ALEXANDRIA, Va. (4/7/14)--Credit unions that make taxi-medallion secured loans, participate in those loans or are contemplating doing so should review new agency guidance on the topic.
The National Credit Union Administration noted in a Letter to Credit Unions (14-CU-06) sent last week that taxi-medallion lending is a valuable form of member business lending when provided by certain credit unions with proper expertise but warned that it entails some "unique risks."
The medallions are symbols that usually are attached to the hood of city cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curbside passengers who hail a cab.
The NCUA letter said that market forces have led to an increase in medallion values in several major metropolitan markets. "As a result, credit unions that offer or participate in these loans can be exposed to increased risk," NCUA Chair Debbie Matz said.
The agency also has released a supervisory letter to ensure examiners take a consistent approach to supervising credit unions engaged in taxi-medallion lending. The guidance also provides information that will help credit unions manage the unique risks associated with the loans.
For the full NCUA letter, use the resource link.