Taxi Medallion Debt Catches A Bid After Prices Plunge 90% Over Last Decade
After years of taxi medallion prices plunging, leading to a slew of taxi driver suicides that we have documented exhaustively, taxi medallion debt (secured by medallions) has finally caught a bid from an unlikely buyer, according to Bloomberg.
For midwest money manager O’Brien-Staley, the disaster that is the New York City taxi industry appears opportunistic. They have acquired hundreds of medallion loans secured by more than 400 medallions from Signature Bank, according to regulatory filings and interviews. This represents about 3% of the over 13,000 medallions that are in use or in storage in New York City.
Lenders like Signature and Capital One have suffered increasing losses on medallion loans as Uber and Lyft have both up-ended the industry. This has also led many cab drivers, who once banked on their medallions for retirement, to severe financial distress.
Meanwhile, regulators are investigating predatory lending within the medallion industry and prices for a medallion have fallen to as low as $110,000 from about $1 million at the start of the decade. Banks that haven’t refinanced their loans and don’t want to compromise with borrowers may see selling to private equity and hedge funds as an opportunity, also.
Matthew Daus, an attorney at Windels Marx who formerly served as commissioner of New York’s taxi and limousine bureau said:
“There are other players resurfacing. Some banks may cut their losses once and for all.”
A spokesperson for Signature confirmed that the company made a bulk sale of performing loans to O-Brien-Staley earlier this year, representing more than 400 medallions. Signature’s financials disclosed about $46.4 million in loans tied to medallions and $4.6 million in repossessed medallions.
O-Brein-Staley’s website says that it specializes in “unloved” credits and the firm has about $1.3 billion in assets under management.
It is now one of the largest lenders against medallions.
Andrew Murstein, president of Medallion Financial Corp., which originates and services taxi loans, concluded: “It is another positive sign for the industry that another fund with a successful track record believes that medallions are a good investment.”