CUNA is questioning the secrecy and knowledge behind the NCUA’s choice to promote the company’s taxi medallions to a hedge fund.
“[The] NCUA has been engaged on this for greater than 18 months with out engagement of the credit score union system, regardless of repeated makes an attempt by CUNA, leagues and credit score unions to have interaction the company to supply various options to a hearth sale of the medallions,” CUNA Chief Advocacy Officer Ryan Donovan mentioned Friday.
And Donovan mentioned CUNA needs to know why its suggestions of the way to deal with the loans have been ignored, how the company determined to promote the loans to a hedge fund and the authorized authority behind the sale.
The NCUA introduced Wednesday night that it had offered its medallion loans — reportedly within the 1000’s — to Marblegate Asset Administration LLC., a Connecticut-based hedge fund.
In promoting the loans to Marblegate, the company rejected pleas from a New York Metropolis Council Taxi Medallion Activity Power, which had requested for time to kind a public-private partnership that would present reduction to drivers who have been having hassle repaying their loans.
CUNA and state leagues representing New York, Illinois, Pennsylvania and New Jersey additionally had urged the company to not promote the medallions to a single purchaser and to debate the perfect resolution to the taxi debacle with the credit score union business.
One other credit score union veteran appeared much more blunt in his criticism of the choice.
“There will probably be time to explain how morally corrupt this motion is,” Chip Filson, the retired chairman of Callahan & Associates and the previous director of the Workplace of Applications on the NCUA, wrote in his weblog Friday. “This motion by the company supposed to guard members would appear proper at place in a Dickens novel about debtors’ prisons.”
The NCUA owned the loans as a result of two main credit score unions that held a lot of taxi loans — Melrose Credit score Union and LOMTO Federal Credit score Union — failed as a result of drivers couldn’t afford to repay their money owed.
NCUA officers defined the choice throughout a Thursday board assembly attended by dozens of taxi drivers and medallion house owners. The company additionally posted prolonged explanations of the sale course of on its web site.
“As stewards of the Nationwide Credit score Union Share Insurance coverage Fund, we’ve got an obligation to pursue an orderly decision of failed establishments, such because the taxi medallion credit score unions,” the NCUA mentioned. “The company has been managing this mortgage portfolio for roughly 18 months and managing non-performing belongings for prolonged durations will not be the NCUA’s position or specialty.”
It mentioned it’s “unreasonable and inconsistent with sound public coverage” to anticipate the company to carry the mortgage portfolio any longer.
However a key New York Metropolis Home member instantly condemned the company motion.
“Not solely have been medallions massively over-valued, however drivers have been then left to compete in an uneven market with little to no hope of ever paying off their debt,” mentioned Rep. Gregory Meeks (D-N.Y.), chairman of the Home Monetary Companies Committee’s Client Safety and Monetary Establishments Subcommittee. “[The] NCUA’s choice to unload that debt to a hedge fund solely compounds that hardship, abandoning them to debt assortment practices that may squeeze them for each final greenback.”
Meeks had known as on the company to delay the medallion sale with a view to give the duty pressure time to develop a plan to assist the drivers.
Having didn’t persuade the NCUA to delay the sale of the taxi medallion loans, the co-chairman of that activity pressure mentioned he’ll now attempt to work with Marblegate in in search of an equitable resolution for the drivers.
“They’ve an curiosity in a stabilized medallion market,” New York Metropolis Councilman Steven Levin mentioned, referring to Marblegate, which reportedly owned tons of of medallion loans even earlier than buying the NCUA loans.
Levin expressed remorse that the NCUA didn’t give the duty pressure time to develop the public-private partnership to buy the loans and supply reduction to taxi drivers whose enterprise has plunged with the rise of ride-sharing companies.
He mentioned the town nonetheless may kind an entity to buy the loans and supply reduction to drivers, who’re struggling to repay the loans.
In the meantime, New York Lawyer Normal Letitia James introduced Thursday she has taken the primary steps towards suing the town and its Taxi and Limousine Fee for $810 million, charging that the town artificially inflated the worth of taxi medallions for a few years.
James on Thursday despatched a discover of declare for $810 million to the town of New York contending that the town fraudulently inflated the worth of taxi medallions over a 14-year interval.
“The town not solely engaged in a scheme that defrauded medallion house owners however continued to additional market these medallions at overvalued charges even after inner experiences raised warnings concerning the inflated values,” James’ workplace mentioned.
Any funds recovered would, partly, present restitution for drivers and house owners affected by the inflated costs.