A sale of all of the thousands of loans for taxi medallions is planned by the federal credit union regulator, according to press reports this week. The agency had no comment on the reports.
According to Crain’s New York, the National Credit Union Administration (NCUA) wants any interested bidder to purchase all of the loans made for the medallions. The loans (and the medallions) were assumed by NCUA when the agency liquidated credit unions that loaned the money to taxi drivers and others to purchase the medallions. The amount of the loans has been estimated at $1.5 billion. There are approximately 3,500 medallions underwritten by the loans.
The estimated cost to the National Credit Union Share Insurance Fund (NCUSIF) for liquidating the credit unions – which included Melrose, Montauk and LOMTO (all in New York), and all of which had substantial loans to taxi medallion owners – was more than $700 million.
Once reaching prices near $1 million for each medallion (or licenses for operating a taxi cab), the medallions lost value as the popularity of ride-sharing firms such as Uber and Lyft grew over the last several years. At the same time, medallion owners (including cab drivers) who saw their income fall in the face of the ride-sharing competition began defaulting on their loans to purchase the licenses. Ultimately, the defaulted loans caused losses for the credit unions, which led NCUA to take the liquidation action.