Bill de Blasio has no chance of becoming president and he should really hunker down and deal with issues like this one the Times has uncovered.
No one will be shocked or disappointed when he fails in his bid for the White House.
Focus on improving the lives of New Yorkers instead of huddling with spin masters and trying to con people out of their vote.
Have a nice day.
21
A number of people commenting on this article have pointed their fingers at what I am sure is a favorite target of theirs: "capitalism."
Make no mistake, the New York medallion racket was the antithesis of capitalism. Licensing schemes are, in general, gross market perversions that harm consumers and potential entrants into the market in order to benefits incumbents in the market -- along with politicians who control the licensing and thus reap campaign contributions and/or bribes. Economists recognize that licensure requirements (at least beyond a minimal amount that might be necessary to identify complete incompetents) are mere rent-seeking. The city's taxi medallion scheme was horrific even by Soviet standards.
In this case, technological changes upset the corrupt medallion model -- to me, a good analogy would be a city-run monopoly scheme restricting video rental outlets (intended to benefit Blockbuster and other incumbents) that collapsed following the rise of Netflix and streaming video - just as happened here. It's sad that these drivers are on the hook for assets whose value has evaporated, but the blame should be placed at the feet of the corrupt politicians who developed and maintained the system that led these drivers to take out these ill-conceived loans in the first place.
Note also that the purported villains of the piece - the banks - are stuck with bad loans and worthless collateral, so all of this is not exactly a win for them, or "capitalism," either.
12
I see an investigation was opened. Bravo NY Times. Wish it had come sooner but without real journalism it wouldn't have come at all.
I do hope we can secure some relief for those impacted. They may have made mistakes, but to a person they sounded like incredibly hard working people. Our economy should not be rigged against the hardworking and honest.
Oh one more thing. This truly DISQUALIFIES DeBlasio from any further public office. Other politicians contributed no doubt, but this happened in fairly plain view on his watch.
Is this an argument for liberalism? conservatism? better government? less government? Sadly it is hard to tell anymore - corruption taints all.
10
Some of the Indians I know in the mini grocery business have very sharp financial minds. Let the driver's go BK and let the banks eat it.
7
@as
Exactly. No matter what language you speak, you would think that before investing your life savings of about $50k, you would think it worthwhile to spend a few hundred banks having someone review the docs for you.
This isn't a language issue, or an immigrant issue. Rather, it's a common sense issue. The cabbies who bought into these deals were stupid before they got here. Can't regulate that away.
14
is anyone surprised?
4
The S&L Crisis of the 1980s, the massive Investment Banking collapse and Great Recession of 2008, and this N.C.A.U. scam are ALL examples of the continuing corruption of capitalist corporate looting schemes where the lack of real democracy, the ‘capture’ of corrupted regulatory agencies, and an unbridled corporate capitalist trail (not of tears) but of looting, underscores how and why our once promising and sometimes progressive country has been reduced to a sneaky-smooth-running Disguised Global (crony) Capitalist EMPIRE — now for the first time ruled by a President who thinks he's Emperor Trumpius I --- not just Emperor of America, but an Emperor of the World.
Capitalist Corporations were feared by our founding fathers for good reason — as the royally chartered East India Corporation of the British EMPIRE was.
The ONLY corporations that were originally allowed to even exist in America had to be for common public purposes and limited duration of a project for the public good and commonwealth.
We can't have 'political democracy' unless we have a people's peaceful Political/Economic and Social democracy --- for the simple reason that an Economic Empire will always over-power a political democracy with money, deceit, and guile.
9
This was a government failure, plain and simple. Creating a medallion program and restricting capitalism is what caused the problem. Without a government intervention, capitalism, in its purest form, would have worked with greatest efficiency and allowed for more consumer choice. Now the government has to come in and clean up their own mess. The problem is over regulation and too much government, not capitalism.
6
"In niches are riches" is all you need to know. You could make the loan but should you, especially when human beings are fodder? Hopefully the world really is round.
And shame on Capital One. We know what those non-profit credit unions were all about (non-profit? haha) but Cap One? Shameful.
2
Welcome to America.
2
Where's the oversight by city, the DMV or whichever organization is supposed to control the issuance of licenses?!
They need to be locked up along with the bankers!
4
Had the guy been able to flip his medallion for a profit of $1,000,000, would there be a story here?
Same with housing.
It was going so well until it wasn’t and now they are looking for someone to blame.
22
They thought they were achieving the American dream. It's all so sad.
7
Many of these issues are the same that occurred in the home lending crash. The bankers know these things often make no sense for their clients. As much as regulation is painful this is why we need it. Some business executives give the same excuses for doing the wrong thing at someone else’s expense. Taking advantage of people because you can is wrong and yet it seems to have become increasingly acceptable to some in the financial industry. They have no shame
12
Another story about unscrupulous people who go into the predatory loan business and make a killing. It's probably because there are always plenty of people to con and the government in the good old US of A isn't interested in protecting them. Funny that it always seems these "business" people end up owning a yacht or a race car. Personally, I'm not sure I could look myself in the mirror if I knew I made my millions by destroying the lives of so many hard working people. Even if I could look myself in the mirror - I certainly couldn't look myself in the mirror on my yacht.
9
Irresponsible lending? Yes, there are sharks out there. However, someone that pays $100s of thousands of dollars for a business opportunity should have had a better business plan. In hindsight, people now see it was a bad investment. Speculation, sharks, greed, and poor choices are nothing new. No one would be complaining if their investments had panned out. Buying medallions in the age of ride sharing was a bad idea.
10
This confirms what I've suspected for a while; credit unions can be just as evil as banks.
8
Taxi Medallions are the city's first cryptocurrency.
Just as the other cryptocurrencies like bitcoin can be manipulated these were putty in the hands of insiders. And just like bitcoin there really is nothing behind it.
At least bitcoin is honest about that.
6
I drove a fleet-owned NYC medallion cab for a couple of months as a summer job during college back in 1972. It was then a relatively innocent business where I got to keep about 42% of the meter plus tips. Clearing $40-50 in one day was considered great. I sometimes spent a whole day driving and sweating for $20, and was later rebuked by the dispatcher for "slacking off." At least I went home with a few bucks and didn't owe my life to a band of slimy profiteers and their enabling politicians.
7
This article misses the point. The bureaucracy of NYC enabled this. Regulators and administrators fiercely protect their jobs and without caring about the collateral damage of the consumers or those without political power.
12
@Edward. The taxi industry was complicit in this, too. If the taxi operators hadn't been complacent in their monopoly, the number of medallions would have kept pace with passenger demand and Uber wouldn't have made the inroads that it did. It is still much more convenient to hail a cab on the street than to order a car online and wait for it to show up. More convenient, that is, if there's actually an available cab around.
But, as with virtually any regulated industry, the incumbents have a vested interest in constricting the supply (competitors).
9
The taxi industry ,the credit union & banks are examples as to why we need strong regulations that are enforced. Failure Trump please take note.
4
To start with the medallion is a stupid concept. Why limit the number of taxis? Why can't anyone who has passed the qualification drive a taxi? Sounds just like the mafia world.
9
These articles on the terrible corruption in the NYC Taxi industry by the NYTimes represent the pinnacle of journalism as it is practiced today. Likely thousands of hours tireless research, analysis, interviewing, thinking, writing, and editing went into these articles, and I sincerely thank and congratulate all involved at the NYTimes. These articles are Pulitzer Prize-worthy.
They are at once highly factual, and heart-searing. Matter-of-fact and moving, and monumental.
These are real wounds and harms suffered by hard-working immigrants sold a false bill of goods by the New York City government working in concert with corrupt medallion financiers and brokers. These wounds and harms are amplified by the illegality daily perpetrated by Uber, Lyft, etc. (who operate without any licenses whatsoever).
If New York City has a heart, Uber, etc, would be banned in New York City, the immigrant taxi drivers would be bailed out, and all those that conspired this terrible fraud on unsuspecting immigrants would be jailed and prosecuted, starting with people like Dennis Dollar and Larry Fisher.
How sick is it that we bailed out the houses of finance and investment bankers that literally conspired to scam and exploit these hard-working immigrant taxis drivers seeking medallion loans?
11
There are conmen all over this country, especially in the White House
4
There go the banksters again, ruining the lives of more and more people, AND everything that's good about The City. Can we PLEASE throw the people behind this travesty in PRISON?
7
I can't believe given all this cruelty, abuse and taking advantage of immigrants, there are still some people who are against immigration reform. How far does interest go?
2
How to measure if NY's Mayors are "good" , "bad" , or "mediocre" ?
Yes , the awful mess described here is one way , exacerbated by the unbearable NYC traffic to which 100,000 added Uber permits have done major harm .
How could NYC sell Medallions for Millions , yet give away Uber permits for free ?
Another way of judging Mayors is to look at the test results for NYC Public Schools , for which Mayors are responsible , and see that barely 50% of NYC kids pass the various tests .
What a shame and what a disaster !!
So overall , sadly , what lousy Mayors have we had !! .
And in my book , Bloomberg the worst of them all !!
2
@Truthbetoldalways.
"How could NYC sell Medallions for Millions , yet give away Uber permits for free ?"
How? Because they're not the same thing. Medallions confer the exclusive right to do street hails. Uber is nothing new on the streets of New York. Car services have been around for many decades.
6
I am reminded of Trump's fixer, Michael Cohen, and his father-in-law, the immigrant from Ukraine, who helped him acquire Taxi Medallions. More corruption? Trump attracts the corrupt as it complements his own taste for the illegal and treacherous.
1
What mixed capitalism is, as exemplified by
the medallion horror, is nutty sometimes.
And Uber and Lyft seem to be a fine thing
until the drivers' protest seems justified.
So what can I conjure from the profoundly
shallowness of absurd thinking?
Why the solution is simple enough ... not.
So who is going to jail over this?
Or better yet, how about convening a commission that has subpoena power and humiliate the TLC, brokers, bankers, and anyone else involved in this fiasco over live radio and television?
2
it's time for a revolution in this country. We need to massively protest as we did in the 60's. Only from massive street protests will real change come. Down with the banks, down with hedge fund managers and all those Ivy League educated "financiers" whose only interest in life is to make money no matter how fradulent.
3
"He had no idea, he said later, that he had just signed a contract that required him to pay $1.7 million" -- that should not be possible. I'm all for holding people to obligations they assume knowingly, but the "knowingly" part is a must. Stronger requirements for clear and readable disclosure won't hold back honest commerce, but will stop things like this.
Require the borrower to write out, in their own longhand, the total amount of debt they're assuming. At least for contracts this size.
5
@Ilya Shlyakhter
Everyone says they "didn't understand what they were signing" when the bet goes the wrong way. You can bet your life savings that, if the medallions had gone up in value, instead of down, these guys would not be saying that they didn't know what they were doing and should be relieved of their loan obligations.
7
A thorough and moving expose. It is clear that lenders took advantage of a vulnerable group of borrowers for profit. However, even a non-English speaker of moderate intellect should know when something appears too good to be true. It's easy for the bankers to blame Uber and Lyft for bursting the medallion bubble but these companies provided services that yellow cabs would not. For example, how many times did a cab stop for you, ask you where you are going, and then drive off when they don't like the address? Additionally, it would have been improper for the City of New York to ban the app driven cab services when they were providing fair competition to an industry that needed a shake up. Moreover, it is completely unreasonable and unfair to expect the taxpayers of this city to bail out a borrower who made a horrible choice when they purchased a medallion. When you invest in any venture there is always a change that you will lose your investment. I do agree that some were taken advantage of by greedy brokers, lenders, and bankers. The borrower should pursue them civilly if they can prove they were duped.
4
I hope to read follow up stories about taxi drivers who bought a medallion at a low price and then, when Uber started operations, sold the medallion for a big profit. Were they smart or predatory?
4
@Robert Borman "Predatory?" You mean like Ubers' unprofitable below-market pricing to drive taxis and competitors out of business? That kind of predatory?
6
"Medallions" or other means of a city government controlling the taxi industry are "side jobs" for buddies all over the world. They used their monopoly power to not only grab political power, but banish technical improvements.
Then Uber discovered that everyone carried a cell phone and drivers could own their own cars and only diehards do the "Frantic waving hands".
Now the city governments are fighting back -- by protecting their buddies who took advantage of the "bitcoin"- like steady rise in a chunk of metal as a hood ornament.
5
This has been going on for years and now the NYT decides to do a story. It think it's called closing the barn door after the animals have fled.
8
@Michael,
It has been going on for at least 30 years in NYC; many immigrant families pool their money, go in to enormous debt to buy medallions and then the heart aches begin. they used to be called Gypsy cabs; too bad Uber and Lift can not help these people incorporate into their business mode.
Amazing that some of these victims easily forked over $50k plus dollars but didn't place a single thought ointo paying an attorney $500 to look at the papers and explain to them what they were attempting to get into.
17
What happens to these taxi drivers is similar to what happens to people who take out payday loans. We need to strengthen the Consumer Financial Protection Bureau and end this kind of predatory practice. The Trump Administration wants to line the pockets of the rich by easing oversight. The consequences of such unregulated lending is catastrophic as this article so sadly points out.
13
Somebody once said that communism would have taken over the world if only its main sponser hadn’t been the Soviet Union. Cabbies & other working people, meaning the ninety-nine percent, are defenseless against the one percent who regard cheating as a right, otherwise known as ‘capitalism.’
7
We are certainly living in some trying times. The “lie”, the worst. God supposedly hates a liar, but have you ever tried winning against one? It’s impossible. They lie their way out of everything and the other is destroyed. And they don’t stop at anything, to destroy you, they’ll use your social media account to co-opt your identity and as one wrote on these blogs, how, in a different time one sent a hooker to destroy his brother-in-law. Shame on all of us for taking any part in any of this. Turn them all upside down now and then sort them out.
3
Why did anyone ever think it was a good idea to make these things negotiable? They are perfect vehicles for abuse. Why is Uber permitted to operate entirely outside the law? They declare all their employees to be “independent contractors” and can get away with murder.
9
@EJS. Who says that they're operating outside of the law? They're basically no more outside of the law than car services, which have existed legally for decades. Should Uber and similar services have to meet safety standards? Of course. But to ban them simply because they meet a consumer demand that taxis won't is anti-consumer.
4
Medallions were a scam from the beginning. Simply a byproduct of over-regulation.
8
Don't these men ever do an examination of conscience? It might be advisable.
3
Thank you, NY Times. This investigation was long overdue. What took you so long?
3
Welcome to America! Immigrants ripping off newer immigrants and all the while supporting Trump and demonizing the same immigrants they are getting rich off of. Classic.
12
American capitalism at its best : grudging and abusing poor people who have no other choice.
9
Another predictable effect of government interference with markets. If the government never set limits on the supply of taxis in the first place, and allowed markets to make that determination, Mr. Hoque would not have been in this position. And better yet, the cost of taxis for consumers would be a lot lower.
5
The fact that these people were exploited in an unregulated secondary market is an argument for more regulation, not less. Just like the increased congestion, lowered safety standards, and below-minimum wage pay is proof that unregulated markets always lead to a variety of worsened outcomes for workers and consumers.
If you’re trying to bang the free markets drum for Uber, you’re going to lose this argument every time.
3
@Paul D
The notion that government regulation makes markets better is not at all convincing. In the U.S., you would be hard-pressed to find a more heavily regulated industry than the financial industry. Despite that, we had a total meltdown of that industry 10 years ago. Governments simply do not have the ability to regulate and police markets like the actual participants in those markets can. In some sense, your comment proves my point in that those who impose regulations are in a never-ending battle to deal with the negative consequences of the prior iteration of regulation. Thus, regulation begets regulation, endlessly.
This particular article was about an individual in a secondary market who made an extremely poor decision. It is not the function of government to protect people from the consequences of such decisions. As I stated originally, had it not been for the inane regulation in this market to begin with, this individual would never have faced this decision.
And, yes, I certainly will bang the drum for Uber and all other individuals and companies that come up with creative ways to make people's lives better.
2
@Hanoch
"In the U.S., you would be hard-pressed to find a more heavily regulated industry than the financial industry. Despite that, we had a total meltdown of that industry 10 years ago."
I agree with most of your post. However, the financial disaster began in the lesser (or non) regulated aspects of the financial institutions' businesses and spread from there.
1
The medallion system was always going to lead to this. In what universe did it ever make any sense for a cab driver to "need"a medallion worth over a million dollars to drive a cab in NYC?
8
I think that a big part of the problem, which is by no means limited to NYC, is how poorly the entry into the market of Uber was handled. Whatever one may think of the pre-existing system of a city-regulated taxi industry, with medallions as the exclusive entry ticket, that was the official system.
And taxi drivers - disproportionately vulnerable newcomers - were told they needed these medallions in order to drive people around for money. It was a closed industry.
Then along comes Uber, who are allowed to simply illegally push their way into this closed industry with the absurd claim that they weren't providing a ride-hiring service, like taxis, but a "ride-sharing" service. Which is pure marketing spin. (True ride sharing would be more like a system for arranging car-pooling between strangers, with the person getting the ride simply chipping in for gas).
My sad suspicion is that Uber and the like only got away with it because of the relative demographics of those who drive taxis versus those who use them (or used to use them).
But if this is what the riding public wants, then fine. It's just that the tradional taxi drivers who had been playing by the rules - and investing their life savings in taxi medallions accordingly - are entitled to compensation.
And until that happens, I will be sticking with traditional taxi services.
8
@David Goetz.
"Then along comes Uber, who are allowed to simply illegally push their way into this closed industry with the absurd claim that they weren't providing a ride-hiring service, like taxis, but a "ride-sharing" service."
