Mellin to NCUA’s Hood: Consider CU reputation when dealing with medallion loans

Bill Mellin-90-4x5New York’s credit unions have a long, established history of helping consumers, but the taxi medallion crisis is threatening that hard-earned reputation, New York Credit Union Association President/CEO William J. Mellin explained in a recent letter to NCUA Chairman Rodney Hood.

“Recent news articles have shed light on what could be described as allegedly systematic wrongdoing on the part of a number of entities that specialized in making taxi medallion loans,” Mellin wrote in his letter. “Unfortunately a few now-closed credit unions are among those institutions making headlines.”

Mellin acknowledged the behavior outlined in the articles is antithetical to the credit union philosophy, though he cautioned that the totality of the facts were unknown. However, he wrote, the Association’s concern is on today’s credit unions.

“What’s not noted in these articles is the fact that credit unions have stepped in to help right the ship,” he wrote. “We know here in New York a number of credit unions that inherited loans through mergers have worked diligently with borrowers to make these loans more affordable.”

It’s also been reported that the NCUA, which now holds many medallion loans, has been among the least flexible loan holders. “We respect and appreciate the agency’s need to protect the Share Insurance Fund from losses, but we worry about the long-term reputational damage to credit unions that may result from reports that suggest an unwillingness to work with borrowers,” Mellin wrote.

He also explained that working in good faith with borrowers is not just a philosophy-driven decision; it makes good business sense. By restructuring the loans to make them more affordable for borrowers, credit unions are protecting their own capital position and potentially the Share Insurance Fund, as well as their reputation by “proving that they are ready, willing and able to be a part of the solution to the medallion crisis.”

“As the taxi industry continues to struggle, we have every reason to believe that news articles highlighting the plight of individual medallion owners and cab drivers will continue,” concluded Mellin. “On behalf of all New York credit unions, we ask that the NCUA works diligently to safeguard our industry’s reputation while finding a balance that protects both the borrowers and the Share Insurance Fund.”

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