Times change and along with them economies. Uber and Lyft have hammered the almost ubiquitously crony taxi cab industry around the world. Yes, some of those medallion loans will go south. The banks and the cab companies made bad bets and now they lose. That is how markets work.
Who knows? Maybe teleportation devices will put Uber and Lyft out of business next year. Creative destruction.
Now the share of taxi medallion loans Capital One thinks its borrowers won’t be able to repay in full has nearly tripled over the past year, to 51.5 percent. (Another 29 percent of loans are to stressed borrowers who could be in trouble soon.)
BankUnited told its investors in November that nearly 59 percent of its loans secured by taxi medallions were under water. Close to 95 percent of the BankUnited’s loans were to New York City borrowers. “This is the portion of our loan portfolio that we keep the closest eye on, for obvious reasons,” Rajinder Singh, then BankUnited’s chief operating officer, told investors last January.