While the taxi industry is taking a hit across the country, in San Francisco, one credit union is fighting back, but not against the rideshare industry. San Francisco Federal Credit Union has sued the city’s transit authority, the SFMTA, as a result of broken promises regarding taxi medallion sales that the credit union helped finance.
When rideshare services like Uber and Lyft began to take off, taxi drivers in markets across the country saw their pay swiftly decline as they lost market share. In some markets, like San Francisco, where taxi drivers are required to own, lease, or rent a medallion, the cost of a medallion plummeted. And in places like San Francisco, medallions were sold for $250,000 each. Unfortunately for the credit union (and the drivers), many of the drivers who financed medallions could no longer afford the payments.
Disrupted Promises Broken
When San Francisco proposed selling medallions for $250,000, the plan was designed to get more taxis on the roads, as well as to help protect the taxi industry. In fact, initially, there was a long line for taxi medallions, even at the high price. However, the city was well aware that individual taxi drivers would not be able to afford the medallions.
To make sure that individual drivers would be able to get medallions, a deal was struck with SF Federal Credit Union to offer financing. To get that deal in place, SFMTA promised to protect the value of the taxi medallions so that each would actually be an appreciating asset.
Now, with the long line of medallion holders looking to turn them back in, the credit union is being forced to take a bath as the medallions, as an asset, have depreciated to a point where recovering the shortfalls and defaulted loans seems impossible. These losses led the local credit union to file a lawsuit basically seeking to cover their losses as the SFMTA and city did nothing to protect the value of medallions after the rideshare giants disrupted the SF taxi market.