Actually, Uber is little different than the car services that proliferate in the city, and those services are not limited. Taxis still have their monopoly street hails.
3
Such a sad story on greed and abuse - recall it is Mr. Trump’s former lawyer Mr. Cohen who was in this business.
It is also Trump who is gutting the consumer financial protection bureau. Echoes of robber barons who presided before the Great Depression.
But what is harder to comprehend, is why NYC never stepped up to curb predatory lending?
What would we do without the NYT? Thank you for bringing out the truth that we may have the strength to take action.
9
No matter how much the lenders made in fees; no matter the interest rate, no matter what; the charge-off of the principal in each loan is devastating. If the loan balance, interest, fees & expenses were $800,000 and the resale of the medallion brings $200,000, the lender charges-off $600,000. They made their bed, they will sleep in it.
Unless the lenders had additional collateral or a non-ligitant for a guarantor, they are stuck, big time.
1
I wonder how much of this money ended up the hands politicians.. people in local government. In the past it was selling deeds to the Brooklyn Bridge, Ponzi schemes. New York has a long history of immigrants learning the hard way..buyer beware. It says something about Trump as he managed to beat these folks at their own game.
3
Who did Trump beat? He is not an immigrant. He lost a billion dollars of his father's and his banks' money over ten years.
3
Seems to me that these medallion buyers should be able to take the Trump route and just refuse to pay off the loans and yet keep the assets. Maybe Michael Cohen could give them free advice on how to do it as part of his redemption! It is interesting how many commenters are strongly critical of these immigrants who were simply trying to make a living while okaying anything and everything Trump has done over the years from lying about asset values to defaulting on loans to stiffing contractors!
7
And yet, NOT UBER/LYFTs fault spent first 22 years of my life waiting for cab when I lived in NYC and now, when I visit, I don't because UBER/LYFT give better, quicker and cheaper service without the "trip around the park to go faster" scams
10
@Dave. That's what so many people seem to be overlooking. Uber is providing a service level that taxis don't, so people use it. Is that the way that competition is supposed to work?
2
This is such a sad story. I don't know how those with the purse strings and power can sleep at night. It's really shameful. However, it's common sense that you don't sign an agreement without fully understanding the terms. There are plenty of bad people out there who are happy to prey on others, who have no morals or ethics. But it's too late for that kind of talk. Hopefully this will serve as a lesson for future generations.
2
Would Mr. Familant and the others set up a family member or friend with one of these "loans" or protect them from it? Or, maybe they are just students of Bernie Madoff and pure evil.
6
When people knowingly rip somebody off there ain’t nothing good about them.
A research study talks about the adverse effect of the gain in time inconsistency of individuals, which deceptively improves their perception of future prospects. It seems that the people in the business of selling medallions were aware of immigrants’ vulnerability to this psychological phenomenon and exploited it. I had a similar experience with bitcoins. The stealing of bitcoins was very well timed so that none of the buyers could appeal to the regulators.
I have very little sympathy for cab drivers. Every single time I've gotten inside a cab, I've been cheated and lied to. Some would take longer routes, and some would try to chat me up while they drove around in circles trying to ramp up the meter...
Not to mention the fact that some cab drivers wouldn't even pick me up if I was going 20 blocks or less...
These guys ruined their own industry due to greed and their own self interests. I'm glad Uber and Lyft are here to stay, even if it means putting the entire cab industry out of business.
6
Danny K. from the Bay Area: To have no empathy shouldn’t be a point of pride.
10
Is deceiving, cheating, taking advantage of others the new norm? I would call this deplorable.
4
US capitalism at its best.
Thank you, NYT, for doing such a detailed job of researching this story on people no one otherwise cares about!
4
There is definitely greed and deception on the part of the lenders. I find it tough to understand why Mr. Hoque would borrow so much money as an immigrant living in a pricey city. He appears to be educated. Worse, why bring a 3rd kid into the world, given his dire financial situation ?
5
$ 1.7 million for one medallion is simply criminal. The looters should be severely punished.
A taxi driver can never earn $ 1.7 million in his entire life leave alone saving that much money. It’s no wonder some taxi drivers were compelled to commit suicide.
I just wonder why didn’t they seek the help of educated people before signing the contracts ?
5
If you needed an idea of how the likes of Donald Trump was created look no further than this article about a city is a sewer of corruption and unbridled greed.
3
Typical Times - Blame anyone but the responsible party. I missed the point in the article where Mr Hoque and others had guns held to their heads to make these decisions. Much like the sub-prime lending crisis, the wages of stupidity are often tragedy. It's called personal responsibility. But, I guess we can all feel better (and righteous) by attacking Uber and Lyft by taxing and regulating them to death. Zero sympathy.
7
The article does not blame Uber or Lyft. It blames the bankers and brokers who artificially increased medallion prices to sustain a bubble, and notes that regulators didn’t do their job.
This is not market economics, but disinformation. It is a deliberately perpetrated con.
Another example in our broken capitalism of how government serves the wealthy instead of the majority of its constituents.
11
They profited off the desperation and misery of others. They targeted immigrants that failed to understand the dangers. Its predatory and wrong.
8
A lot of people should go to jail for this.
8
Hmmmm, sounds similar to student loans... can one say compound interest? Our government loves to make monetary slaves of hard working citizens. Yet "the chosen" (like the one in the oval office) can borrow and defalt on millions/billions and it is business as usual no fault, no crime, no punishment. It is all business as usual in the great ol' US of A!
13
What kind of people profit from the misery of others, and do it knowingly?Does no one feel they have a conscience or soul they have to account to anymore?
10
I cannot believe that Medina called immigrants who barely speak English delinquents and deadbeats - it shows his character and I wouldn’t be surprised if he did worse than pulling out a gun. What a horrible outcome that the banks and brokers are not taking any accountability for preying on vulnerable, low income, not English speaking immigrants
8
Come on folks. This is just like the housing loan debacle. Paying $1mm to make $100k a year is just plain stupid.
2
What a senseless, stupid way of doing all this. Not to mention the perfect petri dish for the same old scummy cells of greed to multiply and thrive. Perfectly legal. All unfolding in plain sight. Government, hello! Mayor, are you there?
3
When I first started driving a cab the meters were mechanical. The initial drop was $.45! The license to drive was called a Hack license, which was issued by the Hack Bureau of the NYPD located in a seedy warrant of 2nd flood offices on Columbus Circle. There a written test was administered to determine one’s knowledge of the city! A small thing, since Each applicant sponsored by a fleet was provided the answers in the exact sequence prior! It was a greasy, grimy and corrupt industry then as now!
Too, then as now, it was grease, grime and corruption that was allowed to flourish under the city’s direct supervision! So, to whatever degree the bankers, brokers and fleet owners are at fault here the City is doubly so!
4
Uhhh, if you’re not smart enough to understand complex financial agreements then don’t enter into them in the first place? Setting aside the legalese of these contracts, you don’t exactly need to be a rocket scientist to know that a loan of around $1 million is going to be hard to pay off - even if you had no interest.
These taxi drivers got caught up in their own greed as much as anything else. Granted that greed was based on a false belief that medallion values would only go up, but it’s greed nonetheless.
2
You blamed the victims.
"Granted that greed was based on a false belief that medallion values would only go up, but it’s greed nonetheless."
3
@JP Greed is capitalism’s motive force. These drivers were merely striving to be good capitalist! So what’s the beef? None of them were
greedy for yachts and caviar! For the Chance to own a modest house and perhaps get their kids through City College they were 16-hr days, 6 days a week! So, again, what’s the beef! Remember Madoff! We’re all crooked timber!
We
2
If even one person was instructed to write incorrect numbers in their application or was deceived, a crime has been committed, but it is difficult to prove. I that same crime is repeated, for each repatition it gets easier to prove. Here's hoping.
2
Article fails to tell the other side of the story:
1. On no money down loan on asset that drops 60%, it's the lender that loses money.
2. Unlike student loans, a bankruptcy filing wipes all the debt away. Yes they "lose everything" but the article makes clear they didn't have much to begin with.
3. Yes ugly abuses but why didn't word get around in these tight knit ethnic communities?
4. Argues strongly for Trump's merit based immigration system. This would not likely have happened to a college educated person with reasonable English skills. Taxi and other low skill wages (nail salons, dishwashers, cleaners) are low because there is a vast oversupply of unskilled immigrants that can only do this kind of work.
2
The hedge funds buying up the medallions get two passing mentions in the story. Why? Which funds? Who are their principals? How much do they stand to make by creating artificial scarcity? Why is it that is that these vultures, in an otherwise deeply sourced and reported article, are anonymous?
7
This is truly sad. While those in the business of making loans said they followed all the laws required, I find it detestable. What "law" allows mountains of paperwork with the truth about what is being arranges lost in a jumble of legalize? What "law" allows preying on those with little working knowledge of English? I do not understand how those who made millions can sleep at night. Unbelievable!
4
So, who will go to jail for this hustle? There are plenty of candidates among the brokers, bankers, hustlers and government officials. Time to make financial crime cost prison time. Prosecutors squandered their chance with the mortgage crisis; time to do their jobs for this one.
6
You can't help but think Trump's points-based immigration proposal has, well, "merit," after reading this article.
Immigrants preyed upon by other immigrants.
Surely it's no coincidence that those who suffered had no English language competency. Mr. Hoque seems to have had a good, dignified life in the old country, and his experience here has ruined him. How many more immigrants who are intelligent and accomplished back home should we expect to come here to live in squalor, leading, as he put it, an "unhuman" existence?
His qualifications could have been of great benefit to his country of origin. But being suited to nothing more than driving a cab in America, this is the worst sort of "brain drain."
And was I the only one who winced at his dream of sponsoring his siblings, as if Ann Coulter needed more ammo? Not sure how feasible it is, but it would probably make more sense for him to simply default on his debt and return to Bangladesh and rebuild there.
These appear to be people who, given their work ethic alone, would have thrived in the economy of 100 years ago. But today, they are giving up more than they will ever get back to come here, and it doesn't seem fair to encourage them.
7
Just like the refugees and asylum seekers, he and others like him quite likely borrowed money from relatives to finance their start, which they cannot walk away from. Defaulting to a finance institution is one thing, defaulting to a family member is quite another.
1
The S&L Crisis 1980, the Investment Banking collapse and Great Recession of 2008, and this N.C.A.U. scam are ALL examples of the continuing corrupt of capitalist corporate looting schemes where the lack of real democracy, the ‘capture’ of corrupted regulatory agencies, and an unbridled corporate capitalist trail (not of tears) but of looting underscores how and why our once promising and sometimes progressive country has been reduced to a smooth running Disguised Global (crony) Capitalist EMPIRE — now for the first time ruled by an Emperor, Trumpius I.
Capitalist Corporations were feared by our founding fathers for good reason — as the royally chartered East India Corporation of the British EMPIRE was.
The ONLY corporations that were originally allowed to even exist in America had to be for common public purposes and limited duration of a project for the public good and commonwealth.
4
So the only need for medallions was to limit congestion?
I find it sad that in order to drive someone somewhere you need to pay tens of thousands of dollars. What crony capitalistic top-down mess.
2
When you buy a home, the value is estimated. In this case, how did the banks did not run their models and see if this is a viable investment or purchase? It was a scam pulled by sophisticated people on the poor and vulnerable. It is a shame.
3
A one word fix for this criminal mess caused by the greedily mismanaged medallion system: UBER!
I know, I know, it has its problems, too. But nothing like this.
1
These drivers need better protection, don’t you think? I would like to help. Care to join me?
3
The borrowing was foolish and impulsive; the loans were not reckless - they were predatory - and the lenders made a lot of money.
1
Taxicub industry has ALWAYS been full of not-very-nice people. Starting up from cab drivers who ignore traffic rules and going up all the way to the top of Taxi&Limousine commissions.
It's no wonder that Uber simply rolled over it the moment it became possible technically.
3
The exploitation of taxi drivers in New York is not unlike the exploitation described in The Jungle, by Upton Sinclair. Most of us were told the novel exposed the unsanitary conditions in the meatpacking industry, but the abuse immigrants suffered in the early 1900's in Chicago, at the hands of corrupt landlords and bankers was, to me, far more chilling. The point being, unregulated capitalism is ugly, immoral, corrupt and a stain on our nation's history. Sadly we have not learned from history. We continue to repeat our transgressions. Look at the people we have elected to office: sycophants for the rich. and a president whose bigoted, sexist and discriminatory conduct would get him fired from the civil service, and from any supervisory position in a reputable private business. Where is our sense of dignity? How can moral people tolerate such immoral conduct? And, why do we blame the victims who have succumbed to the low blows of the powerful who do not play by the rules?
7
This is not an example of “unregulated capitalism “. It’s the opposite. A governing agency interfered in the free market by creating an artificial shortage of medallions. This story is an example of the results that occur when the government controls the market. It’s an (unintentional) warning against socialism.
2
The government removed restrictions on credit unions, which left the regulation to the free-market. The Invisible Hand was thus free to raise a finger to working class people. Government intervention that is financed by business interests is a homage to the free market economics of our new Gilded Age.
"It is unclear if the practices violated any laws."
That's because our financial services laws have become little more than a safe haven for loan sharks, scam artists, and grifters. The whole financial services sector is based on rent-seeking, which our politicians conflate with real economic activity. That there is any serious debate over the value of a fiduciary rule, or any controversy over something called the Consumer Financial Protection Bureau, shows exactly how completely disconnected from reality our financial laws and regulations have become.
One of the basic principles of contract law is that any provision found to be unconscionable can be voided in the courts. One would think that clauses where one party surrenders basic legal rights, including the 7th amendment right to a trial by jury in any disputes exceeding $20 in value, would be unenforceable on their face. But the politicians and the courts routinely enforce mandatory arbitration clauses in consumer services contracts.
And then there are the fees and charges and so forth, imposed for the sole purpose of bypassing usury laws.
Like I said, loan sharks, scam artists, and grifters.
4
The banks giving out loans knew from the very beginning that the taxi drivers would never be able to repay them!
They knew very well that most of these loans would default!
So who is at fault here? The banks, because they have turned into greedy institutions knowing very well that they would destroy people's lives!
They should be held responsible to the fullest extend!
5
By deliberately targeting immigrants who were not so familiar with the English language with cold calls from lenders, not taking into account that someone with an income of around $30,000 a year was hardly likely to be able to repay a $1 million loan, making the loan interest only, adding excessive taxes and fees, and advertising it as a sure fire way to get rich and achieve the American dream, the lenders had no ethics and knew EXACTLY whàt they were doing. This kind of situation can occur wherever a desirable supply is restricted to create a demand. Allowing medellions to be sold to non owners who could artificially drive up the price was an abuse waiting to happen.
5
Difficult to distinguish how much fault belongs to buyers, and how much to lenders... BUT it's clear that the city has abrogated the implied contract of the taxi medallion by allowing Uber and Lyft to operate in the city (NOTHING against Uber and Lyft, in my experience they offer a better service than yellow cabs). The city should compensate current medallion owners and end this system. It no longer makes sense.
Kudos to the Times for great reporting.
1
One October night I took a cab and chatted with the driver who was from Bangladesh. He told me he worked all the time because he was paying off his medallion which cost him 700K. All he cared about was that his son had gotten into Bronx Science. That meant everything to him. I knew something was very wrong with the medallion financing when I heard this, and said so. I said the government should regulate this. He said: "No government regulation. I came here to be free." It's all so ironic. I never forgot this conversation. Thank you New York Times for this exceptional investigative reporting. These are the stories that make possible change for the better.
15
@Clarice
This is how I feel too. This heartbreaking story needs to be a wakeup call. If there were a way to legally hold those who earned money this way- the lenders, who were corrupt in intention and action- personally responsible to pay restitution to those they cheated, maybe it would put things on the right track.
1
Sadly, you have to be extremely careful when you sign any legal agreement. Though I have a great deal of empathy for the driver, I can also remember the countless time I would hail a taxi and the driver would refuse to go to the outer boroughs or above 72nd street, and when u did find a cab, sitting in traffic as the meter kept running. Uber and Lyft liberated the passenger and totally changed the dynamic putting the public first.
11
"As lenders loosened standards, they increased returns. Rather than raising interest rates, they made borrowers pay a mix of costs — origination fees, legal fees, financing fees, refinancing fees, filing fees, fees for paying too late and fees for paying too early, according to a Times review of more than 500 loans included in legal cases. Many lenders also made borrowers split their loan and pay a much higher rate on the second loan, documents show.
"Lenders also extended loan lengths. Instead of requiring repayment in five or 10 years, they developed deals that lasted as long as 50 years, locking in decades of interest payments. And some wrote interest-only loans that could continue forever."
These people may just as well have been brought over in chains in the bowels of ships. The result's were very similar. An old story, since the beginning of time, played out on the streets of NY. These poor slobs never had a chance...
7
I had read with interest and dismay the stories of cab drivers that had committed suicide supposedly because the rise of uber and lyft that had cut into their earning power. Now I see the other piece in the puzzle. The usual greed of the fat cats combined with the ignorance and hope of the working man in the street. Very interesting article.
15
@mollie
You surely must mean: Very sad article!
From the article’s description, I would characterize this system exploitative. It keeps the yellow medallion taxicab drivers in debt bondage.
Blame the debt on poor investment and changing market, it does not change that these are essentially enslaved, and too small to be bailed out.
The story also reminded me of an 18th century French caricature etching of a rich noble and a clergy piggybacking on a peasant.
10
The Murstein business and similar ones operate no differently than criminal loansharking. The difference is that they fall on slightly different sides of the law for historical and political reasons. The morality and the practical, day to day operations are quite similar. Political power can shift and facts can be exposed, as was done in this article, such that Mursteins and similar can just as easily find themselves in prison as Park Avenue. Among other things, the article serves well as a cautionary tale to those who knowingly operate “close to the line”.
