NCUA's Harper: Agency was too slow to address taxi medallion issues
WASHINGTON – The National Credit Union Administration didn’t act quickly enough to address issues with taxi medallion lending, according to Board Member Todd Harper.
The regulator allowed certain documents of resolution — documents that outline problems and identify corrective action measures — to sit around, Harper said during his remarks at the National Association of Federally-Insured Credit Unions’ Congressional Caucus.
"We didn’t escalate them,” Harper said. “As a result, these problems grew in size."
Harper cited a previous report from the Office of the Inspector General that argued the NCUA should have taken timelier action. He emphasized that the regulatory body needs to be ready to act expeditiously.
In an interview with Credit Union Journal at the caucus, Harper said that the NCUA would be taking new approaches in 2020 to prevent another medallion lending crisis.
“We are going to be putting in place new standards at the start of 2020 that focus on concentration risk,” Harper said.
The credit union industry has been under fire for the way it handled taxi medallion lending. Earlier this year the New York Times reported abusive practices by credit unions when lending to taxi medallion borrowers. The newspaper reported earlier this week that federal prosecutors have opened an investigation into possible fraud. Bankers have used the issue to criticize credit unions and have called on Congress to take action.
In addition to addressing taxi medallion lending, Harper outlined three risks to the industry – liquidity of federally insured CUs during the next downturn, the rise of consumer debt and the growing federal deficit.
He told Credit Union Journal that CUs “need to make sure that they are carefully underwriting their loans and looking to make sure that the credit risks are being appropriately taken.”
Other concerns include how fintechs are affecting the credit union system and whether or not additional reforms are needed in the space to allow credit unions to successfully compete, Harper said.
Another is maintaining pace with diversity. Research has shown that businesses that prioritize a more diverse and inclusive workplace experience greater staff motivation, improved customer service, and higher employee retention, all which lead to better financial results.
“The demographics of the U.S. is changing and the NCUA and credit unions must change with it,” Harper said.