Report Criticizes NCUA for Not Working with Struggling Taxi Medallion Owners

A report from the New York City Mayor's Office is critical of the National Credit Union Administration (NCUA) over its failure to work with struggling taxi medallion owners.

The report found that drivers had median debt of $500,000 -- well above the current value for New York City taxi medallions in the secondary market. Only 35 percent of the drivers owe less today than they originally borrowed. The report found that many drivers borrowed against their medallions for other purposes, such as home purchase, buying a car, or paying for college or education.

Fifty-one percent of the surveyed drivers stated they are struggling to pay their monthly bills and 26 percent were considering bankruptcy.

According to the report, credit unions and credit unions in NCUA receivership held about two-third of all medallion loans based upon survey results.

The report found that LOMTO Federal Credit Union and Melrose Credit Union had among the highest interest rates on taxi medallion loans at 4.6 percent and 4.5 percent, respectively. It also found that First Jersey Credit Union had the highest average monthly loan payment at $3,825.22.

The report noted that only 15 percent of drivers indicated that their lender had lowered their monthly payment or reduced their loan principal.

The report stated that credit unions taken over by NCUA are among the least likely lenders to work with taxi drivers struggling to afford their loan payments. For example, drivers reported that Melrose Credit Union had taken actions on only 9 percent of their loans to either lower their monthly payments or reduce their loan principal. Only 8 percent of drivers with a loan from LOMTO Federal Credit Union saw a lower monthly payment or a reduction in loan principal and no borrower from First Jersey Credit Union received a lower monthly payment or a principal reduction.

The report does not address the role of ride-sharing companies in disrupting the New York City taxi market.

If Congress decides to investigate NCUA's supervision with regard to medallion lending by credit unions, this report should provide grist for the mill.

Read the report.