The National Credit Union Administration on August 31 liquidated taxi medallion lender Melrose Credit Union of Briarwood, New York.
Teachers Federal Credit Union, of Hauppauge, New York, immediately assumed all of Melrose’s members and shares as well as some loans and other assets. Teachers Federal Credit Union is a federal credit union that serves 300,541 members and has assets of nearly $6.1 billion, according to the credit union’s most recent Call Report.
The NCUA made the decision to liquidate Melrose and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations. Troubled taxi medallion loans due to the disruption from ride sharing companies ultimately led to massive losses at the credit union. Click here to review Melrose's mid-year financial performance.
The New York State Department of Financial Services placed Melrose into conservatorship on Feb. 10, 2017, and named the NCUA as conservator.
At the time of liquidation and subsequent purchase by Teachers Federal Credit Union, Melrose served 19,864 members and had assets of approximately $1.1 billion, according to the credit union’s most recent Call Report.
Melrose is the fifth federally insured credit union liquidation in 2018.
Read the press release.
The following comment was made by Tony Costanzo.
ReplyDeleteMelrose has run a rich loan to share ratio over 100% as far back as 2001. In 2008 it was over 130%. Did the NCUA ever consider concentration risk? Did the NCUA ever put the brakes on this run away taxi medallion? TIme to place the NCUA into conservatorship. Time for the FDIC to manage the liquidation. No FDIC bank has failed due to taxi medallion lending. The NCUA played loose and in the fast lane with these taxi loans - now we have a total loss. The NCUA owns the NCUSIF - a self-insured pool. Time for the credit unions to pony up for an agency that incompetently manages the NCUSIF. To the NCUA management of the NCUSIF is by way of assessments. Your'e fired.
Melrose CU - Dead in the hole it dug.
ReplyDeleteThought they could make it up in volume. They couldn't.
NCUA operates efficiently - only took them 18 months of continued bleeding to liquidate.
NCUA managed the joint for 18 months - how much did that cost the credit union community? The NCUA Is so grossly time management incompetent they are making the DOJ and IRS look good. Explains why the NCUA dumped $500M into its reserve account 12-2017. Will that be enough to bury this taxi without too much Congressional attention? Where is the OIG report? THis taxi credi union is making Telesis CU (Chatsworth,CA) look like chump change on Cinco de MAYO!
Dr. Leggett,
ReplyDeleteany idea what this will mean for the rest of our rebate and possible assessments?
cuna and nafcu are silent on the subject.
I don't think there will be an assessment, as NCUA has reserved for this failure. However, if the reserves are not enough, this may cause future assessment.
Deleteits overdue to have "the discussion".
ReplyDeletehow does ncua continue to dodge accountability for what is now a history of proof that their mission is conflicted and it leads to poor supervision?
a consultant presented at our board meeting and suggested we pay closer attention to this and we have. the us treasury warned about how ncua would wind up like the federal home loan bank board and cause credit unions to pay more assessments than necessary because it has its own insurance fund which conflicts with proper supervision. its become true with the failure of the 5 largest corporate credit unions, Telesis, eastern florida financial, Melrose, Montauk, chetco, etc. and they never seem to learn. the taxi loan failures came AFTER treasury bailed out credit unions over the corporate credit unions and BOTH were failures of board governance, exceeding prudent concentration and sheet hubris.
how does ncua explain that Melrose, lomto, Montauk, progressive had/have 75% of assets in taxi loans?
how does ny state explain it?
how does ncua explain that the basic set of regulations for navy fcu are the same as for tiny credit unions?
how does ncua explain that it made changing charter to add more members so easy but changing charter to a bank has been made so incredibly difficult and expensive and against the intent of Congress?
perhaps mr trump can do what his predecessors and congress have been unwilling to do and deal with this rogue regulator that improperly relies on credit unions, members and taxpayers for bailout of its terrible supervisory mistakes.
we would love to see this all be publicly discussed and dealt with because we would rather pay the 21% tax to get access to capital, no membership restrictions and no small business lending cap.
which brings us to another but not the only cu/ncua injustice...how does ncua justify that hundreds of crdit unions, some of whom are competitors of our credit union, can essentially operate as a bank that doesn't pay taxes because theyre a low income credit union?
we are capped on small business loans and cant raise capital but two of competitor credit unions and all the banks in our market can.
how is that fair?
do we have to wait for congress to grow up or can mr trump deal with this blatant unfairness?
Never an estimated cost to the insurance fund with these press releases like the FDIC publishes....
ReplyDelete