The New York State Department of Financial Services on Friday took possession of Montauk Credit Union, a New York City lender to owners of taxi medallions who have suffered due to the rise of Uber and other ride-sharing services.
The New York regulator placed the $178.5 million-asset Montauk into conservatorship under the National Credit Union Administration because of “unsafe and unsound conditions at the credit union,” the agency said in a press release. The credit union, located in Manhattan’s Chelsea district, would remain open and operate normally, with many accounts insured up to $250,000.
The rise of Uber and other ride-sharing services in the New York City area has resulted in a surge in delinquencies at credit unions specializing in taxi medallion loans, according to Reuters. Montauk, for example, had $19.25 million of loans that were at least 30 days past due, more than twice the $9.45 million of delinquent loans it had six months earlier.
Montauk was one of four credit unions specializing in medallion loans that in June sued New York City and New York State to stop Uber from serving passengers who use their smartphones to hail rides. They said Uber encroached upon taxis’ exclusive right to pick up passengers on the street, and that its rise has driven down the value of medallions, which once topped $1 million, by as much as 40%.
But last week, State Supreme Court Justice Allan Weiss in Queens County ruled against the credit unions. The other plaintiffs were Lomto Credit Union, Melrose Credit Union, and Progressive Credit Union.