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CUSOs may finance cab medallion purchases NCUA
ALEXANDRIA, Va. (11/01/10)--Credit union service organizations (CUSOs) may originate business loans that are then used to purchase taxi medallions, the National Credit Union Administration (NCUA) said in a recently released legal opinion. This corrects a previous NCUA determination which incorrectly stated that credit union service organizations (CUSOs) could not originate or fund loans used for the purchase of taxicab medallions. In the legal opinion, NCUA Associate General Counsel Hattie Ulan said that brokering taxi medallion loans is “a permissible CUSO activity within the category of loan support services.” However, Ulan added, “this activity may involve compliance with other federal law or state or local requirements and, as with all permissible CUSO activities, a CUSO must comply with those requirements.” In the case cited in the letter, the CUSO would mainly be responsible for submitting loan applications from credit union members to credit union lenders. This type of loan broker activity is “permissible under the pre-approved category of ‘loan support services’ in the CUSO rule,” Ulan said. Taxi medallions are symbols that are usually attached to the hood of New York City cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curb-side passengers. The city limits the number of medallions that are released, so these medallions are often sold between drivers, and can sell for over $700,000, the NCUA said.
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