New York Credit Union Association President/CEO William J. Mellin penned a letter yesterday to Senate Minority Leader Chuck Schumer, D-NY, in response to the senator’s request to have NCUA review its taxi medallion lending oversight.
Last week, Schumer wrote to NCUA Board Chairman Rodney Hood and called on the agency to review and update its supervision of credit unions that lend to the taxi medallion industry. Schumer’s letter to Hood was sent after The New York Times published a two-part series that examined the taxi industry’s decline and left many individuals who took out loans to purchase medallions unable to repay their debts.
In his letter to Schumer, Mellin emphasized that credit unions were not the cause of the industry’s downturn, but rather a casualty. “We cannot gloss over the fact that the industry was disrupted by an innovative outside competitor,” Mellin explained. “Ride-hailing technology companies like Uber, Lyft, Via and others upended the taxi industry, and they did it largely by operating on an uneven playing field.”
While expressing empathy for the borrowers who have struggled to repay their loans, Mellin stressed that there was no reason to believe the credit unions that made these initial loans operated outside of federal or state laws or regulations.
However, he said, “there is no excuse for predatory lending practices, and my letter should not be taken as a defense of those who may have duped hard-working consumers into taking out loans they had no ability to repay. The credit union movement was founded as a way to grant the marginalized access to the financial system and help consumers avoid predatory lending practices. This ethos is still the cornerstone of the credit union movement, so we stand firmly behind you on the notion that anyone who violated federal or state laws or regulations should be held accountable.”
Mellin went on to explain that the four New York credit unions responsible for originating the vast majority of medallion loans have since been closed and merged into other stable credit unions. He also noted that these current credit unions have continued to assist these members by modifying their loans, reducing their monthly payments and extending the terms of the loan.
He concluded: “As your office continues probing the decline in New York’s traditional taxi sector, I ask that you examine all potential causes of the industry’s disruption and find the right path forward to ensure this never happens again. Today, 340 credit unions all across your state are providing innovative products, services and technologies to help consumers achieve a better financial future. I hope you are proud of our overall performance and our steadfast commitment to our mission of ‘people helping people.’”