11
I feel for these people, but I spent my four years at Columbia and the rest of my adult life in NY either looking for a white person to hail me a cab or eliminating taxis from my radar below 125th Street. These car sharing services eliminated the humiliation of getting from point A to point B in NYC in a hired vehicle. If their business model included equity, perhaps they wouldn't be in this situation currently.
14
This whole matter should be further investigated by both federal, state and municipal entities.
And specifically, the lenders, should be investigated by said entities as to the propriety of their loans.
With recent, unanticipated competition from newly profitable tech entities such as Lyft, Uber, which didn't exist just a few years ago, a study should be undertaken, in order to ascertain if and how it would be feasible to allow both types of entities to survive and thrive.
3
A man just wants to drive a taxi and not have to be a wage slave to someone else. Simple. Then there is a whole pyramid of hangers-on feeding off a single driver with a young family. NYC created medalions, like bonds a financial instrument, out of thin air and released them into the market with no oversight. From the very beginning an inexpensive and simple licensing process would have accomplished the same goal. Why do all the get rich schemes always start in NYC?
18
True, an occupational license would have been sufficient. If there were more taxis than the demand would support, the drivers not making a living would have quit or gone somewhere else, and the free market would have regulated itself.
Credit unions are not-for-profit, not non-profit. It's a very big difference, and one that allows a situation where a credit union CEO to buy yachts and mansions, and how the credit union "movement" became the credit union industry and how the good guys of banking are fast becoming like the rest of the banking industry and losing their original purpose.
(It's worthy of an article because, while the taxi medallion bubble might have burst, others involving niche industries are only going to be worse. In particular I'm thinking of legalized cannabis, and the bubbles forming right now.)
People reading this article might notice that the medallion market -- a market created by government-regulated artificial scarcity -- was stable for decades before getting completely out of control in the naughty oughties. Of course the answer is the same as with real estate: big money got behind it. You mention this in the article, but the timing of that entry should have been made clearer. When did the big money arrive? That's the point on the chart when the prices took off.
Several of those interviewed said these were crazy loans. Indeed they were, and without the ability to sell them on to big players you never would have seen local credit unions writing them. Taxi regulation created a medallion market, FI de-regulation allowed the bubble to happen. There will always be crooked opportunists in business, but they shouldn't run the financial system.
12
BUYER BE AWARE. A cruel lesson to the rst of us. Always keep your eyes open. Just because you are a hard working driver and know how to operate a taxi, doesnt mean you know how finance and borrowing works. Always consult a specialist (lawyer, financier) that you hire. These are money well spend.
4
Currently the Homeland security and the TSA is terribly broken and no one takes responsibility for people migrating from other countries and this makes them vulnerable to loan sharks and vultures. For some time we stop all migration in the USA and fix the thousands of such problem and only then we should allow orderly entry of foreign citizens and ensure they receive humane and fair treatment one they receive legal residents.
5
As an attorney, a few months ago I made very similar observations in a New York court on behalf of a client, alleging fraud and violations of the civil provisions of the RICO act, which the court rejected. The court just didn't see it. So I am appealing. I really do appreciate the research these fellows at the New York Times have put into this, because the taxi drivers themselves seem to not really have the resources to do that kind of research. Judges read this paper so an article like this will help to educate them on a subject that they likely don't know too much about. This article might help a lot of people, actually.
23
@Jay Sanchez
The "fellows" credited with contributing research are named Doris and Susan.
14
Lack of English speaking or "newly arrived immigrant" ought not be excuse for not knowing what papers people are signing. It is not non-english speaking immigrants, even native-born residents also might have faced similar situations. Let us say, for example, after signing up stack of documents, the same year or the following year, the taxi-cab driver makes payment and most of it goes for interest, he/she knows it is interest, right then and there, he could have filed a complaint with the taxi commission; however, in this case, the belief is he might have felt he hit the jackpot down the line when he could sell the medallion for more money than he paid and kept quiet. Now the market had shifted and people take other means of transportation and the complaint now ensues. It is similar to someone taking a second, third mortgage paying high price for a house, hoping to flip it for a higher price and when the market tanks, he/she owes more than the house is worth. However, if the market keeps going up and he sells, then he makes a tidy profit.
7
@Hari. Easy for you to say. Willing or not, predatory lending and conspiring to jack up value’s (see The Russian) is horrendous and lead to human tragedy.
2
It should be illegal for banks and credit unions to make loans to individuals when the bank knows or should reasonably know that the borrower cannot pay interest and principal out of current cash flow - not increase in value of the collateral for the loan. It should be illegal because all other loans are by definition predatory. We saw this in the housing market. The institutions making loans for the medallions surely knew the prices were inflated and the loans not capable of being repaid out of earnings from the cabs.
10
@Ann
You give the banks too much credit. In fact, they are crowd-following lemmings just like the borrowers. The only collateral the banks had is the medallions, which now have plummeted in value, so they lose as well when the loans become uncollectible.
2
Yet another case where the NYTimes blames private business for a problem that is solely governmental. Medallions are a government racket. Now that superior services like Uber and Lyft have exposed the government racket for what it is, drivers are being ruined. This is caused by government. Stop blaming business for it.
25
Wong. Did you even read this article? “bankers, brokers, lawyers, investors, fleet owners and debt collectors” are all from private industry. Heartless and greedy.
2
@Itsnotrocketscience There's no system to exploit once you get rid of the medallions.
This is the opposite of the American Dream -- now you work hard and you become desperate and destitute. We have become a country where the strongest feast on the weakest, like vultures stripping corpses of flesh. And we the people do not make it our priority to protect the most vulnerable in society. This truth underlies our recent political turmoil and the regime of Trump.
Capitalism is no longer lifting up the poor in the US. It is not even lifting up the middle class. Instead, it is a gigantic machine for pulling wealth from working people and concentrating it in the pockets of the wealthy. Every year, the gap between rich and poor grows, and this is one more repulsive example of how unregulated market economies make that happen. How much longer can this continue?
50
"Mr. Hoque made about $30,000 that year. He had no idea, he said later, that he had just signed a contract that required him to pay $1.7 million"
"drivers took on debt they could not afford, under terms they often did not understand"
“The part that wasn’t fair was the guy who’s buying is an immigrant, maybe someone who couldn’t speak English"
"A Pakistani immigrant who thought he was just buying a car ended up with a $780,000 medallion loan "
Moral to the story:
Don't sign contracts written in language you do not understand.
28
This is deplorable and intentional malfeasance. Immigrants are the hardest working people and deserve better. They are not meth heads, or entitled trust fundies, they slave to support their families and tolerate a lot of grief from Americans. This country is preying on itself because it is "profitable" though frankly not sustainable. Ugh.
14
Let this wonderful reporting be an end to how things have been done when it comes to taxi medallions.
13
It would be valuable if the graphic showing Mr. Hoque's revenue showed the impact of taxes. For example, Mr Hoque would certainly have to pay self employment tax, but also would take deductions for business expenses such as gas, maintenance, insurance, and other expenses. These all reduce taxable income.
2
@David, Hmmm, reductions of an income of $30,000 would not be necessary as there is a $12,000 deduction for him, and if married, his spouse leaving -0- Federal Income Taxes. BTW, $2,500 a month is not enough for a family to survive, not including payments on a sizable loan.
New York City's own TLC (Taxi Limousine Commission) created this monopoly over transportation in the first place. They created this Frankenstein long before the loan sharks started circling these gullible immigrants. The biggest mafia on Earth--NYC's government--happens to have the sixth biggest economy on Earth. And the TLC is the second biggest generator of revenue for NYC--a fact that was oddly omitted from this article. Which member of the TLC was bribed or paid off to allow Uber and Lyft into NYC in the first place? Did anyone within the TLC consider how a ubiquitous driving app would affect the livelihoods and huge financial investments of these taxi medallion holders? NYC, for all of its grandiose claims of liberalism, is the most money-hungry, selfish, inhumane city on Earth.
16
@Joshua Folds.
"Did anyone within the TLC consider how a ubiquitous driving app would affect the livelihoods and huge financial investments of these taxi medallion holders?"
Frankly, that is irrelevant. The only thing that should be a consideration is whether Uber and other services improve life for the public. It should not be the job of the government to preserve the status quo.
7
My parents always told me education was the only way up. Guess these people will have to learn the hard way.
5
WOW....NYT is doing a REAL story instead of Trump bashing? Feels like a newspaper with a mission, like it was before!!! Am sure this phase will be shottlivrf!!
25
"They were conned" to come to the US.
12
Thank you Brian and team. Excellent journalism.
13
American exceptionalism writ large.
4
It's rather amusing to see people blaming this fiasco on "free market capitalism."
Newsflash: medallions are a government-created cartel. They shouldn't exist. Government regulation created this problem--which it then made worse by arbitrarily allowing Uber and Lyft to operate outside the cartel.
22
Drivers as a group should default and seek protection from creditors, and the return of funds obtained by deception and fraud. Those involved in taking advantage of them should face jail and have their assets seized. Just like happened to the same banksters in 2008...
12
@expat perhaps NYC should return the money. They are the real villain not lenders. The lenders were irresponsible as were borrowers. NYC was the beneficiary
6
Unfortunately, exploitation of people that drive for a living seems to be acceptable. Uber and Lyft are predatory businesses also. The drivers are making far less than minimum wage when it’s analyzed. What good comes from allowing predatory businesses to operate?
11
Disgusting - NY City should never allowed the medallions to be speculated with.
11
@David DeFilippo
Perhaps they should pay off the loans and retire those medallions
3
British Columbia is probably the only jurisdiction on the planet without ride hailing. Both right wing and left wing parties have been massively dragging their heels although popular opinion wants it. Because of strict regulation it may never happen...govt.setting parameters re criminal record checks. insurance. drivers' license regulations. The real reason is the power of the South Asian community. They tend to concentrate in specific ridings and bloc vote. Also there is political donations which will be markedly less influential going forward because they have been markedly capped. Already the companies Uber and Lyft have threatened never to come because of all the proposed rules.
Any jurisdiction fighting ride hailing should study British Columbia. We march to our own drum indeed.
6
@bcer
"The real reason is the power of the South Asian community" Surely, you must be joking.
Vancouver has been home to illegal Chinese Uber for quite a while. Despite being well known by the government that they exist, nothing has been done to enforce existing laws.
https://globalnews.ca/news/3953538/richmond-ride-hailing-illegal/
The real doozy is that unlike Uber, the Chinese raid hailing apps are only available to those of Chinese descent, continuing the Chinese tradition of xenophobia and bigotry.
7
@bcer
Just visited Vancouver. The absence of Uber/Lyft is a real inconvenience, good luck hailing a cab when you need one. The irresponsibility and disdain that Vancouver politicians have for the constituents are appalling, including the horrific homeless problem.
The Taxi industry was artificially propped up by the New York City government. Why was the price of a medallion allowed to rise to such a ridiculous level in the first place?
What did we expect to happen?
16
The only recourse now is to declare bankruptcy. Don't feel bad about it as it is the only way getting out from under. You tried to provide for your family. Vultures had other plans. Good luck!
7
@Don Juan We've all seen those sales contract warnings that you have three days to second-guess your decision.
What if the city instituted a regret period of - maybe a year? - two, three years? - involving loan or rental customers taking the option on undoing everything they thought they wanted to get into?
@The Observer
Then nobody would make loans to cabbies. A 3 year rescission period is basically an option, not an obligation. Try calling your bank and telling them you want a 90% mortgage on a house, but want the ability to put the house back to the bank in 3 years if you feel like it. Come back here and let us know how many lenders would make you a loan with that feature.
2
So, NYC is awash in grift. Who knew??
The only thing "regulated" was the total number of medallions, creating an artificially high value.
Drivers who bought at insane levels were desperate and foolish, but because of the overall controls on sales of medallions, the City should have had some regulations covering such sales. And the lending regulations? I wonder how many in the hierarchy made money off the drivers at the bottom?
11
“They did loans that were frankly insane,”
Clearly a predatory industry, exploiting the trust, ignorance and greed of immigrants. Everyone, but everyone in NYC has known about the medallion Ponzi scheme, for decades.
So while this article is an example of quality investigative reporting, one needs to ask WHERE WAS THE NYT 15 YEARS AGO? Why did the city Taxi commission abet loan sharking and predatory lending if not because of corruption?
In my view, the timeliness, cleanliness, courtesy and transparency make Uber/Lyft/Juno more convenient choices. By curtailing them, the City is simply penalizing another population of immigrants as it lets off the shady financiers and corrupt city officials. Let's see if deBlasio has the guts to go after the sharks.
12
@Kai
De Blasio is the shark. NYC got the money. Nearly $900 million in medallion sales during the rough time this article covers. NYC got the money. Not banks.
8
I've come to the stage of life where I realize that the world is a cruel place. No one cares about the little guy, including banks, corporations, especially government. These cabbies are the latest sacrifices on the alter of unfettered capitalism.
27
There are many days I am not proud to be an American.
21
This is also a risky business for lenders; once debtors go bankrupt, it's done. The basic idea, I heard, is "Don't let them die nor live."
1
Lenders don’t loose as they take possession of the Medallion and resell it. Right?
2
@Rod Zimmerman
At a 80% loss. Lenders were foolish and buyers as well. NYC got the money.
4
This story is neither new nor unique. The predator-class that demands "Less government, fewer regulations" always enriches itself exploiting the weak, poor, and uneducated members of the society. Of course no one ever goes to jail for these crimes. And yes, these practices should be crimes, even if there are no laws against them now.
19
@JB
Perhaps the government officials directing the sales should go to jail. NYC. got the money.
Borrowers lost banks lost
4
@JB except in this case the problem was more government.
What can I say?
For all of the talk about this country's freedom of speech, freedom of the press, freedom of religion, freedom of etc., America is about the freedom to turn a buck faster than you can anywhere else on the planet.
Writing this from Nob Hill, where the Uber/Lyft condominium has decimated the taxi industry, those very drivers invested in their community.
The Uber/Lyft folks DO NOT KNOW WHERE THEY ARE GOING when their GPS fails, or even then it functions and sends the driver to an unidentifiable street corner. These people come from the (sorry, sort of) *banlieues*, chasing a fare with no idea how to drive in a community.
And every day, I thank God that I will not be around long enough to see where this will all end.
Have monthly bus pass, will travel.
17
I remember taking taxis in San Francisco. Clapped out Crown Victorias with 300 000 miles speeding over potholes to the airports. Meters? Turned on if the driver felt like it. Outer Sunset or Outer Richmond? Call dispatch and wait an hour for a disgruntled, bitter cabbie NOT to show.
The “drivers” you speak of “investing in their community” (whatever that means) were most often not the ones doing the driving, having bought the medallion as in investment firstly and then leasing out the medallion-car to others to do the driving. They waited for their medallion - retirement and then were going to cash it in. This in a city that prides itself on the newest and cutting edge except for a monopoly racket like cabs. Then the progressives circle the hybrids.
And I’m constantly scolded that I don’t need a car in San Francisco, where MUNI is a system most cities would envy. Remember when Willie Brown was going to fix at least *some* of MUNIs ills? I do. I’m still waiting.
Nob Hill? How fortunate you are, a neighbored crossed by buses, cable cars, and of course cabs at hotels. Enjoy your 1 California and 30 Stockton.
2
@Levon
All good points, especially the ongoing travails of MUNI. Admittedly, I am spoiled.
Note that potholes are the great equalizer, for all modes of transportation.
Whenever people say that one does not need a car in SF, I say that I don't, but people, especially families, in the outer districts do.
I see that the ride-share mechanisms are practical in the outer districts. My problem is the congestion in the "inner city", due in no small part to the ride-sharing services, making it impossible to get from my home to Mission Bay in less time than it takes to walk.
A little while ago a friend ordered me an Uber. The GPS directed the driver to wait for me one-half block away.
Perhaps a solution is to apply London-style congestion regulation to downtown, and encourage ride-sharing for the outer districts. This might make for an efficient realignment of resources.
Interesting point about the medallion ownership.
Re. dispatchers, order online at yellowcab.com. Yellow Cab has a brand to defend.
"progressives circle the hybrids" lol I'll take the liberty of using that one. Applies also to sanctimonious defense of the "civil right" to live on the streets and fish through garbage cans.
Anyway, thanks for replying.
1
Here we have the perfect distillation of a corrupt yet familiar ethos: slimy government-structured but deregulated capitalism: 1) The machine-fueled construct of a capped number of transferable medallions, paired with 2) the complete free-for-all of amoral profiteering by the powerful.
This is the same dynamic that enables the massive waste/theft of resources under the auspices of the MTA/unions/sweetheart contractors.
Meanwhile, on the national level, we have the higher level of deregulation of finance and business paired with pilfering of public coffers within the defense and healthcare industries.
Instead, we need a radically pragmatic and moralistic renewal of civic responsibility.
The winner-take all district-based system of city councils, Senates, etc. must be thrown out in favor of proportional representation, i.e. parliaments.
13
Unions bad? Sir let these hard working people do their much needed jobs.
1
This is a true immigrant travesty and an example of why I wanted to become a lawyer.
In contrast to thoughtless, lazy Central American border jumpers who do not have the character to value legal entry. Their values are why the countries they are trying to skip are the war zones they are.
3
@David H. Why don't you try living in one of those Central American countries for awhile?
7
Yeah, it’s so “thoughtless” and “lazy” to want to escape the threat of daily violence and death threats. Why don’t you move there and show them how it’s done then?
