Clark Street Capital Featured in Credit Union Journal
Will credit unions’ reputation be the next victim of
By Melissa Angell
Published June 03 2019, 5∶00am EDT
Mirela Alexe, CEO of the Bronx, N.Y.-based Van Cortlandt Cooperative Federal Credit Union, blamed the rise of ride-sharing apps for the lending crisis. The $64 million-asset Van Cortlandt has been involved in taxi medallion lending.
Alexe said that she didn’t believe the allegations in the New York Times coverage since her credit union’s loans were thoroughly examined by the NCUA.
“It’s very hard for me to believe that such a thing really happened because every approved loan was reviewed at least once a year by our federal examiners therefore, I doubt that could have actually happened,” she said.
“It was not something that credit unions could control,” she added.
Still, the industry could face additional criticism and a reputational hit. Last week the American Bankers Association used the New York Times coverage as a cudgel against a proposal from the NCUA to expand access to non-member deposits.
The “reporting on NCUA’s supervisory failures in New York’s taxi medallion business only further calls into question why this regulator would now propose to allow credit unions to accept more non-member and municipal deposits,” Ken Clayton, head of the ABA’s office of legislative affairs, said in a statement last week.
The New York Times coverage portrays credit unions and other lenders as knowingly making loans to borrowers, including immigrants, who might struggle to repay them. That contrasts how the industry often likes to promote itself – being friendly to members, especially the underserved and other marginalized groups, who may not have access to mainstream banking services otherwise.
“There’s a really strong case to be made that a lot of these borrowers didn’t know what they were getting into,” Winick said. “If you look at these loans at origination – forget Uber, forget Lyft – they had very little margin for error to begin with. They were probably always bad loans.”