NEW YORK — It isn’t just credit unions that make taxi medallion loans that are feeling the pain from ride-sharing services such as Uber and Lyft and their effect on the value of those medallions.
Citigroup is attempting to foreclose on 89 medallions here, according to the Chicago Tribune, while New York Community Bancorp has put its entire taxi loan portfolio up for sale.
Those announcements come at the same time four credit unions that make taxi medallion loans–Melrose Credit Union, Montauk FCU, Progressive Credit Union and LOMTO FCU–are suing New York City for not stopping Uber and Lyft from operating, arguing that the two companies are committing “illegal hails” according to New York City law.
The Tribune reported that New York City Taxi & Limousine Commission data show the value of a taxi medallion—the collateral behind those CUs’ loans—has shrunk to $770,000 today from $1.1 million in 2013.
"It's very hard to find new financing for the medallions," Alexander Twerdahl, an analyst with Sandler O'Neill & Partners in New York, was quoted by the Chicago Tribune as saying. "As the banks are pulling back from the industry, I think they're only hurting themselves. And they're hurting the industry more."
New York Community Bancorp has tried to sell its $200-million taxi medallion lending business, but has yet to find a buyer, and recently took the portfolio off the market. It said it has not had any defaults.
Twerdahl told the Chicago Tribune that by his count, only about 500 of the city's medallions (3.7%) are trading below their purchase price. That means that if banks foreclose, losses would be "insignificant," he said.
The 89 medallions Citigroup is attempting to seize are owned by one person, taxi tycoon Evgeny "Gene" Freidman, who buys medallions through companies with names like Bombshell Taxi and Vodka Taxi.