4
This is all on the TLC and their masters for creating an artificial shortage that that enriched fleet owners and financiers while driving the vehicle renting drivers to lose their life savings to debt and for some, to lose their lives to suicide. The renters never had the ability to monetize the pricing premium from this artificial shortage. All the gains went to those who were able to get in early in the game who benefited.
Uber and Lyft finally showed the emperor had no clothes on and disrupted this corrupt market. Let drivers charge a premium during peak hours to make the most money possible and let them lower their pricing when there is lower demand. Let the renting drivers make the money and take out the speculators and financiers out of the equation.
The TLC and government alone need to find a fair way to make whole the victims of this market distortion and corruption. They have blood, ruined lives and shattered dreams on their hands.
9
And \De Blasio looked the other way the whole time
17
How are these credit unions that pay their executives millions of dollars per year ($30 million, in one case cited by the article) considered non-profits? Where is the public benefit? How do they get off the hook from paying taxes? These two articles describe many crimes which should be investigated and prosecuted. The abuse of non-profit status to avoid taxes and enrich certain individuals should also be investigated and fixed.
It’s outrageous that so much money was made by a select group of individuals preying in unprepared and ill-informed immigrants.
16
GREED is strong in New York city and it starts at the top not the bottom, and who runs the city?
8
The article states that from 2002 to 2014, taxi industry leaders artificially inflated medallion prices, which helped cause them to quintuple.
Which taxi industry leaders?
How did they artificially inflate medallion prices?
4
Outstanding journalism - how about turning those lights on politicians? A solid deep investigation into them one by one
Adrienne
13
@Adrienne Jarvis
The investigation was fair at best. The central thread was apparently predetermined as bankers evil A true objective analysis clearly shows NYC was the real winner financially. Borrowers lost and banks lost. NYC could simply pay off the loans and retire medallions. Good luck on waiting for that. More I think about it a terrible piece.
4
I was a cabbie about 40 years ago. Even then, we all knew that borrowing from the sharks to get a medallion was a sure road to disaster. So, nothing's changed!
15
Aren't Uber, Lyft, etc. a bigger part of this than the lenders?
1
@Michael Livingston
No they're not.
6
Just as credit card companies are now required to tell you very clearly how long it will take you to pay off your card and how much in interest you will pay if you only pay the minimum, so should any loan have similar requirements of clarity that assume a minimal level of financial literacy on the part of the borrower.
The fact is that many, many people are not equipped with the education to avoid situations like those described here. We need to do better and it needs to be standard across all loan types. Yelling about greed — or shrugging and saying “caveat emptor” — is not gonna change a thing.
8
i am deeply conflicted on this. Maybe the borrower lied on the loan application and took the loans without understanding all the details. Maybe the lender did not know all the scheming that went behind the scenes or maybe they presumed that the lender would know what they are doing and how they are managing their finance. At the end of the day, entire families are effected by the greed of all parties involved.
There is the motto of Greed is Good, but it comes at a cost and some or the other person has to pay that cost. This has been the cycle since the beginning of civilization and society. The other alternative of socialism comes with its own problems. A central authority cannot ever make a decision that is right for all the people. There will always be people who will get the wrong end of the bargain even in that case. And as much as i understand socialism, it inevitably leads to a race to the bottom in terms of people trying to do the best.
Humans are essentially selfish beings. So unless we evolve to be like a colony of bees where most of the participants are selfless and working for the betterment of the hive, such stories and instances are bound to be repeated.
1
The despicable greed of a minority of people should not be used to define our great country. We fight injustice and we don’t give up.
5
what's the problem, from a conservative perspective, free market and social Darwinist forces at work. Market and natural selection will produce optimum result and we should just let that happen in the "natural course".
1
@John Smith
Quite the opposite. Overly regulated artificially imposed scarcity. Not a free market at all.
3
Thank you NYT for this article. It is criminal how these immigrants were treated. Shame on the people and companies that took advantage of them. Keep the pressure on them!
12
@Voter
You do understand that NYC is the villain here. Borrowers and banks both lost.
5
@J. Shepherd. And, the riding public gained because 1) it now has more options and 2) there are now more vehicles instead the artificially constrained quantity of medallions that bore no relation to actual demand for services.
If the taxi industry had been doing an adequate job of meeting passenger needs, Uber would never have gotten a foothold.
3
This is why one should tip in cash...so at least their kids will eat another day.
10
@Charlie This is why nobody should take cabs (or other Uber, Lyft) any more. It should be obvious by now that these drivers are being grossly lured and abused. It just makes me sick to think that such practices are legal. And it won't be long until driverless cabs roam about our cities and will render these people completely useless. The price of medallions is headed nowhere but down.
5
I didn’t like Michael Cohen before I read about taxi medallions and now even less...
10
In 1865 the USA abolished one form of slavery. Slavery to debt fueled by the greed of few to the detriment of many is however still rife in 21st century America.
5
@Okihara
It is simply astonishing to me that you are conflating relatively trivial matters of greed and stupidity worth a few dollars in cab medallions with the systematic theft and brutal subjugation of millions of human lives over a 300 year period. I think you need to get a grip.
4
banks: 21st century loan sharks , much much bigger, powerful , ruthless, and with no accountability whatsoever, yet no-one is able to hide from them.
6
@sam
You do understand they lost massive money on this don’t you? NYC was the winner
4
At the same time, these crimes might have been convenient for Uber and Lyft, who offered comparable slave wages to those who might have been displaced by the Ponzi schemes---then some of these drivers ending up in no-man's land. It was a total disruption of the industry. Just awful.
4
This travesty is the dominant picture of New York held by eveyday people between the coasts.
New York City is the proverbial home of crooked and voracious moneymen - the kind of creeps who end up shut out of business in small towns where people see eactly what is happening and wod gets out overnight.
2
“The practices were strikingly similar to those behind the housing market crash that led to the 2008 global economic meltdown: Banks and loosely regulated private lenders wrote risky loans and encouraged frequent refinancing; drivers took on debt they could not afford, under terms they often did not understand.”
Except the “2008" crash was NOT simply caused by bad housing loans and their reselling as derivatives.
It was caused by a massive unregulated derivatives market, backed by fake insurance. The Obama administration never reversed the deregulation of derivatives, and never insisted that what was in the derivatives (many purchased, “cashed”, by the Federal Reserve) be made public.
So this is yet another example of the NY Times being grossly misleading about the “2008" crash.
Now, right, all sorts of loan brokers had no business selling such loans to cab drivers making $30,000. I also see no mention of the fact that in the 1970s cab drivers were cab company employees, with pay checks and social security.
Derivatives=Collateralized Debt Obligations + plus possible side bets=often junk bonds.
Fake bond insurance=Credit Default Swaps. Sell more, then you can sell more junk bonds.
Submitted May 19th 8:00 PM Eastern
8
As a long time New Yorker, I feel very sad about the plight of these immigrant taxi drivers - a lot of these drivers are from India and Bangladesh. I always enjoy chatting with these drivers either in Hindi or in Bengali language.
They are very hardworking people trying to accomplish their American Dreams. I'm curious to find out whether or not these impacted Taxi Drivers sought help from the Taxi Drivers unions like New York Taxi Drivers Alliance which is led by a remarkable leader and a social activist: Ms. Bhairavi Desai. Additionally, I'm also infuriated by the ineptitude of the governmental agencies responsible for regulating the Taxis.
15
Thank goodness there were no "job killing regulations." Thanks NYT for this much needed story.
16
For years I’ve wondered how taxi drivers could make a go of business given the insane prices of medallions. Thanks to this article I now know that they can’t. And people wonder why capitalism is in question?
13
The first rule of predatory lending "we were just providing a service, the borrower should have been more careful".
24
It is very ironic …
4
City should buy back medallions and rent them out on yearly leases.
Meanwhile we should stop green card lottery for the sake of the low skilled workers already in the country.
9
American Exceptionalism. Whether indentured servitude by way of H-1B visas, exploiting undocumented workers, or any other creative ways devised on Capitol Hill, we never quite manage to get rid of the cave-man style capitalism that so abhors 'socialism'. Long li e the free market forces inspired by our religious and spiritual leadership.
8
@Erik van Dort
Yeah. Should definitely let government run things. Worked out so well for nyc taxi industry
2
what I see is not related to Uber or competition. this is a scam, and unfortunately there is no rule to protect people against scams by banks and big companies as they have money and can hire good lawyers to write the rules which it makes sense for them. Shouldn't be a rule to stop getting rich by manipulating people? These lawyers, and bankers are pushing the society into its edge by making not only a person but whole family poor. where is justice. I mean when a president can lie about his wealth, what do you expect from ordinary people. This is a jungle rule if you are strong nobody can catch you, but if you are weak a simple mistake can cost you everything. Look at the articles were published in NYTIMES about how Mr Trump manipulated the system to not to pay his tax and now he is a president. Thanks to capitalism
7
@rz
You do realize that absolutely nothing to do with NYC medallions has to do with capitalism?
3
Predatory criminal conspiracies are getting to be a norm in America.
Former head of CFPB says the NY Attny General ‘should investigate lenders’ Should?
“A handful of powerful industry leaders artificially drove up the price of taxi medallions, creating a bubble that eventually burst….and “generated huge profits for bankers, brokers, lawyers, investors, fleet owners and debt collectors…creating “multimillionaires…..rich enough to buy yachts and waterfront properties.”
“…..strikingly similar to those behind the housing market crash that led to 2008 economic meltdown: Banks and loosely regulated private lenders wrote risky loans and encouraged frequent refinancing; drivers took on debt they could not afford, under terms they often did not understand.”
A pattern in America. Sensible regulations by elected govt for public protection from exploitation are simply equated with big govt interference in American freedom of private profit. Extends to the attitude on taxes, and health care profits. It's the underlying reasono HC for all is still blocked in America.
Sounds like "COLLUSION".
And ---NYT: "New York Sues Sackler Family Members and Drug Distributors.” Arts institutions now reject Sackler philanthropy---after opioid overdoses plague the US.
A pattern, with ripple effects on all of us.
The medallion fleet exploiters and the opioid pushing Sacklers should share the same jail cell. In the same prison as Bernie Madoff.
10
Reading this made me very sad and angry. Taxi drivers are part of what make NYC the greatest city in the world. I always (unless I’m busy/on the phone) talk with my drivers, and it is a delight to hear about their home countries and their lives in the city, and to share a conversation with a stranger for a brief while. I can only recall 3 poor experiences in a countless amount of rides; most drivers are kind, professional, and work long hours for not a lot of money. I’ve gotten tips on which restaurants make the best food of my driver’s country, I’ve been comforted after hailing a cab right after a painful breakup, I’ve been comforted when I found out my then-roommate was stealing from me, and I’ll never forget, after I was mugged and going home from the hospital (with money given to me by the ER nurse from her own pocket because my mugger had stolen everything!), my driver turned off his meter and refused to accept the money no matter how much I insisted. I have had so many touching experiences like these. Lastly, I strongly prefer riding in yellow cabs over Uber/Lyft because the difference between professional drivers who know all the streets vs someone doing a side gig is great; I’ve missed flights because an Uber/Lyft driver got lost on an unfamiliar street. I truly believe NYC taxi drivers have one of the hardest and most stressful jobs in the city. No one deserves to have this over their head. We should all support them; they are an essential part of our city.
24
I’m shocked! Banks taking advantage of people
7
@Massimo Podrecca
You do realize that NYC took advantage of them. Banks lost money.
2
I knew for years that there was something very wrong with TLC and how cabbies were doing in New York. While my friends began using Uber, Lyft and Via because it was cheaper and app-accessible, I kept flagging the yellow cabs; knowing that our cabbies were struggling. They need our support, our business, I would tell friends. But with congestion pricing and fare hikes, taking a cab is much more expensive than last year. It was my impression that these fare hikes/fees were meant to go straight to cabbies' pockets so I kept paying (although it really is less expensive to take Via or Lyft nowadays). But after reading this, I'm wondering if these fare hikes are another maneuver from TLC, Albany and brokers to make profit out of this industry, drive customers away, and make it easy for drivers to go bankrupt and lose their medallions.
This industry needs to overhauled, uprooted, wiped clean. The TLC, city council and Albany must correct this problem and redeem itself for its poor oversight and mismanagement.
11
This is one more example of capitalism greed. There is nothing in this country that isn’t tainted by ruthless lawyers , Wall Street and myth manufacturing.there is no decency and no character.
We need Elizabeth Warren to put these criminals in line. She is a lawyer who cares about democracy and know the monetary games being played on the citizens of this country.
5
@Tony
You do realize that NYC is villain here don’t you? Banks and borrowers lost money
1
@Tony Excessive regulation is what got us in this mess in the first place.
Who is in charge in New York The Trump family you will always have greedy GOP around abusing the poor workers
3
@D.j.j.k. You do realize that Democrats have essentially run NYC for decades and likely forever. The Democrats are the culprits...sorry to burst your internal narrative.
My father in law came to America with no education, worked a factory job, and saved enough to buy a medallion for 40,000 in the 70s. Sold it for 1.05 million when he couldn't work anymore. It was beautiful. A guy who never had more than 20,000 in taxable income his whole working life, got a seven figure payout for his retirement. Then I think about the poor guy who bought it (working class type, seemed like a decent fellow), and it's not such a great story anymore. He must be so underwater I can't imagine what he'll do.
7
He shouldn't have had to buy it in the first place and shouldn't have been able to sell it since it was a public good. Always a ridiculous system.
6
@Bob:"He shouldn't have had to buy it in the first place "
Nothing was mentioned about "having to buy it in the first place".
Did anyone else notice that the taxi driver in the story was making only $30,000 per year before he purchased the medallion? His income before and after the Ponzi scheme for medallions is not the issue in this article, but it is relevant to the frequent stories and debates in the pages of the NYTimes and other papers as to ride hail companies. It is often argued that ride hail is far inferior to the taxi business for driver compensation, and that Lyft and Uber drivers cannot support their families, but taxi drivers could in the past. If this taxi driver’s income was only $30,000 after nine years on the job, how are similar or higher incomes of Lyft and Uber drivers really any different?
9
Don't we just know POTUS deBlasio will fix all this.
6
What a wonderful country!
3
Big fish eat little fish. It's the circle of life. It's really just that simple.
The libs in the prosecutors offices should be focused on these kinds of issues rather than harassing Trump. To let these loans stand is unconscionable! Shame on conman Warren Wilhelm
6
DiBlasio will do nothing about this. It’s not politically expedient.
7
Here’s another revolutionary idea- if you must migrate to the US in the 21st c ntury, try landing on US soil with a decent fluency in English. Trump is right.
6
Yes, because learning English while fleeing gang violence through drug-infested Spanish-speaking nations is right at the top of the To Do list for the day.
7
@Alexa:Bangladesh is a Spanish speaking country?
2
Micheal Cohen and his father-in-law got big into the taxi medallion business, and then the latter realized that he was in over his head . . .
4
Before The Taxi and Limousine Commission was created, Taxicabs were regulated out of The NYC Police Department's "Hack Bureau." It was also known that there were Police Officers who drove cabs on their off hours to earn extra money which kept crimes against cab drivers low. How about moving this back to The Police Department's oversight?
5
@Jeff Brosnan
I wondered why some of the pictures medallions said “Hacked”.
These are adults who made adult decisions. Showing photos of the man’s children does not change that fact. Do I feel for him as a human being? Of course I do. Do I think big brother should reach in and stop people from chasing their dreams, even less.
10
I’m trying to understand why he had the third child despite going through this and already living in a studio. Why is there no issue with this mans total lack responsibility. He should be charged with child abuse.
5
It wasn't Uber or Lyft that caused me to take less taxi's. I was born in New York and I have used cabs since I was a child. Every place I want to go is walking distance in Manhattan, but I take a cab when I am in a rush. They put a congestion price of 2.50 on each ride, so my ride to work each morning went from 5.50 to 8 dollars. There is never congestion in Park in the 30's and rarely significant congestion on Madison. I can afford the congestion pricing, but it is just so hostile, I have significantly curbed my cab riding and just walk. I am sure it has an effect on the cabbies incomes and on the price of the medallion
2
Hard to feel too badly for them after the decades of appalling service and slovenly cabs. I haven’t set foot in a yellow cab since Uber came to town.
4
Maybe someone said it before but, these are the same drivers who for decades discriminated against blacks who were simple trying to get home. It's now a go to trope in comedy, of the taxi driver leaving a black person in the dust. So, do i feel bad for them now? not really. Is it insensitive of me, maybe, but maybe if they did do their jobs and not carry on the discrimination of other marginalized people we wouldn't be where we are today. Complain all you want about Uber but i get my taxi when and were ever and not have to plead with someone just to get home.
7
Problematic investigative journalism. The flaw in this reporting (which editors ultimately bear responsibility for not flagging) is hinted at by its stray observation made in passing: “It is unclear if the practices violated any laws.” Exactly. So this story implicates far more complex public policy questions than its crudely drawn caricatures of evil rich villains preying on unsuspecting innocents. An example: flip this story around (poor immigrant drivers denied medallion loans because they don’t have adequate means to repay), and the same crusading reporters would be writing an expose on how unfair that is too. Just as with the perpetual home loan controversy (is it better to deny loans to borrowers likely to default, or to take a chance on them?), and as with life in general, right or wrong is not so easily judged.
17
@Beantownah
You nailed it.
Perhaps a minor but intriguing point: while this is all happening Mr and Mrs Hoque made a conscious choice to bring home a third child? Is the threat of poverty not powerful enough to reconsider this until their circumstances get better?
24
The city has allowed the private sector to benefit from a public monopoly. A perfect example of privatizing gains and socializing losses.
