Open Letter to the Board of Signature Bank (SBNY)

Scott Shay
Joseph DePaolo
Kathryn Byrne
Alfonse D’Amato
Barney Frank
Judith Huntington
Jeffrey Meshel
Michael Pappagallo
John Tamberlane

On the eve of the Goldman Sachs conference I strongly recommend you exit the taxi medallion business in Q4 2015. Please:

  • Join in the investigation of suspicious medallion transfers throughout 2015 in New York, Chicago and Boston. These values were used by the Top Twelve medallion lenders to mark their assets to market in Q1, Q2 and Q3. This practice must end for Q4 valuing of assets.
  • Determine if former board director Stanley Kreitman’s membership on your advisory board as well as the board of directors of Medallion Financial (TAXI) creates a conflict of interest.
  • Immediately offer all of your medallion loans on the market. They currently are held on the balance sheet with a value of $700 million.
  • Recognize New York Community Bank (NYCB) has already taken this action with their loan portfolio with a face value of $200 million.
  • Recognize NYCB failed to find a buyer at that level. SBNY should be prepared to accept a price considerably below $700 million.
  • Recognize the logical buyer will be an owner of an activist hedge fund such as Paul Singer of Elliott Management. The buyer of SBNY’s medallion loan portfolio or any other portion of the $7 billion in outstanding medallion loans is making a bet. The bet is that Uber will be constrained by regulators in New York, Chicago and Boston enough to preserve average medallion values above the price paid by the activist hedge fund.
  • Interpret FASB regulations to conclude medallion markets in New York, Chicago and Boston are no longer liquid enough to determine fair value.
  • Consider negotiating a settlement with all of your medallion buyers as a group. Uber has permanently destroyed their ability to pay or their option to sell their medallions for more than their loan balances. The hostage collateral concept no longer applies. Extend and pretend must end.

You have created one of the most well-run banks in the country.

Your decentralized approach has been extremely successful throughout your entire history. Stockholders have shared in this success.

This approach has degraded your ability to assess risk exposure in the taxi medallion lending business. However, it’s the only business you have with this problem as far as I know.

Your medallion portfolio is only 2% of your total assets.

While waiting for a buyer for the medallion loan portfolio, you can write off a substantial portion of the portfolio’s value in Q4. You will take a hit on your Q4 earnings and your stock price. Kicking the can down the road is not your style. You will then move on without the weight of the moribund taxi medallion business.


I’m organizing the Coalition Against Big Taxi (CAB) in Boston.

We include both Opponents and Supporters of Uber and Lyft. We advocate the negotiation of a settlement between medallion lenders and all of their Boston borrowers preserving their legal right to operate a taxi.

I stand to gain financially by your decision. I also would  benefit from knowing that the cause of social justice and economic freedom make progress.




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