As ridesharing startup Uber continues to grab market share from traditional taxi services, the disruptive app is starting to take its toll on taxi business infrastructure.
The National Credit Union Administration (NCUA) has notified 94-year-old Melrose Credit Union that it has one month to submit a “net worth restoration plan” after losses on taxi medallion loans caused the institution to fall below the required capitalization level.
A number of financial institutions lend against the value of taxi licenses, which are known as medallions. In the past three years, the value of medallions has plummeted from above $1 million to $500,000 due to Uber’s rise.
Former senior economist at the American Bankers Association Keith Leggett isn’t optimistic about Melrose. “They’re going to have a hard time meeting the requirements,” Leggett recently said.
Last year, the state of New York seized control of struggling medallion lender Mantauk.
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