We have the same problem in NJ with liquor licenses, where the number that can be issued in each town is based on population and doesn't take into account business demand. This is a system that is at least as old as the medallion system. As a result, current owners of licenses can resell them for huge amounts, none of which accrues to the public. But, the existing system is too difficult to change because it would damage the economic interests of the owners, even though change would benefit the public in the long run.
If there have to be, say, medallions, they should be issued for a fixed period of time long enough to make investment in a vehicle feasible. If a taxi lasts three years, for example, the medallion should be good for some multiple of three years (3, 6, 9, or no longer than 12). At that time or when the current owner no longer wants to use it, the medallion reverts to the city. The fixed-period medallions can then be auctioned off again at market rates, with all gains accruing to the public. Bidders will pay only prices that can be justified by potential profits during the license period since they can't resell the medallion, eliminating the risk of a speculative bubble and associated excess prices. If Uber appears poised to take a portion of their business, they'll simply adjust their next set of bids accordingly.
6
Surly taxi drivers gave in to greed. No tears. Next.
7
Of course those people profiting off the loans are no less greedy than the drivers who you claim are greedy. So successful greed, by your logic, is okay and unsuccessful greed is not so good? Or is all greed bad? I’m so confused by your comment.
7
In Chicago, Michael Cohen sealed in taxi medallions.
The mob like individuals who shamelessly preyed upon immigrants should be sentenced to jail.
But before they serve their prison terms, they must drain their bank accounts to purchase out of pocket, a medallion, and provide reparations to those of whom they exploited.
Prior to jail time, they should be mandated to drive a taxi from 10 pm to 6 am six days a week. And on a weekly basis, ferry their families around so that their spouses, and offspring realize they are not deserving of the the life they are accustomed to.
7
Ok Dems...let's open those borders so we can mistreat more immigrants? Where were Bloomberg, DeBlasio, Bharara, and Cuomo during all of this? They were conspicuous by their absence!
13
Without immigrants there would probably not be any taxi drivers since plenty of able bodied American people would, or have, gone diisabilty
1
@Dutch
You're right, Dutch. But we have to have safeguards in place for immigrants and not just throw them into the streets. This taxi issue is terrible, and complicated for a non-New Yorker like me. It appears to have been corrupt for many years, which begs the question "How could this have gone on for so long?".
2
Kudos and thanks to both Brian Rosenthal and Kholood Eid for a thoroughly well researched and well written article that was not only difficult to read -- but difficult to understand the extent of man's inhumanity against man.
11
@N. Smith
You do realize that their central premise is incorrect? Banks and borrowers both lost money. Only NYC won
2
This gives a whole new meaning to "Cash Cab".
4
as my wife just said, they might just as well have killed them and taken their money. this is just another sickening example of unregulated banking.
19
Makes Uber look like an angel
5
I cannot finish reading this. It is so reminiscent of the housing SCANDAL that I wonder if these people have a soul. You would assume that we learned from the past but no. The rich take advantage of these poor people trying to help themselves and provide for their family. Every one of these lenders past and present knew they were selling these victims lifelong debt they were unable to repay for their own benefit.
Something has to Ed one to stop this kind of fraud.
I saw do not come to America where people can rob you without guns and not be punished.
12
You’re right. Reminds me of the Upton Sinclair book “The Jungle “ from the beginning of last century.
8
This story has legs. The NYS AG can examine it in two directions. One is whether there was an organized fraud as it concerned the price manipulation of taxi medallions possibly linked with a scheme to lend into the fraud via credit unions and finance companies which were established with the intent to deceive. If there were common actors between the owners, the financiers and the collectors conspiring to defraud the incoming buyers a criminal and civil case against the operators, the corporate directors and other beneficiaries could be pursued.
9
@Will Eigo well said yet I do wonder if no matter the NYS AG does that anyone will ever be seriously prosecuted and JAILED for their crimes. Or will taxpayers just bail out another failed greedy enterprise and pay the bill twice over ?
2
The bankers have Ivy League MBAs.
The drivers are trying to eke out a living.
Lax regulation of Wall Street. Again.
Who wins?
16
Another example of "vulture capitalism". As long as there is money to be made - you will find people and companies more than willing to rip-off immigrants, the sick, the elderly or the uneducated. Other examples are "The Sackler Family" and "Trump University".
21
They bought medallions high and Uber came along.
End of story. Ain't coming back now!
Same could be said for buyers of Fairfield County, CT real estate pre-2008. It will be 25 years to get back to even money at best.
9
The US has over-sold itself as a promised land for immigrants for its entire history. In two or three generations, they become sharks too.
13
I agree. This may have been true but is certainly no longer the case.
1
In 2014, if that driver had bought a new Toyota Prius for 20k then signed on to drive for Uber and Lyft and used the other 30k as down payment for home, both he and his wife would be doing much better today financially. That NYC medallion loan system is criminal.
Thank You, NYT, for your extensive research on the topic.
11
“The industry veterans said the Mursteins, as well as others, started saying medallion values would always rise and used that idea to focus on lending to lower-income drivers, which was riskier but more profitable.”
Presumably this is the case because the lower income might be less educated and so accept more predatory terms?
Shameful.
Wasn’t Michael Cohen heavily invested in the medallion racket? Only the finest people after all ...
8
The takeaway from this is that the US is quite a hostile environment for low skilled immigrants no matter that they are ready to work themselves to the bone. Trump, despise him all you need to, is onto something with the new proposal re immigration, - to consider skills and education level. If fewer low skilled people were allowed in, wages in low skilled jobs would be forced up. People in less developed countries would understand the absolute importance of training and skills. And if they were able to acquire high level skills they might wield them at home instead of emigrating to the US, thus driving up wages here even more. The US would become a more a place where even the bottom ring of the ladder paid better, and developing countries would have an emergent generation of motivated, skilled workers propelling their economies. Right now we have the opposite. A race to the bottom and dirt cheap labor forces of desperately overworked and impoverished new comers. Even if Trumps proposal is just a fraud, Democrats should be smart enough to develop and push it.
13
It seems unlikely that we could reach a status where even the bottom rung pays a decent livable wage, it's definitely a dream worth aspiring to. It seems like Trump's proposal of only well educated immigrants would come with a different set of costs. The cost of living would inevitably rise considerably if all low wage jobs were forced to raise wages until occupied thus pulling down somewhat the standard of living currently attainable by middle and low income families. Perhaps it's worth it, perhaps not, but it should be examined by the experts. I disagree with the proposal in terms of compassion and the consequences to our national diversity. Are we to sequester compassion to immigrants seeking asylum from war torn nations in favor of only the highly educated? Inevitably, we would become less diverse by closing the door on immigrants from developing and poor nations because the opportunities don't exist in those nations for a would-be immigrants to enhance their skills to the proposed acceptable qualifications. I don't disagree with immigration reform, or entirely with your comment, but it seems like a multifaceted solution is needed; if a simple one were out there it would already have been employed.
@Chuffy No, the souls from LDCs would not understand the "absolute." The manifestations of this problem and this sadness and exploitation are far too understated in your comment. I don't have the energy to explain.
@Annie Kelleher -I have four decades of physical work informing my perspective. Everyday I work with ppl Durango, or Chiapas, or Guatemala City, or Kingston, or Guyana or....
The beginner level trades people are lucky if they take home $100 a day: in New York City. The older ones who are genuine masters at their tradecraft are taking home 200 after taxes if they have a really good gig. That’s master trades people in New York City. So no, I don’t think you CAN explain why it wouldn’t be a good idea to shrink the pool of workers and let people prosper a little. Unless it’s just because you really don’t want to pay more the next time you have a meal out, a renovation done to your home, child care, elder care, a driver, a gardener, or any other device provided by the army economic refugees who are competing with each other for the crumbs from the uppermiddle class table.
2
This story gives new meaning to the phrase, "taken for a ride." And as usual, it's impoverished people of color (nearly all immigrants) who are fleeced by predatory lenders and other legal "vultures" and then left behind.
Hey AG Tish James, you up?!
5
NYC Should learn how to protect their citizens and city by looking at London Taxi.
6
@WZ That is exactly what is not needed.
1
So this would be an example of predatory capitalism. Republicans have no problem with this type of activity. If it is illegal, they would seek to make it legal.
6
Wasn't the Consumer Financial Protection Bureau created PRECISELY to protect people in situations like these? The need is surely great, and usury and fraud appear to be the norm, even with organizations calling themselves "Credit Unions."
Ask Sen. Elizabeth Warren on the campaign trail if she did not intend the CFPB to exist to help people who are being conned by Ponzi schemes. I am certain she will give you an earful.
5
@Chris Boese, ask trump why the cpb is NOT protecting them
1
While my perspective is anecdotal by means of observation and consideration I would not be surprised if in greater NY area a similar story surrounds much of what Uber has been doing. Not Uber per se, but the same style of medallion entrepreneurship. I explain: in NYC an Uber car certainly ( and I assume the driver ) must be licensed by Taxi Limo Commission to operate. Then , if you notice, so many of the cars are the same model and color etc. As if they are a FLEET. I actually believe they are fleets. Then, you will take note that quite commonly the drivers are young men ( well mannered, articulate and trained ) who drive these cars. Often their stories is an immigrant’s tale and they are often from similar parts of South Asia. I do not assume they all coincidentally bought the same car and decided Uber was their future. More than likely I submit, there are ethnically dominated, established immigrant businesses that buy a fleet of cars, register for a raft of TLC permits and plates and then call in their cousins to do the driving. Some may be driving with or without an obligation to pay for the use of the vehicle. Some may actually lease the vehicle outright. But I will bet the fleet management is controlling the top line revenues and taking a cut of the driver’s work.
3
@Will Eigo. The “fleet owners” don’t necessarily own the cars. I’ve talked to a few Uber drivers that rent their own cars to other drivers - or to middlemen (equivalent of fleet owners) who rent to other drivers.
2
Thanks for that information. We agree that to some extent NYC Uber is not just individuals waking up and putting their own cars into the Uber app which is actually the way it happens elsewhere in USA.
7
This has been a sweat shop industry for decades--long before Uber appeared. It was a sweat shop not in spite of but *because* of government regulation, which diverted profits to fleet medallion owners and to the City.
At most, the city should sell a $100 taxi license to anyone who wants to drive... whether a yellow cab, an Uber, whatever. Anyone who can pass the requisite driving test, background test, and show he or she's insured. Creating an asset in medallions--a city-created privilege that people own and sell--was a betrayal of the public interest. The faster mediallions are eliminated, the better off everyone will be.
But rather than blame the City, let's blame Uber!
13
I am amazed that, with all the investigation and analysis given by the NYT to the medallion bubble and the inevitable system of easy money lending underlain by fraud that it encouraged, the writers simply write off the obvious agent of destruction of the system, Uber and Lyft, as an almost minor component of the problem.
But how was it that a publicly created and supported market that had been allowed to become the basis for a vast amplification involving speculation, lending and abusive business behavior could have been immediately surrendered, with nary a defense, to a simple declaration by Uber and Lyft that they were going to operate.
It appears to me that, even if the bubble had never happened, and medallion prices only risen along with what it's government imposed scarcity would cause, this would still mean that they would sell for 1/3 to 1/2 half as much. Over the years, the authorities have made sure that someone with a big Buick from the South Bronx couldn't slap a "For hire" sign on his car in order to make a modest living. What happened to the mandate of the Taxi commission? That the city abandoned a system that so many had put money into in good faith with no fight is the real crime here.
But, unfortunately for the hacks, the writers, most readers and most riders simply like Uber and feel no obligation to uphold an agreement that they no longer benefited by. But better to blame those who did.
3
The data mentioned does NOT demonstrate that yellow cabs are generating considerably less fares and revenues. It does show that drivers who become owners have the expensive burden of fuel, insurance, maintenance, regulatory licenses, car lease payments and then the ENORMOUS and decidedly treacherous and onerous Medallion financial contract that sucks up their cash flow perpetually. So the article stands up without putting the blame on Uber and Lyft.
6
It’s good to see most of these comments have pointed out the absurdity of this article. I feel for cab drivers, in the same way I feel for coal miners, real estate brokers, investment bankers, radiologists, and everyone else who is dealing with technological change. Also, NYT, please stop citing this suicide stat: it’s insulting and disingenuous. The rate of suicide among drivers over the past year did not exceed the general population, as pointed out by a commenter when you first cited your own statistics several months ago.
8
Real simple Drive for Uber or Lyft... I use them all the time and those drivers are making money. Seems buying a "Medallion" is a pipe dream anyhow.......
3
Wait until the Uber shareholders demand that Uber stop subsidizing passenger rides. The drivers won’t even make the $10.00 per hour they make now. Owning a share of Uber might be a bigger Ponzi scheme than Maddox.
1
Bloomberg for president!
If not Mike, then Bill (De Blasio)!
All for the common man/woman!
What income is required for a million dollar mortgage?
What is the taxi driver "exception" on that front?
2
It is a curious question why the city did not increase yellow cab medallions over the years as the demand grew. Somebody might argue that they profited from the higher medallion values but actually the city left much money untapped and service undelivered since it could have issued more medallions. Except when it did the one big increase mentioned in the article. Obviously the existing fleet owners enjoyed the yellow hail cab scarcity because it meant their cabs were in use for more minutes with fares of the 24 hour cycle. If they did choose to sell a medallion to another they could show how profitable the car operation was. But that began to fade even before the technology edge of Uber/Lyft. Also worth a mention is Via which is prevalent and growing. Via is ride sharing. Lest we forget there are also other sorts of livery licensed by the city that expanded over the 1980 and 1990s especially the black radio cars.
5
@Will Eigo.
"Obviously the existing fleet owners enjoyed the yellow hail cab scarcity because it meant their cabs were in use for more minutes with fares of the 24 hour cycle."
You answered your own question about why the number of medallions wasn't expanded. It would have benefited the public and taxpayers, but the larger number of medallions would have depressed the value of the medallions held by the entrenched owners. The owners held more sway with the T&LC than did the riding public.
3
Yes I realized and agree that the Medallion owners would also ‘own’ the TLC but the general public over decades still elects the Mayor and the City Councilmen, so the buck stops at City Hall which controls the TLC.
3
@Will Eigo. We all know that government officials don't always act in the best interest of the public at large.
In this case, the riding public has decided to employ the free-enterprise system to exert its will. By patronizing Uber/Lyft in such large numbers, citizens are making it clear that they're not happy with the status quo. For years, the taxi industry, secure in its monopoly, resisted the structural changes required to improve service in a growing city. I have no sympathy now that it is facing the consequences of its complacency.
2
Good reporting. The city should make amends to these people.
5
@Kara
By "City" you mean New York City taxpayers.
As a New York City taxpayer, we welcome Potomac's generosity on the matter.
4
@Kara. Except in the most recent round(s) of sales, the city/taxpayers didn't benefit from the higher prices. The public shouldn't compensate people who lost money on transactions where both sides were in the private sector.
2
I was waiting for this single phrase when I read this article:
...". Mr. Freidman, who was partners with Michael Cohen, President Trump’s former lawyer, disclosed the plan in a 2012 speech at Yeshiva University. ..."
The gang is now raiding your country; it will not be nice...!
7
The head of the credit union pocket over $35 million! It doesn't take a Marxist or Socialist to think that there's something wrong if one person is taking out all that money from the system while others are losing their shirts. Shame on the "Progressive" Credit Union and all the other conscious-free actors.
9
This is why many Republican business people are concerned about limitations on immigrants. It will reduce the supply of lambs to fleece. One of the most odious Republican policy prescription is to reduce regulations that are designed to protect low-information consumers. Anything to do with finance sets up an extremely unbalanced relationship in which the low-information party gets fleeced. Elizabeth Warren is right about this.
7
Reading this not only made me ill, but ashamed that in the US we would allow a contract to be binding if the signer did not read and understand the language in which it is written; or if of the obligation exceeded a certain amount and did not read English, attorney review was required to be provided. If this isn't predatory lending at its worst...OMG, what is??? It's like Tulip Time.....
5
Most of the blame here should go to the City government. Particularly the Taxi and Limousine Commission.
The City created this monopoly in the 1930’s by capping the number of Yellow taxi medallions. Years later, the City reaped billions of dollars by auctioning off thousands of “new” medallions at well over $1mil. each. The City budget benefitted from this largess while the systemically corrupt mass transit system (see LIRR overtime abuse) rotted.
Then, in one of the dumbest policy decisions ever witnessed in the history of this City, the De Blasio Administration let Uber and Lyft flout our laws and grow unchecked until there were over 5 times as many Uber/Lyft cars (80,000) on the road as Yellow Cabs—driving down fares (also with borrowed VC money) and medallion values and making it impossible for any driver to make a living wage in this industry. Think of it as a huge transfer of wealth from thousands of individual middle class medallion owner/drivers to a few rich Uber/Lyft founders and their early financial backers. Meanwhile the City lost untold billions in potential future medallion revenue.
The City’s answer to this monumental screw up, aside from temporarily capping the number of Uber cars (closing the barn door after the cattle have left) is to impose congestion pricing so that even more people can suffer from the City’s incompetence.
5
@Malicon.
"Think of it as a huge transfer of wealth from thousands of individual middle class medallion owner/drivers to a few rich Uber/Lyft founders and their early financial backers. "
Also think of it as a vast improvement in service for hundreds of thousands of New Yorkers who had been under-served by the monopolistic taxi industry. Why are the public's interests being ignored in this discussion?
4
@Barry Short It is not in the public interest to be driven around by somebody who is not only subsidizing you ride, but is likely extremely tired from working multiple jobs to make ends meet.
For all the monopoly of the taxi medallions, the government regulation created taxi companies that actually employed drivers, paid them a living wage, and bore the cost of car maintenance.
