Melrose CU, Briarwood, N.Y., one of several area credit unions suing the Taxi and Limousine Commission of New York City related to taxi medallion loans that have been floundering in the wake of ride-sharing and ride-hailing apps such as Uber and Lyft, has parted ways with CEO Alan Kaufman.
The $1.9 billion credit union confirmed the firing to Credit Union Journal but declined to comment further on the reasons for the termination or plans for a replacement.
The CU, which serves 23,600 members, has struggled to remain financially sound following the massive disruption of the medallion taxi industry by Uber and other ride-sharing and ride-hailing apps because Melrose had a strong focus on taxi medallion member business loans. According to NCUA's most recent call report for the CU, Melrose has a total of $367 million in delinquent loans – $100 million of those loans are 180 to 359 days delinquent as of Q1 2016. The total number of delinquent loans at Melrose grew 180% from Q4 2015 to Q1 2016.
A majority, $1.5 billion, of Melrose's $1.92 billion loan portfolio consists of medallion loans according to court documents filed by the credit union in its lawsuit against the city of New York; the CU reported an increase of 238% for Allowance for Loan and Lease Losses (ALLL) to $230 million from September 2015 to December 2015 .
The onset of ride-sharing applications such as Lyft and Uber has turned the taxi industry upside-down, and the CUs that support the industry have been dealing with the effect it has had on medallion-holders, causing contentious battles throughout major cities in the U.S. and around the globe.
In New York, the issue came to a head in a November 2015 lawsuit filed by Melrose CU along with New York-based Progressive CU and Woodside, N.Y.-based LOMTO FCU against the City of New York and the NYC Taxi & Limousine Commission. The lawsuit alleges that poor regulatory structure allows consumers to bypass the traditional taxi market. "Defendants' deliberate evisceration…has and continues to inflict catastrophic harm on this once iconic industry," the lawsuit alleges.
It was just this situation that forced Montauk CU, Montauk, N.Y., to merge into Bethpage Federal Credit Union of Bethpage, N.Y. in late March of this year. Montauk CU, which served 2,830 members, had primarily done business with individuals involved in the taxi industry. The $162 million institution went into conservatorship in late 2015 and was merged with the $6.6 billion Bethpage FCU just six months later.
The contentious debate surrounding ride-sharing applications and their effect on the taxi industry and the lenders that support them is still being argued. Moreover, NYC and other major cities throughout the nation have been giving the business model a closer look, introducing small regulations like specialized licenses and license plates.