PenFed Gobbles Up Progressive

January 3, 2019 at 9:29 am Leave a comment

Well it’s official. Uber claimed another victim yesterday with the announcement that New York City based Progressive Credit Union has merged into the $24 billion Pentagon Federal Credit Union (PenFed) putting an end to the last of New York’s taxi medallion credit unions which for decades were among the most profitable cu’s in the state as they specialized in making loans for the purchase and resale of the medallions which were required if you wanted  to drive NYC’s iconic yellow cabs. 

I haven’t been able to find any official statements from PenFed yet, but the CreditUnionTimes is reporting that PenFed has agreed to take on all of Progressive’s medallion loans which is good news for those of us concerned about the impact that the demise of medallions could end up having on the Share Insurance Fund. It is also reporting that Progressive’s CEO and Treasurer will stay on to head the credit union’s New York State operations.

I’m assuming that the merger allows the credit union to operate under Progressive’s open charter which means that the credit union can now take on members from anywhere in the country without regard to their military affiliation consistent with safety and soundness. A similar deal was reached with NCUA when another of the medallion credit unions, Montauk Credit Union, merged into Bethpage Federal Credit Union on Long Island. Teachers Federal Credit Union also acquired an open charter when it acquired the assets of taxi medallion credit union Melrose last year but that credit union’s purchase and assumption did not include the acquisition of Melrose Credit Union’s medallion portfolio.

With the lightning-quick instincts for which I grudgingly admire them, the American Banker’s Association issued a statement decrying the merger as the “latest example of large credit unions far exceeding their original mission to serve targeted communities of modest means,” said ABA EVP Ken Clayton. “This not only hurts small credit unions playing by the rules, but also taxpayers who are unknowingly subsidizing this national expansion.”

 

 

Entry filed under: General, New York State. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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