Uber and Lyft don't do any of that. They intentionally make desperate drivers subsidize fares so that they even undercut public transit options, further eroding the city's infrastructure.
1
@Viv. Government regulation also created a system that guaranteed inadequate service for the public because of the incentive of existing medallion owners to oppose any expansion in the number of medallions, even as the population of NYC exploded.
I have no sympathy for the taxi industry. It it had been doing a good job of serving the riding public and investing in new technologies, Uber wouldn't have gotten a foothold in the city. The fact that Uber is so successful is proof that vast changes are needed. But, an industry protected by a government-issued monopoly faces no pressure to innovate.
1
The article makes it clear that Uber and Lyft did not ruin these guys. BAD MATH did. If any driver had really fleshed out a budget of both Operating Expenses AND Capital Expenses and then factored in the risk of competition and regulation he would have stepped away. People who are bad at math always pay more wherever they go. Now they should wise up and file Chp 7 ASAP. Don’t continue to pay into a money pit.
8
Medallions were never a monopoly on carrying passengers. The medallions were a monopoly on picking up street hails -- and that monopoly is still in place. Uber doesn't do street hails. There are any number of (uncapped) car services in the city and no one has been complaining about them. There are those who say Uber and car services are not the same thing. But, why aren't they? If car services were dispatched by app instead of by phone, would Uber critics be in favor of banning car services? If Uber drivers were dispatched by calling an 800-number instead of using an app, would critics of Uber be happy?
Don't blame Uber because people don't like standing on the side of a busy street in the rain desperately hoping that a taxi will stop for them.
The Taxi & Limousine Commission failed. Not because it didn't protect taxi drivers, but because it didn't protect the only constituency that really matters -- the public. If it had been watching out for the public, it would have ensured that the number of medallions kept pace with population growth.
Instead, the attitude that prevailed was that if passengers couldn't find a taxi at rush hour or in bad weather, well, that's too bad because the value of the industry's investments must be maintained at all times. When regulators are captured by those it regulates--whether it is the NYC TLC or the FAA--the public suffers. End this delusion that the medallion system is in the public's interest and find a way to dissolve it.
10
As a former yellow cab driver that drove just as Uber was getting going, I can confirm that the TLC and garages downplayed it’s potential threat, explaining regulation would keep it at bay and repeatedly stressed that creating tech to compete would be bad for business because it would drive costs up to maintain and “new Yorkers wouldn’t really use it”. It seems in retrospect after reading this that this attitude was purposely designed to keep drivers buried in debt.
8
This is awful and I feel terrible for the drivers who were duped into these loans. However, it would have been a more complete (and honest?) picture had the Times at least mentioned, somewhere, that drivers (until credit card payments became ubiquitous only a few years ago) would have earned a substantial amount of unreported cash tips over and above their salaries. Perhaps the belief that the drivers had amassed a lot of cash in tips was the original reason for giving loans beyond the drivers' means? Not justifying most of what went on, just saying it should have at least been mentioned.
No reason why a medallion should be over a million. This is why Uber/Lyft took off in NYC.
3
@Ben. The popularity of Uber/Lyft has nothing to do with the price of a medallion, and everything to do with a shortage of taxis.
1
ummmmm, that's the same thing. Medallion prices were high because the supply was limited while NYC population rose
1
@GMooG. The limited supply is what enabled Uber to take off, not the excessive price of the medallions.
Name the sharks and businesses who made these loans. If they can’t be jailed they can be tried in the court of public opinion. They should not be allowed anonymity.
1
The city made a billion dollars by auctioning medallions right before the crash. If de Blasio doesn’t repay these people the city gouged, he should got a long term in Attica.
2
@Rick. The buyers got what they were promised in the auctions: the exclusive right to pick up street hails. That guarantee is still in effect. So, if they were gouged, it was of their own doing.
This is why I take yellow cabs instead of Uber or Lyft. I still do not understand why the city allows Uber and Lyft when they had a medallion system in place. In my opinion, NYC is just as responsible as the unscrupulous lenders.
7
@wavedeva. Are you also in favor of banning the numerous car services in the city? If no, why not? They are analogous to Uber in that both must be requested by the passenger.
Medallions never guaranteed a monopoly on passenger traffic--just a monopoly on street hails. Technology has just made that monopoly less valuable, just like technology has made the Post Office's monopoly on first class mail less valuable. Time's change.
2
A piece of advice to Mr. Hoque: Please borrow for the last time to file for bankruptcy. You can rebuild your credit within two-three years but may not a fortune to pay that million $. You can have a fresh start and life may become easy.
6
This article reminds me of my high scholl girlfriend 's dad - a hard working guy from the Phillipines who mortgaged his house to buy a million dollar taxi. It destroyed him and reaked havoc on the whole family. Bravo New York Times. But it goes deeper. Whole parts of main street are pulled under by the finance community. And these guys drive our entire political system for their benefit too.
6
Please show the economic gain of the taxi owners as they used refinancing as their ATM. This is necessary for a balanced article. The NYT professes to have the records from nearly 100% of loans; so, publish. Without this, readers do not know, with reasonable certainty, if some of the examples cited are outliers or typical.
Question - is the extensive database compiled available for independent analysis? A "peer review" type of analysis would benefit newspapers. A simple suggestion.
1
claw back the moneys taken by every single bankster who signed off on those loans; and zero out all remaining debts, with refunds for what these drivers have already paid.
4
@linda It's not the bankers' fault the asset price went down. However, the borrowers can still declare bankruptcy and the banks will not get back the risky loans they made.
1
A taxi medallion's market price should never be more than the bureaucratic time it takes to issue one -- e.g. $200. Same goes for any other permits issued by a city. There is zero public interest in NYC or other cities having rationed these. If there is scarcity, cities need to come through and issue more. The high prices needed to pay off the cost of medallions, not being able to pick up rides in cities where medallions are not issues etc. partly explains the rise of Uber and Lyft.
3
Shame on all those politicians regarding which side of the aisle they sit, who just a few months ago were blaming the demise of taxis and high suicide rate on the Lyfts, Ubers, Junos of the world, a continuously evolving tech industry. That was just too easy instead of the Mayor, City council and others doing their homework to get to the root of the problem; taxi industry asleep at the wheel in a booming tech industry and poor customer service when they once they thought they had grip hold on NYers for transportation. Do feel bad for those immigrants and poc who got conned but as for the industry as a whole, have no sympathy at all. Gone are the days of trying to hail a cab b/t 3-4pm but 100's of cabs passing you by bc of shift change.
4
OK, so let's review the losers here:
I have a pickup that's worth $50k. But I stop you on the street and tell you that because the truck manufacturer is going out of business, this truck will be worth $1M in a year, and I only want $300k for it today. YOU...are...greedy. YOU make the decision to take advantage of me and buy my truck for $300k. A year goes by, and the truck is only worth $30k because the new model has come out. Simple question: Am I to blame for YOUR greed? Or should YOU have done a little research and found that the truck company was in fine shape...Or in this case, done a little research to find that the price of the medallion was inflated? Maybe done a little research into the actual cost, payments, expenses, etc...? No folks, sorry, but as P.T. Barnum said, "There's a sucker born every minute", and you need to be smart enough to not be that sucker. Play stupid games, win stupid prizes.
5
Big mess here. I'm surprised the total fecklessness of the TLC isn't getting more press. They basically had complete control over the prices of medallions because they regulate their issuance and sale. They could always issue enough medallions to keep the prices low or restrict their transferablity to the point where prices would not be high.
Immigration policy is also at fault. Want to create a population incapable of marshaling the regulatory power of the state to help themselves? How about a community of several hundred thousand nonvoting, nonenglish-speaking, low-education chain migrants? They are ripe to take advantage of. They have no options for work so they drive down the wages of the taxi drivers. We've heard this story before, folks.
The banks were icky too, of course, but I have a harder time faulting the banks for doing what they are designed to do (make money) as long as they are doing it lawfully. It's really not their job to regulate themselves. That's the city's job or the job of federal regulators.
1
A great example of investigative journalism demonstrating systemic abuse. It seems there is plenty of blame to go around on this one, but regulation by the TLC was nil, as was oversight of predatory lenders and those individuals seeking to create a taxi monopoly. In that setting tax service was notably inadequate and created a void that Uber and Lyft filled - so why blame them? That said, it’s worth noting who was running the city while these abuses were taking place. Shouldn’t the buck stop with the Mayor and Council?
6
@LTJ TLC regulation was the entire problem
I remember hearing that a medallion cost $1M and thinking "that's crazy". Do the math. There are about 2000 hours in a normal 40 hour per week work year. Even if you work 60 hours per week, that is still only 3000 hours. A $1M loan at 4% is $40,000 per year in interest. That means you're paying $13/hour at 60 hours per week, or $20/hour at 40 hours per week to pay off the interest. And that's before you pay taxes, buy/lease the taxi, pay for gas, maintenance, repairs, or pay yourself a wage.
It was obviously a bubble, a scam or something that made no sense.
3
The idea is to then lease out your medallion cab so it is working 20 hours a day. That’s how you pay it off without going broke.
2
Wealthy preying on immigrants in NYC. As old as the city itself.
Ghouls
4
This journalist, like too many others who report on predatory lending, refuse to acknowledge the harm that borrowers who willfully lie on their loan applications, do to themselves and others. Those borrowers were not "conned," as this headline proclaims. They were part of the con. They knowingly inflicted these risks and harms on their families. They knowingly contributed to making the loans harder to get by honest borrowers not willing to lie on their applications. And, yet, that is the one glaring aspect in these stories that the journalists repeatedly insist on ignoring because it does not dovetail neatly with their pre-determined, pre-digested narrative that only greedy actors in these morality plays are the bankers. That's a facile view of the world, and I would expect more from sophisticated investigative journalism
4
This is such a scam. Show someone the stars and the moon is in their reach and then drown them in debt that they can never get out of. This is the same thing like the housing market all across the globe now. Legalized theft.
I am sorry that they lost their money but didn't they bet ALL on the medallion making them rich. Then uber ruined this. Why does the times make it look there had no responsibility in this and were victims. Seems like no one will take responsibility for anything anymore.
3
I’m not sure of the purpose of this report. Surely, these trends could have been publicized years ago to save these victims millions and some their lives. But, alas, a day late and a dollar short! Everyone knows bankers don’t get jailed or punished substantially, so what is your point here? The bankers can claim that their vicious and unscrupulous practices were and are legal. “Let the buyer beware” as they say. Laisse faire or something like that. The Federal government failed to compensate evicted homeowners in 2009 so why do you care now? These stories are gut-wrenching and heartbreaking but just like with a car wreck, you gawk and keep going. Where was Di Blasio on this? Now he wants to run for prez as a Progressive? Not on this resume! We need the good ole daze when Obama and Biden told you: ‘it’s your own fault!’ And, Clinton said banks get a “bad rap.” Now you know why we got Trump and you know how much HE wants to help. Debt is the new slavery and corporatism is the new fascism but maybe the NYT needs more time to study it for us.
1
Ah, the Reagan Restoration...it's a beautiful thing. Trump as president is actually quite fitting. The kleptocracy, unbound.
I am not sure why we as a nation would want lottery immigrants who are unable to participate in our society by being unable to speak English or speak it poorly.
A fool and is money are soon parted - this is true around the world across all nations.
3
These disgusting, exploitive practices must end. It is a terrible thing to take advantage of people this way. Who in NYC government knew about this, but was also making money? They should be held to account for their misdeeds.
1
They started with nothing and ended up with nothing.
No big deal.
For a few hundred dollars they can file bankruptcy and get a fresh start.
Oh, don't worry about their credit.
This is America. Most debtors will have their credit scores go up within a few months of filing bankruptcy.
The people to feel sorry for are the latest lenders.
They are going to take some serious loses and may themselves go under.
Uber drove them into bankruptcy.
Uber may itself go bankrupt having never turned a profit.
Oh, Sears, International Harvester, Oldsmobile were sure deals.
2
It was a mistake that no banker was criminally charged out of the 2008 financial crisis. I hope NYC doesn’t repeat that mistake.
15
@Ralph Mistakes and fraud will continue until we impose very harsh penalties. Our corrupt politicians are a major part of the problem.
Immigrants with no sought after skills and little education immigrate to a country where it is very difficult to make a decent living for those already here...this is what happens.
Solution--support merit based limited immigration, it's the only solution but emotionally immature people on the left will never go for it.
8
@derek - you mean compassionate people on the left and opposed to cold blooded money grubbers on the right.
2
@derek. That is why a devoted liberal like me will not vote for a democrat who thinks with his emotions instead of his brains.
1
Just another example of Democrat liberals' policy of taxing. Keep voting them in NYC liberals.
1
Just get rid of those job killing regulations, or never enact them, and we’ll all win and get rich. Or at least some will.
The story of America. Always someone ready to take advantage of immigrants, those who don’t really understand the in and outs of American business, let alone the language, those desperate for a better life, those of a different color, and then blame it on them.
5
@JKile These people had been here for a while, several years. There joined a community of immigrants already established in NYC for decades. They were buying into an industry they had worked on for years as well. Cut these immigrants some slack. Just because they were immigrants, does not mean they were stupid, naïve and unschooled in business practices. Your comment is deeply offensive to all of us immigrants here in America.
2
This was a criminal conspiracy. There will always be people who misjudge their circumstances and overextend themselves into insolvency. No business can be held responsible for customers who foolishly take on obligations which they cannot handle. But these businesses targeted people who had not the ability to understand into what they were committing themselves and preyed on them. They convinced them to commit their resources to something that would leave them broke and with only bankruptcy as a resolution. They stole their money.
451
@Casual Observer
I disagree. All lending terms were disclosed to them
and no one forced anybody into signing anything.
These drivers chose to invest in a taxi medallion which as any investment entails risk - no investment is risk free. A lender should not be accountable for borrower's education/sophistication level as long as terms are made clear.
5
@Bob
Incorrect. A lender at all times should be accountable for the borrowers understanding of the terms that the lender is presenting. Otherwise, the action of the lender is predatory. Banks and Financial Institutions (I use these words loosely, as some of these organisations listed in the article seem to be no more than fronts for criminal organisations) have traditionally created terms & conditions wrapped in such legalese that the normal person could not comprehend the intention of the terms. Worldwide, banks & financial institutions have had to be dragged kicking and screaming to provide plain english wording of the their terms & conditions, many still don't.
Whilst individual borrowers must always be prudent in signing up for any financial product on offer, and there will always be people who suffer loss because of their own circumstances, industry wide practices such as this should be abhorred and those who perpetrate them knowingly and deliberately should prosecuted and jailed.
67
No. Not true.
The price of medallions were skyrocketing so these, mostly immigrants, taxi drivers thought they would go the ride and make quick buck.
No one was duped. They made a risky bet and lost.
4
Great article and very sad. I do recall an article in the Times ages ago about the value of medallions going through the roof with many people becoming wealthy, at least on paper. No where in the story was there any mention of inflated values or something similar to ponzi schemes. While my heart goes out to these individuals it was technology that resulted in the value of medallions going down. Similar to the last investors in buggies at the turn of the 20th century, technology resulted in the depressed market. In thr 20th century it was the mass production of the auto, while now it is Uber and Lyft that drove down the value of medallions. Bottom line is that the value of any investment is what people are willing to pay. Some win and some lose, but we all have to take responsibility for the decisions we make
3
All bubbles burst and those who buy before they do lose their money. Every one of the bankers knew that they were taking money from people who were going to lose big and greedily sought to gain from those losses. They did get rich but it was by stealing not good business dealings.
5
One thing for sure, certainly here in San Francisco, medallions were very expensive and cab drivers had to meet fairly strict standards to drive as well. Once the city gave "wild west" freedom to Lyft and Uber it cut the throats of the cab drivers, Cities should offer refunds on medallions by virtue of the fact they guaranteed the destruction of the traditional cab companies.
8
@Ira Cohen
Yes, exactly. Just like the government gave money to the stagecoach drivers when cars and trucks became popular.
7
The situation described in the article is not in any way analogous to cars and trucks replacing stagecoaches. Oh, and according to history, cars and trucks did not replace stagecoaches, trains did.
6
@Ira Cohen. Medallion owners still have the only thing that the medallions guaranteed: a monopoly on street hails. Uber and Lyft, which are essentially dispatched car services, don't do street hails. It isn't their fault that the value of a monopoly on street hails isn't what is used to be.
1
"One of the most successful bankers hired the rap star Nicki Minaj to perform at a family party." ... Is this what we've come to? I'm not sure there's any hope for America after reading something like that.
7
This article is WHY we need to support our local newspapers. Great Job. Sad Story. Thank You for all the effort put into this investigation.
17
"...Mr. Hoque thought his dreams of wealth and independence were coming true...."
Folks like Mr Hoque purchased medallions thinking they would get rich. In this respect, they were just like the unscrupulous lenders.
But the differential in information and sophistication between sellers and buyers in the immigrant community created an unfair market in a commodity regulated by the city. The city had a responsibility and walked away from it. Take that up with your mayor/presidential candidate.
6
Given that the vulnerable in this article are predominantly immigrants, and that the the wave of anti-immigrant hysteria is upon us, I don't see any help coming their way. The hard core will say: you come to this country, you learn to speak english, and stand on your own two feet. Add to that the deregulation movement, especially in the financial services sector, and you continue to see more people bilked of whatever they possess. Let the buyers beware.
4
An immigrant myself, I have done business with South Asian immigrants. I will tell you they outsmarted me every time, and good for them. They not always spoke English, and there were communication barriers, but they knew the value of the goods I was selling, negotiated skillfully and always came out on top. They came across as natural born businessmen, and I admire them for it. So I have my doubts about the Times casting these South Asian immigrant drivers as victims. To me, it seems if they were victims of anything, it was mostly of their own greed.
