A December 5 New York Times investigative report on the rise and fall of New York's Taxi King, Evgeny A. Freidman, examines the role of Freidman in creating the taxi medallion bubble and his relationship to Progressive Credit Union.
This article is part of an investigative series on the disruption of New York City's taxi industry.
According to the article, Freidman turned to a family friend, Robert Familant, who was the CEO of Progressive Credit Union, to help finance his plans to take on more risk to increase the industry's profit and drive up the value of taxi medallions.
The article noted that between 1997 and 2004, Progressive’s loans enabled Freidman to buy about 100 medallions to expand his taxi fleet. The article further noted that Freidman during this time became a licensed broker helping some drivers to buy medallions, usually with loans from Progressive.
In 2006, Freidman embarked on a new strategy to increase the value of his taxi medallions. New York City was auctioning 54 medallion loans for $350,000. He won all 54 medallions by bidding $477,666.50 apiece.
According to the reporter, Progressive helped finance the purchases.
Records show that Freidman used this strategy at three additional auctions.
By overpaying, this inflated the value of taxi medallions enabling Freidman to borrow even more from lenders.
This inflating of the value of taxi medallions burdened purchasers of medallions with more debt.
This story would suggest that taxi medallion lending credit unions along with other lenders probably contributed to the taxi medallion bubble with their lending practices.
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