Crain's New York: Another taxi lender closed by regulators

By Aaron Elstein

First Jersey Credit Union of Wayne, N.J., was closed Wednesday by the National Credit Union Administration. Its accounts were transferred to the USAlliance Federal Credit Union of Rye, N.Y. 

First Jersey had more than 9,000 members and $86 million in assets.

Like Melrose Credit Union, Montauk Credit Union and Lomto Federal Credit Union, First Jersey was seized after too many of its taxi-medallion loans went bad. Keith Leggett, an economist who tracks credit unions, estimates that taxi medallions accounted for nearly 20% of First Jersey’s loan book at one point. Medallions in New York have lost about 80% of their value in the past five years amid the rise of Uber and other e-hailing apps.

First Jersey, chartered in 1929, hasn’t had a profitable year since 2013. It piled up about $15 million in losses during the past four years.

The credit union had been trying to avoid the fate it suffered Wednesday by auctioning medallions. 

On Jan. 11 in the rotunda of the state Supreme Court building, it sold six to a bulk buyer for $1.11 million, or $185,000 apiece. In early 2014 individual medallions were selling for about $800,000. Prices are much lower now because medallions generate less revenue than they once did and because once-prolific medallion lenders are no longer financing such purchases.

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