16
@ The Voice of Reason, according to your ”reasoning” any one who is trying to improve their livelihood and provide a better life for their family is “greedy.” So in your estimation most people in America are driven by greed.
1
The exploitation by medallion owners and lenders is, at best, amoral but real fault lies with the city government for artificially capping the supply for 60 years (!), yet the article seems to give the city a pass. How much has vehicle traffic and population increased over the same period?
Capitalists exploited this government caused market distortion and monopoly until Uber & Lyft rendered the precious medallion unnecessary, causing the collapse in medallion value.
It would have been interesting to read which NYC politicians benefitted from the largess of the medallion owners and the so called credit unions. This is one article where the Times could have dug a little deeper.
12
the American dream for some turned into the American nightmare for others. What were the "regulators" and the government doing? Nothing, worse, adding fuel to the fire!!!
4
This is typical GOP supporter type greedy behavior. You know the type goes to church weekly supports going to war weekly but won’t join in the fight , polluting our planet with coal and fossil fuels. Yet the GOP want less government less jails. I don’t think so. Put millions of these bad GOP starting with Trump in JAIL now.
6
Imagine that, financial corruption in the most liberal city and state in the country while Obama was president. I thought the democrats cared about immigrants and working people.
7
@Jim - NYC seems rather backwards to me. Pot is still illegal, the minimum wage is low, the city just finally got rid of plastic bags, etc.
I would not point to NYC for liberal ideas. They have lots of ideas about what fashion or art is or is not but that is about it.
Cheating people is bad and if the predatory lenders broke laws they should be prosecuted.
But Hoque should not even be in the United States. He is a Bangladeshi who won a lottery and got to come here! What an absurd way to let people into the country.
7
Excellent article.
3
Thank for this important article. This is why I subscribe. It is exactly the reason why we have regulations. They are an inconvenience, sure, but necessary.
1
Thank you for publishing this article
2
Didn't President Trump's (ex) layer Michael Cohen own lots of taxi media]lions? How did he come out in this?
2
This article made me vomit at the sheer ugliness of those thieves.
1
The day NYC allowed Uber and Lyft to work in NYC should have been the day that Medallion loans were paid.
1
Uber and Lyft do have one benefit, they take passengers during shift change. It used to be impossible to get a ride between about 3:30 and 5:30 as the taxis all had to get to their garages for shift change. And of course 3:30-5:30 was just about when cabs were needed.
1
anyone who would pay hundreds of thousands of dollars for a medallion, on credit, should be smart enough to do the math and determine if it is a good investment.
Blame can be spread around, but the buyers of these medallions were driving taxis and presumably should understand the economics of the business.
10
Since when is heavy spending correlated with intelligence? These are immigrant taxi drivers, not lawyers. It’s remarkable we still have people who defend the finance industry after the evil it has waged on nearly every facet of the US’s infrastructure. I’m talking healthcare, education, mortgages. We still defend these people.
5
So are you saying that immigrants are ignorant?
4
@Vincent, quite the opposite
Some may have the prejudice of low expectations.
I hold anyone taking a large loan accountable. If you don’t understand the economics of the business, don’t do it. If it’s a hot dog stand, factory or taxi medallion, one must do the analysis and make an informed decision
2
It may be true that nobody could have seen the coming of Uber and Lyft but I knew people who could have bought medallions years ago when they were relatively cheap but didn't for one simple reason: the figured that at anytime the city could expand the number available and therefore decrease their worth. There was never anything forbidding this. In fact, if the taxi industry, which is suffering now, hadn't vehemently opposed this while people were complaining about the difficulty in getting cabs to come or go to many neighborhoods, the number no doubt would have been expanded several times over.
And I'm sorry about drivers feeling cheated but those who thought it was okay to lie on their loan applications because someone told them it was all right get little sympathy from me. Perhaps it is accepted practice in some of the countries they come from as it is accepted practice to do other things forbidden here but that is no excuse.
As the old saying goes, if it's too good to be true, it probably isn't.
122
@Steve I am sure that some of these unscrupulous brokers/lenders told themselves the same thing. That if a person wants to sign their life away by doing something sketchy, then it's not MY fault. And in a way, it absolves them of their own nefarious ways---legal or not. No, all this was rotten down the line, and it all ended with ruined lives; some innocent, and some who maybe knew better, but ruined nonetheless. There are too many fissures in finance that can allow this.
43
@Steve don't just condemn the "foreigners",..thousands of US citizens played the deceipt game in getting their subprime housing loans and caused the whole country harm,
22
@Steve a wise person once noted that what a person says preceding the word "but" is an often a self-serving lie. What follows the word "but" is often closer to the truth. Case in point - you wrote: "And I'm sorry about drivers feeling cheated BUT those who thought...." In other words; not sorry at all. Your hostile indifference to those that take advantage of others makes their crimes possible in the first place. They know they can count on people like you to blame the victim.
79
Outrageous that no one in authority has picked up on this in 15 plus years. I include the media, it's so easy to blame the new kid on the block - Uber and its ilk - for the spate of driver suicides. Mayors, Taxi & Limo, City Council, asleep at the wheel.
157
@Kim10024 Agreed re: the media, but I don't think we can assume at this point that NYC's elected officials and TLC commissioners *didn't* know about it. To quote from the second part of the series:
"Two former mayors, Rudolph W. Giuliani and Michael R. Bloomberg, placed political allies inside the Taxi and Limousine Commission and directed it to sell medallions to help them balance budgets and fund priorities. Mayor Bill de Blasio continued the policies."
The TLC also controls the NYC ground transportation business with an iron fist. It's not even *conceivable* that they didn't know full well that rich "corporate" medallion owners (including the most infamous one of all, Trump "fixer" Michael Cohen) were snapping them up and reselling them to individual immigrant buyers - for prices that topped out at $1.3 million before the bubble burst. They also had to have known that the lienholders on all these medallions were a small group of credit unions, given the near-impossibility of an individual with little to no credit history securing any sort of "normal" loan in excess of a million dollars.
It's stating the obvious that the TLC was in on it. The only real question is just how deep down the rabbit hole this scandal goes.
15
@Kim10024
The “Mayors,Taxi & Limo,City Council,asleep at the wheel”....I suggest they were well awake and complicit,possibly corrupt.
4
If someone takes out a six-figure loan, they should very carefully do their homework to understand the risks. Unfortunately, they invested in a taxi medallion at exactly the same time a disruptive technology came around (Uber & Lyft) which caused the value of medallions to plummet.
If banks offer capital in the form of loans to lower-income people, and those loans are for investments that don't work out, then the banks are taking ADVANTAGE of these people.
If banks DON'T offer capital in the form of loans to lower-income people, then they are discriminating against poor people and denying them access to capital.
A bank's responsibility is to assess the risks of a loan that are posed to the bank. The individual has the responsibility of understanding the risks of a loan that are posed to the individual.
Medallions have plummeted in value, and banks are not the reason. Anyone who invested in a medallion has only themselves to blame.
89
@North Face
It would be interesting to see you go to another country where you don’t completely understand the language and culture, with limited resources, and not knowing who the schemers and shysters are, and be successful.
Easy to be self righteous.
61
@North Face
It appears from the article that the overwhelming majority of the loans were issued by lenders who were in cahoots with the sellers of the medallions that the owners were looking to cash out at a premium. Once they established a pretend market place, with lots of transactions, banks entered the market.
Medallions were valued at $200,000, which was apparently around the market price, an amount that a cabdriver could pay off in five or ten years while maintaining a living wage and still paying the note, after which he could either cut back his driving hours or enjoy additional income.
In order for it to make sense to buy a medallion for $1million, he would have to believe that he was going to earn an additional $100,000 in profit for ten years instead of an additional $20,000 per year. Someone who bought a medallion for $200,000 would feel that he bought at the peak, and would have been better off waiting, but could still make his payments.
Uber and Lyft did disrupt the market, and the medallions are probably only worth $100,000 to $150,000 today. But the sellers of the medallions well knew that they were never worth anything near the $1 million they got their captive bankers to lend.
24
@JKile
If I were in a place where I had limited command of the language and no deep understanding of the culture and customs I would be doubly cautious about large financial transactions. It’s just common sense.
23
This is not just a story of New York City business, it’s another reminder of how loosely regulated any and all “banks” are, and how the US financial services industry is as dirty and dangerous as ever, no friend to consumers.
294
@JP not really. Banking is highly regulated, but the regulation is focused on big banks. Capital One (essentially a credit card company that bought a bank for funding) is the only bank I would characterize as even regional in size.
The failure is the lack of applying regulations to smaller banks. Remember, the federal government made money off the big banks in the downturn by forcing them to give up warrants and pay big money for "capital loans" that were paid back within 2 years.
The smaller banks, on the other hand, have been failing for some time and do not get regulated the same. Your culprit is weak application to 2nd and 3rd tier institutions.
3
@JP....we see repeated, normalized Collusion in American business to cheat, steal, exploit---with a green light signal by loose govt regulations.
Then we get Trump and Friends/Family.
See articles about the Sackler family with super profits from opoids.
Business is regulating govt, not the other way around.
Can the Democrats run for office to oppose this and win?
9
@JP
They did the same thing with mortgages, thus the market collapse.
5
How is it that physicians, clinics, and hospitals are required, at their own cost, to provide translators for any language that exists but the financial industry does not have the same requirement? I’m not saying that healthcare should not be required, but that financial services should be required. The deleterious effects are potentially as dangerous in instances like this as they are in medicine. Lives are at stake in both fields.
349
@Charles Keller
Trouble is, even speaking English doesn’t guarantee you won’t get caught in a labyrinth of legalese and regulations slanted against you.
23
@Charles Keller
Translators in the medical services are there because of Barak Obama's groundbreaking healthcare legislation. Unfortunately, the financial industry has not been subjected to the same transparency requirements, and as long as rich people continue to make money by duping striving workers, it is not going to change.
Hearing technical jargon in your language does not guarantee that you are going to understand what is being said. And, given that the loan documents were designed to deceive in the first place, I don't understand how any of these people could be expected to understand the documents they were conned into signing.
We really need Elizabeth Warren's common sense approach to the financial industry.
32
@Charles Keller -- no doubt, this is by design. Pity!
9
And if the medallions were now worth $2M you'd be writing about this great immigrant success story. They thought they were invulnerable to competition and the asset would continue to revalue in perpetuity, as if a right to drive a taxi was like owning prime real estate on Park Avenue. We had the same quasi-monopolistic racket here and its long overdue failure has benefited consumers tremendously.
12
If it sounds too good to be true, it is not true. A hard lesson for all these people to learn.
4
I feel deeply for the people profiled in this article. But the problem isn’t predatory lending. The problem is that the taxi business in NYC was heavily protected from competition for decades. And the medallion owners protected their interests rigorously. Not one politician was willing to go against them.
There’s no doubt that medallion prices were manipulated. The market was always opaque and trades happened infrequently. There’s also no doubt that loan terms were structured in favor of lenders.
But it’s also inconceivable to me that the borrowers had no idea of the obligations they had taken on. Particularly suspicious is the idea that one borrower thought he was buying a car for $780,000. Just the size of the monthly payment would have been a signal.
Most importantly, the article elides the fact that it’s Uber and Lyft that caused medallion prices to collapse. Uber rides are about the same price as cabs, so the revenue for both is about the same. But Uber drivers don’t bear the cost of the medallion. So they’re much more profitable. The obvious outcome is that the medallions will decline dramatically in value. Price manipulation and predatory loan terms account for only a small part of the decline.
Also missing in the article is a discussion of losses lenders have taken. Some lenders may have gotten out of the business before the market collapsed, but it’s highly likely that many have lost a lot of money on these loans. Pretty bad predation on their part.
13
Between the Byzantine structure of the loans, loans and brokers bent on deception, and language barriers, the borrower didn’t think he was getting a car for $740,000. He did not know what he was getting, except that the near-term monthly payment - often interest only with a balloon after three years - for what he thought was a medallion, seemed affordable. Our financial system is too complex for even well-educated, native born to understand all the fine print. Which is why we have consumer protection laws and fiduciary requirements.
15
Uber and Lyft and significantly cheaper than taxis
This story illustrates how vulnerable one is to the capitalistic markets and sharks that swim in them. It's why I have spent only what I can afford and need, have always paid my credit card on time-god forbid I give the banks extra money, and generally lived within my means, not extravagantly. I have never put money into the stock market, knowing what a casino it is. Instead I have bought guaranteed bonds. I have been fortunate and now plan on retiring in a foreign country where people are taken care of during their golden years, unlike here.
Greed is as American as apple pie.
13
Medallions. Bitcoins. Stock markets traded by computers, not people. Endless are the ways the rich concoct to fleece the commoners. Yes, buyer should beware. But also what has become of basic human morality? Ethics? Dead concepts apparently.
58
@Karen K
Yep, and we are being conned every day by a corrupt president who cheers his fellow wealthy criminals on.
10
@Karen K We have seen ethics and morals disappear from humanity when an unethical and immoral individual, a grifter and predator in his own right, become our president.
9
@Karen K - Please point to any time or place in history when there was basic human morality or ethics.
1
Vote Progressive. Vote for Sanders/Warren.
No more corporations and banks to run this country, this Democracy, this election.
34
@s.whether
The perfect recipe for more fiascos like this.
12
@s.whether
Yes, indeed. I misread your comment. An end to banks and corporations running this country. Exactly. I'm all for it!
6
@Daphne ridiculous. it wasn't progressives who did this, and it's progressives who are on the forefront of the fights for economic justice, lending justice, and immigrant justice. Centrist Dems (like Biden and Schumer aka the Senator from Wall Street) openly ally with the GOP and (obviously) provide no defense against the predatory capitalists who fund their campaigns.
4
Is it just irony or ironic justice that Mega Funding, one of the worst in this revealing and disturbing “Times” investigative reports, brings to mind MAGA.
BTW, I use the acronym MEGA for Make Empire Great Again.
8
I am sorry for these people’s losses but it’s not the banks fault. There are always winners and losers in the ever changing economy. There’s a movement for some sort of bailout for the people who bought these medallions but doing so would be a huge mistake. In addition, article is way too long.
10
I think it’s what they call a ‘long read’. Sometimes that’s written at the start (to warn people?). The length gives the story a depth that it deserves, imho.
24
@Bill Would you agree then that the bailout of GM was a huge mistake?
4
@Paul
Good lord, yes and I said so at the time,
2
This is truly indentured slavery, another downward slide of western democracy thanks to Trumpism and unchecked greed. The government needs to intervene, forgive these bad loans, force the banks and lenders to reimburse the cabbies and legislatate the end to this lucrative swindle. It's hard to believe this hasn't happened yet.
11
@Una . This was going on LONG BEFORE TRUMP. And I don't like Trump either for what it is worth but you people can't read anything with accuracy.
6
The medallion system was in place long before the Donald was born and the drivers were at the mercy of medallion owners when Donnie was still chasing skirts at Wharton.
7
This scenario will be the norm until our society rebalances from the bottom up. We currently live in a Trumpian world where not paying taxes, not giving back to society is ‘smart’ and swindling simpler or more vulnerable individuals is accepted practice as long as the one running the con is whiter, richer or more educated than the victim.
47
Uber and Lyft came out of nowhere and were immediately successful because they offered a better product than taxis
Uber took credit cards from the start, when taxi drivers were hostile to them until very recent times.
Uber serves all neighborhoods, while yellow taxis were and still are only commonly available in Manhattan, some neighborhoods near Manhattan and the airports. In the “ outer boroughs “ Uber didn’t displace taxis here because the taxis were rarely here before. And in the boroughs lots of the Uber cars are pre existing “ car service “ vehicles who signed up.
The same Uber app will work in NYC and also in Austin and Sacramento. You no longer need to find out how to grab a taxi there, the taxi will come to you. Business travelers and young people switched to Uber years ago, not because of price but because the experience was better.
11
Yea, always blame others, blame the big guys.
When I make a million dollars from the taxi medallion, I'm a genius. When I go bankrupt because I didn't understand it's an artificially inflated market by NYC regulations, it's the bankers' fault.
This is where I vehemently split from the left. Take some responsibility.
14
Really highlights the harm that Big Gov’t causes. They created an artificial market, failed to manage it, and now want to shift the blame to Uber (which lets anyone be a taxi driver without paying a million dollars or working for the ‘Taxi King’).
9
Meera Joshi acknowledged that officials saw red flags and could have done something.
See something Say something. It’s the government mantra and their own employees don’t even follow it. Maybe a few years in jail would refresh her memory
10
On the background of this Story of predatory Capitalism which happened also under his watch, Bill De Blasio is promoting his “legacy” as the Mayor of the fairest City in America. Trumps lies pale in comparison, De Blasio accomplished the impossible even before being elected president, being worst liar than Trump.
3
@RM The second part of this series discusses the failures of all *three* of NYC's most recent mayors to rein in the taxi business, and also includes a link to a Times article from 2012 titled "Taxi Industry Opens Wallet for de Blasio, a Chief Ally":
https://www.nytimes.com/2012/07/18/nyregion/de-blasio-reaps-big-donations-from-taxi-industry-he-aided.html
At the time de Blasio was the NYC public advocate (!!), but reaped huge donations from Big Taxi to oppose then-Mayor Bloomberg's plan to introduce Boro Taxis outside of Manhattan:
"Bill de Blasio, the New York public advocate and presumptive candidate for mayor, emerged earlier this year as an unlikely ally to the city’s usually maligned yellow taxi industry. Mr. de Blasio’s campaign received about $85,000 in the last six months from executives, lobbyists and other affiliates of the yellow taxi industry...
