screaming indictment of government and lobbyists.
Good job NYC.SFRAN.
Good job NCUA and CUNA/NAFCU.
Why aren’t banks in taxi trouble?
Because OCC is a real regulator.
Pre-Huber. Pre-Lyft. San Francisco FCU was laughing all the way to the bank. And why not? They thought they had a corner on the market because the city owned a monopoly on the taxi license. And of course the credit union owned a monopoly on the taxi loan license. They were living the good life like pigs at the trough. Enter capitalism. Enter Uber and Lyft. The monopoly pops and the credit union taxi license skids out of the fast lane of high finance into a dead-end dead-beat ditch. And where is the NCUA? Hello Concentration Risk Specialist...did you miss the bumper to bumper traffic as credit unions have been selling this toxic taxi medallion loan waste? Now labeled as: Loan Participations they are stalling on the balance sheet of so many other credit unions - like a car lot of "Rent-A-Wreck" salvage titled, lemon law, total loss scrap. Instead of driving this in the slow lane San Francisco FCU jumped into the fast lane full throttle. No complaints when cash was king. Now they own a repo lot of taxi cars and no market for resale. The credit union CEO files a lawsuit. Tell me Mr. CEO - who presented the brilliant idea to load up without regard to concentration risk on these taxi loans? Was your salary bonus tied to the increase in loan to share ratio? Even the wise guys running the MAFIA had concentration risk limits when they ran the hard money juice racket. San Francisco FCU lost their moral & ethical compass. That happens when greed gets in the way. Smog check your lawsuit - it won't pass it's full of...bad gas. The NCUA can not recognize concentration risk - not at WesCorp, not at USCentral, not at Members United. San Francisco FCU & NCUA & NAFCU & CUNA...all stuck on cruise control stupid. Where is the OIG investigation of NCUA on these huge taxi medallion losses? This ride & fare is not going to end well.
ReplyDeleteTony you are right but the current ceo has nothing to do with it. The one that did it saw the handwriting and escaped to a different cu in Oregon.
DeleteAs far as his bonus goes, can you say clawback?
Hmmm more fear monger by the ex-banker against credit unions. You really should go back to ABA.... you are reckless in your credit union reporting.
ReplyDelete