The member business loan exemption of the Federal Credit Union Act was the driving force behind the New York City taxi medallion loan crisis that led to over 950 bankrupt taxi drivers and eight suicides. This Note analyzes the exemption as the legislature’s balancing act to reconcile two competing policy aims: keeping lenders safe while encouraging them to lend to risky borrowers.

Viewed through the lens of the taxi medallion crisis, this Note demonstrates the severe harm that this loophole creates. Exempting credit unions from regulatory limits has left vulnerable borrowers subject to the adverse designs of powerful actors. Ultimately, this Note proposes statutory loan protections with severe penalties for the exempt institutions to keep the credit unions and borrowers financially safe and sound.