After a successful career in the taxi industry that spanned more than four decades, Robert Schlageter was enjoying his retirement when he read that the New York State regulator was placing Melrose Credit Union under NCUA trusteeship in February 2017 after the New York Financial Cooperative paid out hundreds of millions of dollars in taxi medallion misses.
Many taxi medallion loans were underwater because drivers lost much of their business to popular ride-sharing services. In addition to Melrose, other credit unions with large taxi medallion portfolios, and credit unions across the country that held taxi medallion equity loans, also lost tens of millions more. . Mounting losses forced some credit unions to close while others were merged.
From this taxi medallion crisis, Schlageter came up with the idea of helping credit unions remarket and sell repossessed medallions to independent professional drivers, allowing credit unions to recoup at least some of their losses while helping to stabilize taxi medallion markets. He said he believed there were credit unions that could still seek help selling their repossessed medallions.
Using extensive taxi industry contacts and negotiating methods to maximize the selling price of medallions while eliminating or reducing fees and penalties, Schlageter has remarketed approximately 600 repossessed medallions in New York, Chicago, Philadelphia , Boston, Cambridge, Mass. , and Miami markets the $11.5 billion Bethpage Federal Credit Union and Progressive Credit Union before its 2018 merger with the $35.3 billion PedFed Credit Union in McLean, Virginia.
“He has deep industry experience and knows the people,” said Bethpage CFO Brian Clarke. “We had this inventory of medallions for sale and everything indicated that the inventory was going to increase. So we needed that expertise and he was great.
Montauk Credit Union, which was placed in receivership over its financially troubled taxi medallion loan portfolio, merged with Bethpage in 2016. Montauk posted losses of more than $17 million. A year later, Northwell Health Federal Credit Union, which lost $2 million due to multiple taxi medallion equity loans, also consolidated into Bethpage.
Schlageter launched his career at a New York City taxi medallion lending service company in 1976, when medallions cost around $20,000. Later, he got involved in selling loans and making collections.
“For me, it was rewarding because we were selling to guys who were buying jobs,” he recalls. “I’ve always called entry-level capitalism in the taxi business.”
Schlageter opened a business in 1986 that originated taxi medallion loans, bundled them, and sold them to financial services institutions while his company continued to service the loans. He sold his company in 2010 and was living in the retirement world until headlines about the taxi medallion crisis caught his eye and sparked his remarketing idea.
Schlageter, who first pitched his idea to the NCUA, said the federal agency initially liked it and hired him on the spot. But in about two weeks, the NCUA decided to go a different direction, and they parted ways amicably. In February 2020, the NCUA announced a highly controversial decision to sell an undisclosed number of New York City taxi medallions to Marblegate Asset Management for an undisclosed sum. The federal agency had thousands of taxi loans, largely due to the failure of Melrose and the LOMTO Federal Credit Union.
After leaving the NCUA, Schlageter received a call from someone he had known for years: Robert Familant, former president/CEO of Progressive, who was also hard hit by the taxi medallion crisis and recorded tens of millions of losses. After signing a consulting agreement with Progressive, Schlageter remarketed its repossessed medallions.
After Progressive consolidated with PenFed, Schlageter got a call from Bethpage, which he has worked with since 2019.
His approach to remarketing taxi medallion loans is quite simple yet effective. After determining what type of medallion is for sale as they all have different values, he calls four to five brokers and asks them to submit offers.
“That’s how you get the best price because you have brokers competing for that medallion,” he explained. “Many lenders work with one broker, so they only get one price and that’s it. I have never taken this approach.
He also said he leverages patience in that he doesn’t accept the first, second, or even third offer. His patience over a period of seven to 10 days usually results in higher bids.
Over the past year, it has appeared that the taxi industry in New York has stabilized and the value of medallions has increased significantly. For example, data from the New York City Taxi and Limo Commission showed that the average value of medallions rose from $92,565 at the end of June 2021 to $140,663 through May, an increase. by nearly 52%, according to a June 9 report published in Crains New York Business magazine.
Schlageter said he averages back about $145,000 per medallion and uses his negotiating skills to eliminate fees and penalties for repossessed medallions.
“I sell almost exclusively to career drivers,” he said. “I can see some of their earnings reports and those who work hard – 10-12 hours a day, six days a week – can book $100,000 a year.”
Additionally, ride-sharing company Uber struck a deal in March with two taxi companies that allows New Yorkers to order a yellow cab on the Uber app. According to local media, Uber decided to form the unlikely alliance because of a shortage of drivers that was lengthening wait times and driving up fares.