A two-part story in the New York Times (subscription required) investigated the role of lenders, regulators, and city officials in the rise and collapse in taxi medallion values in New York City.
Over 10 months, the New York Times spoke to 450 people, built a database on every medallion sales, and reviewed thousands of loans and other documents,
The articles cited risky lending practices at banks and credit unions, which devastated taxi drivers. For example, many lenders by 2013 were not requiring a down payment. Also, many of these loans were interest only.
According to Monte Silberger, LOMTO Credit Union’s controller and then chief financial officer, “It got to a point where we didn’t even check their income or credit score.”
The article also states that regulators, especially the National Credit Union Administration (NCUA), ignored warnings from examiners regarding these risky lending practices. The story points out that NCUA granted waivers to regulations requiring at least a 20 percent down payment for taxi medallion loans to help credit unions compete with other lenders.
The article notes that the New York City Taxi and Limousine Commission became a cheerleader for medallion sales, as prices for taxi medallions soared. The city collected more than $855 million by selling taxi medallions and collecting taxes on private sales.
The article points out that many people were enriched during the medallion bubble, including Progressive Credit Union's Robert Familant, who made $30 million in salary and deferred payments.
Read Part 1.
Read Part 2.
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Not fake news!
ReplyDeleteWow. All I can say is Wow.
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