Late Friday afternoon, New York’s Department of Financial Services (DFS) announced that it was placing $1.78 billion Melrose Credit Union into conservatorship and appointing NCUA as Conservator. Melrose is the second state-chartered credit union specializing in making taxi medallion loans to be placed into conservatorship. Montauk Credit Union was taken over by the DFS with NCUA acting as Conservator in 2015. While the ultimate outcome of Melrose’s situation remains uncertain, here are some key points to keep in mind.
Melrose is continuing as a functioning credit union. The regulatory purpose of a conservatorship is to give regulators the authority to take over management of an institution and resolve “immediate problem areas and document[s]. . .prospects for the credit union’s future.” See Examiner’s Guide Section 29-14.
In making the announcement, neither DFS not NCUA would put a timeframe on how long the conservatorship would last. But, according to NCUA’s Examiner’s Guide, NCUA aims to have conservatorships completed within two years whenever possible.continue reading »