CUS Placed In Conservatorship

September 21, 2015 at 9:17 am Leave a comment

Friday was a sad day for New York credit unions. In case you didn’t hear the news, two iconic credit unions, Montauk Credit Union and Bethex Federal credit union were placed in conservatorship and taken over by regulators.

Montauk was chartered in 1922. It has $178.5 million in assets. It specializes in making loans to finance the purchase of taxi medallions in New York and other cities. Since the late 1930’s, when New York City first began regulating taxis, the Medallion industry, distinguished by its yellow cabs and exclusive right to pick up street hails, had been among the most stable sources of credit union loan growth. In addition, the value of medallions spiked over the last decade reflecting increased tourism in the City and a search for higher yields. In 2013 they sold for as much as $1.3 million. But the emergence of Uber, which provides drivers with a low-cost means of entry into the taxi industry, has sent the prices of medallions tumbling. A recent decision upholding the right of Uber and other such services to pick up street hails so long as an App is used further hurts the industry.

On Friday I was talking to a credit union CEO who has participation interests in NYC taxi medallion loans. He has given these loans increased scrutiny in recent months and adjusted his ALLL to account for potential loses.

Bethex Federal Credit Union in the Bronx, N.Y has $12.9 million in assets was started in 1970. Its CEO, Joy Cousminer, is a leading advocate for small credit unions who has been honored by the NYS Senate for her work in the Bronx Community.

In June Bethex was one of the credit unions highlighted in a WSJ article reporting that 50 credit unions were identified in a confidential report from FINCEN for their increased vulnerability to potential money laundering. Here is some additional information.

http://www.ncua.gov/News/Pages/NW20150918Montauk.aspx

http://www.ncua.gov/News/Pages/NW20150918Bethex-Federal-Credit-Union.aspx

 

Pressure To Settle MBS Lawsuits

Just how much money credit unions will get to offset their special assessments for losses stemming from the purchase of Mortgage Backed Securities (MBS) by the corporates may become clearer in the coming weeks. The Law360 blog is reporting that   “ A New York federal judge on Friday gave Morgan Stanley & Co. Inc., Goldman Sachs & Co. and other big banks six weeks to meet face to face with the National Credit Union Administration and try to broker resolutions to lawsuits that claim the banks’ toxic mortgage-backed securities helped ruin multiple credit unions.”   Stay tuned.

 

 

 

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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