The contributions coincided with an aggressive attempt by the industry to derail a Bloomberg administration plan that would have allowed hundreds of new metered livery cabs in northern Manhattan and in the other boroughs, parts of the city traditionally underserved by yellow taxis.
Mr. de Blasio loudly opposed the mayor’s plan ... and in May, his office filed a brief in support of a lawsuit filed by the yellow taxi industry against the city. That suit prompted a judge to halt the plan, leaving it in limbo; the city, which is counting on $1 billion in revenue tied to the plan, has appealed."
4
I cannot fathom ( my naïveté) how any human could be so greedy, corrupt, and dishonest just to make money off of another human. Where is their conscience, their dignity, their soul??
What is this world coming to?? I guess when we have “leaders” who lie, cheat, steal and con then it all seems normal and ok.
15
@Rob L - This is the way its always been. You should have heard my late grandfather talk about the Depression.
"The banks took our homes and threw us out on the streets. They will do it again. NEVER trust a bank! If you can't pay cash, you can't afford it".
He did not live to see 2008. And I have no credit cards (or credit for that matter) and would sooner do business with Machiavelli than a bank.
1
Thank you NYT for constantly outstanding journalism in the service of the people who have nobody else standing up for them. This was a heartbreaking read.
35
How much did the city of NY generate in revenue for the new medallions they auctioned, and what happened to that money?
6
@ebmem $850 million into their pockets. During the auction period (2004-14) Before the auctions, revenue for the TLC was around 2 mil
6
NYC should give the $850 million back to those people who were deceived and had their lives destroyed by such a corrupt and unforgiving situation. It’s time to man up.
1
"A generation!... That's shocking and so very sad.
1
A prime reason for having regulations that protect the most vulnerable against sleazy people who know exactly what they are doing.
9
Lending money to people who can't pay you back isn't good business.
3
@abdul74
Actually, it's great business if you can legally require them to spend the rest of their lives trying to pay you back, and of course pay back many times more than you ever lent them.
3
Isn’t it easy to see that this is a government failure plain and simple. Limiting and regulating the industry has caused greed and corruption and even suicide.
Now the government has to step in and clean up its own mess with more of the taxpayer’s money.
8
Greed seems to be the prevailing human characteristic, unfortunately.
5
The predation of these hardworking drivers is disgusting and absolutely shameless. Why is there such a gap between what is legal and what is both moral and right? Unfortunately the quality of our society is not measured on the basis of consistent and sustained attempts to close that gap. In fact - it seems to be going in the opposite direction much of the time.
8
This would be the "work" of currant president's fixer.
Anyone associated with Trump needs to hire a fleet
of attorneys.
4
@V Michael Cohen was certainly part of the problem, but he was only one of HUNDREDS of businesspeople with equally low scruples who had no apparent moral issues taking grotesque advantage of the poor drivers conned into buying "investments" they couldn't possibly pay off.
So this happened in a 100% top to bottom Democrat-controlled city, with taxi drivers represented by a union, and the medallions hailed as a brilliant market regulatory device.
Obviously it was a terrible system for taxi drivers and for consumers, specially for black residents of this liberal city who could not get rides or for those consumers wanting to go outside Manhattan.
But the liberal elite celebrated their accomplishments.
Then it all started to unravel.
And they, predictably, blamed the free market alternative - Uber.
And the NYT readership bought that story line for years, vilifying Uber.
The sooner Uber can put the taxi industry out of business all over this country the better off we all are.
11
More of US "starve the poor, feed the bankers" mentality. These drivers are just trying to earn a living to support their families. Capitalism run amok.
6
My daughter many years ago was required to attend financial responsibility classes in order to receive her federal student loan payments. The classes were intended to make her and the students receiving those loans to understand the terms and conditions of the loans including all of the required financial disclosures.
Sadly, the predators took advantage of those who possibly had little understanding of the loan-shark bite of those predators and those borrowing the money were only advised to get an attorney.
Then the sharks smelled blood in the water and drove these people to suicide and bankruptcy.
Shameful that students were or are required to attend a class about their loans but others, not at all, unless that is by design...
7
The NYC cab system is a mess. I’ve usually travel with a group, and every time we land at JFK or La Guardia, the cabbies try to cheat us. They refuse to turn on the meter or they will change a quoted rate by saying tolls are an additional $70. I feel sorry that these cabbies are exploited in some cases, but it reminds me of the saying, “what goes around, comes around.” The entire system seems corrupt from top to bottom.
24
@CJ
You seem to be arguing that we should reject progress, go back to buying our groceries from farmers by the side of the road, making our own clothes, bartering.
The economic system we have is based on change, on the constant introduction of disruptive technologies. Uber is a classic disruptive technology; it works because it’s more efficient (another driving force behind free market economic systems) than yellow cabs.
Ninety-nine percent of buggy-whip makers went out of business shortly after Ford invented the motor car. In your view of the world we’d still have a whole industry of government subsidized buggy-whip makers because it’s unfair they lost their livelihood to new technology.
I can’t decide if your position on this issue is more naive or absurd.
1
A similar fraud was perpetrated by the for profit firm administering the Port of Long Beach, CA. Instead of being employees driving trucks for the firm, the drivers leased trucks from the firm and became independent contractors. Between the fees earned and leases paid -- most of the drivers now have take home pay of less than $50, net, for over 70 hours of work versus the $1700+ they would earn as unionized teamster drivers.
7
So markets are self regulating and government introduces distortions. Hairball situation. While this shows how sellers could collide with others to exploit buyers, they did so over franchises that existed in at least part because the government was regulating the business.
But let’s be real, the distortions of markets develop without government interventions because nobody is okay with losing because of uncertainties and will seek to arrange with others including competitors to reduce those uncertainties. This leads to predatory behaviors. Sometimes society must step in to prevent perversely predatory behaviors.
3
if you sign a loan agreement with all the terms and conditions laid out than tough luck. Why should immigrants be exempt from contact law. They probably come from countries which are far more corrupt. So they should be cautious from life experience. if they cannot understand English than bring in someone who can. get an accountant or attorney. ultimately they bought at the top of the market. an Arabic saying is "buy at sound of cannons, sell at sound of violins"
4
@eugdog "if you sign a loan agreement with all the terms and conditions laid out than tough luck."
Speaking as an attorney, it's not at all unusual for contracts to contain deleterious language that's either buried in the fine print or craftily written in such a way that even many *lawyers* fail to catch. Such contract provisos are expressly designed to trick signees, and as such they're broadly illegal under both US and UK law.
Also, your victim-blaming and apparent anti-immigrant views are utterly repugnant. Just thought I'd mention it.
19
Am I wrong in thinking that unbridled capitalism is essentially an immoral activity and only strong government regulations and moral government leaders can keep capitalism from ripping everyone off?
If so, then I have a response to anyone and everyone involved: you are acting like Donald Trump.
7
This problem was created by the government and its absurd medallion program. This is a failure of socialism, not capitalism.
7
@Michael Donner
What element of capitalism was involved in the process? The government decided that if you wanted to drive a cab, you had to get permission from the government and pay the government from $10 in the early days to $1 million in the latest auctions.
The taxi industry loved it because it created a limited supply and made it possible to raise fares.
This meets the classic definition of socialism. It is the economic system where private ownership of the means of production [the taxicabs] is still permitted, but the government controls the business. In this case, the government controls the owner of the taxi by requiring him to also own a scarce medallion.
Once again, this explains why Democrats do not want immigration reform. How many of the victimized immigrants were illegally present in the country? Not mentioned in the article, but legal immigrants are less likely to be exploited. How many of the East Asians who were exploited were steered to "bankers" by East Asian associates? How many of the fleet owners who sold their medallions for $500k t $1 million, fully aware they were overvalued, were Democrat donors? How complicit was the city government when they auctioned medallions for $1 million when they were fully aware that that cost, amortized over decades, was in excess of the value.
The rich and powerful owners of the medallions rigged the system and victimized the vulnerable.
Socialism, not capitalism, by any definition.
5
@ebmem: Simply because the government is involved in business does not automatically turn that business into a socialistic enterprise. For instance, when there are police on the take, are we talking about socialism? No, and the same applies here. We are no longer discussing capitalistic or socialistic paradigms; we are just talking about a way to shelter crime, close to the bosom of the law. Keep your enemies close, as they say.
3
Suggest we design a new American flag with the motto: "Let the Buyer Beware."
5
This analysis is deeply flawed. The taxi industry has failed in dozens of places for a variety of reasons, and nowhere else did the prices for medallions get as high as they did in NYC. Blaming the bankers for this is absurd.
Credit where credit is due: Government created a monopoly, taxi's, encouraged cost increases for new entrants, and failed to provide enough supply. When gypsy cabs, which used to be banned, criticized, outlawed, started carrying cell phones and called themselves Uber and Lyft, the city did squat and that destroyed the market for cabs, and still does.
6
@BIll Hammonds
The medallions were never worth more than $200,000. [A reasonable price would be the expected cost plus financing amortized over five to ten years between what a driver could be expected to receive in revenue as an employee compared to how much he could ear while paying off the medallion.]
The government loved their opportunity to auction off medallions at $1 million which not only was a windfall to the government but helped their cronies establish a new market value for existing medallions.
The city was in cahoots with their donors. Uber and Lyft drove the values of the medallions from $200,000 to $150,000.
It's not the bankers, although they should have been smart enough to recognize that the medallions were not worth more than $200,000 as collateral, who are at fault. It is collusion between the city government and their cronies that victimized the purchasers of the medallions. This is a classic pump and dump scheme. It took a longer time frame for the pumpers to dump their medallions, but they had a cooperative city government to hold things together and support their inflated prices.
2
@ebmem; and, don't forget, Uber and Lyft are lose a fortune every year, subsidized by VC dollars. They pay no taxes because they operate at a loss, and compete at "below cost". Gotta be something wrong with that.
If it ain't a corrupt housing market, it's a corrupt medallion market. If it ain't that, it's money laundering at places like DeutscheBank and that crowd. There is a deep web of financial crime that most of us never come close to seeing. It poisons our lives but it's hard to root out. A $613,000,000 fine such as US Bank had to pay is just another cost of doing business. The thieves simply work into the pricing mechanism and all of us are just a little bit poorer.
Until actual heads roll and actual oligarchs spend time behind bars, it's not going to stop.
9
I have to wonder about drivers in the story like Mr. Hoque, who was university educated. Why would he not read the terms of his loan? Many immigrants come from far more corrupt countries, which is often why they leave in the first place. Don't they have alarm bells for these type of things? How can one mistake a 1.7 million dollar loan for a car loan?
5
@Scott Cole
It is highly probable that it was a friend or friends who were also immigrants from his native land who steered him to the people ready to exploit him, for a commission. There was a lot of money floating around. the "loan officer" and brokers were likely countrymen.
Just as most of Madoff's victims were of similar social and religious background, they were easily duped by affinity fraud.
The same thing happened during the real estate boom and bust. The ignorant were led to their financial demise by the nice lady they met a church who wanted to help them realize the American dream of owning their own home by helping them lie on the subprime application. The agent wanted her commission and the friendly loan originator wanted the 1% loan origination fee.
People who are not exceptionally literate are easy to dupe, and legal documents are rarely clear enough for a layman to comprehend their risks in signing. [A shockingly large number of even educated homebuyers close on their homes with a lawyer selected or suggested by their lender. Even if the purchaser is paying the lawyer, rarely is the purchaser aware that, for example, the title insurance protects the lender but not the purchaser unless the purchaser pays an extra $50 to be listed as a named insured.]
These poor taxi drivers were duped and should be bailed out-we bailed out banks, we should bail out medallion owners. Uber was allowed to compete with no regulations of any kind-that is wrong! I never have taken and never will take an Uber. As consumers we are complicit in what happens in the world. Use your power to keep taxis going, keep stores open, support independent shops and do not use Uber, Amazon, Wayfair, and all the other online places that steal from local entrepreneurs.
4
@CJ At this point, I feel we should all be bailed out, especially for health care costs. If Trump can use our tx money for weekly trips to Florida and doesn't have to pay taxes, why should we???
3
@CJ
The people who should be required to cough up money are the lenders, who got huge fees, but also the people who sold medallions for $1 million, knowing full well that they were worth only $200,000. Good luck with that, but they are the guilty ones who manipulated the system. they are well connected politically, and the Met is still accepting tax deductible donations from them.
1
@atb
We are still supplying Secret Service protection for Obama and his family for their worldwide despite the fact that they are probably pulling down the same $30 million per year Bill Clinton was collecting in 2001 in deferred compensation from his cronies. The Clintons were so broke in 2001 they had to steal property from the White House to furnish their mansion in Westchester with money they borrowed from a crony.
Let's see Obama tax returns from 2012 through 2017 to see where he got the money to buy two mansions on his $400,000 income while in office and his $200,000 pension.
1
So this article highlights the issues of socialization and the integration of economic rules of how "American law" actually works. Many comments point to the idea that many cultures claim to shield their population from predatory lending and fiscal impoverishment by banning lending/ usury etc etc.
So is the jist of this article actually, in it's own perverse manner, a support for English fluency and established skills and not family linked immigration? The theory being that English fluent and well read green card holders will know that every word of a contract needs to be understood before you put your John Hancock on the bottom? Actually I'm beginning to think so! The reason these persons had no "right" to sign these contracts and endanger their family's well being is kinda manafest. To now blame all the other players in this horrid scheme is akin to forgetting how did there people get into this in the first place. Illiterate people signing contracts and then the illiterate complaining that they didn't know what they were signing !
3
I know people with Ivy League business school graduate degrees who have almost been victimized by predatory, obfuscating contract language. Just speaking English well doesn’t protect you. When did we become so callous as a country that we think it is OK for someone to take advantage of others because the victim was not learned or savvy? Is everything now a bottom line transaction and a Caveat Emptor now our national motto?
5
@Steve Cohen while I emotionally agree with you, and second the idea we live in a society that seeks to help those less fortunate, still don't sign contracts you don't thoroughly understand. And if you can't read the language even more.
1
[somehow, the name of a former
potus lawyer/fixer comes to mind].
whether it's medallion, housing or other bubbling hypes,
the worst thing about them are the
OUTRAGEOUSLY SHAMEFUL AMOUNTS OF GREED
that countless numbers of people have no scruples
employing to cheat law-abiding, unsuspecting [gullible?]
contemporaries out of their hard-earned meager savings.
if politicians continue to let the so-called 'free market' take care
of things instead of them stopping this bunch of robber barons,
they should not wonder about voter support for people who
promise to fix things the [alt]_right way!
3
@°julia eden
There is zero free market involved in the whole process.
Too bad this excellent expose came out five years after the medallion crash instead of five years before. If the overinflation of medallions was so obvious, why hold the story for 10 years?
6
@Rick
The people who owned the medallions in 2004, when they were valued at $200,000, were Democrat donors to Democrats in NYC. the immigrants were lambs for the slaughter, of no particular political value.
The NYT always sides with the rich. Although they are now protesting the evil that was done, they never made a point of the fact that a medallion was never worth more than $200,000 when the rich were dumping them on the poor.
2
Loathsome. We are rapidly becoming the Disrupted States of America where gaming the system, replaces the concept of ethics, integrity and fair play. It is a systemic virus of manipulation that was lit up by the Disruptor In Chief. Decades of a lifetime dedicated to honest work at every level blown up.
4
@Lynn Russell
Good one, blame Trump.
The Democrats ruling NYC auctioned off medallions for $1 million which got them revenue while simultaneously allowing their rich donors to maintain the illusion that the medallions were worth $1 million so they could sell them to immigrants for five times their worth. So much for Democrats caring about the downtrodden.
Trump ran for office saying the system was rigged to benefit the rich and powerful, violating the polite code of silence of billionaires. Democrats and establishment Republicans rose up to oppose him, but the people managed to elect him anyway.
Given a clear example of Democrats exploiting immigrants for the benefit of their donors, you conclude Trump is responsible.
Although this is a NYC/NYS example which is not affected by Trump's efforts to drain the swamp, it is similar to the games played in the federal government to exploit citizens for the benefit of political donors.
Democrats and the leftist media keep harping on how many lies Trump tells, even asserting that opinions he expresses are lies. They are working hard to convince the sheeple that he lied when he said the game is rigged. Democrats do not want the ignorant to know that.
It worked on you.
2
These drivers could have created safe reliable “gypsy cabs” for people who were not well served, or not served at all, by the medallion cab system. Instead, they gave their savings to strangers, signed contracts they did not read to obtain medallions and then continued the yellow cab practices of refusing to travel beyond Manhattan and refusing to pick up nonwhite fares(even though they are nonwhite too). They then expected NYC to bail them out? Give me a break.
1
Maybe publicizing this predatory activity wlll discourage immigrants form coming here. Spreading the word is a lot cheaper than building a wall.
I don't expect Elizabeth Warren to go the distance but she seems like the only one who would seek to punish the medallion hustlers.
3
@JR
The people who sold medallions worth $200,000 to immigrants for $1 million are Democrats and donors to Democrats and employers of their children and political operatives. Don't expect anything from Elizabeth Warren except a suggestion that the federal taxpayer forgive the loans. No one is going to check the emails of Democrats to prove that the medallion owners conspired to pump and dump.
Just like the Obama administration was never motivated to investigate why generic drug manufacturers conspired to fix prices for generic drugs by illegally violating anti-trust laws.
Drug manufacturers were major contributors to Democrats and shifted their donations to Republicans after 2016. Paying off Democrats buys protection. Apparently it doesn't buy protection from Republicans.
1
once the medellians were issued in the 1930s and changed hands when initial owners sold them on, than in became impossible for government to change owner ship rules. investors have paid big bucks for medellians on the understanding they could sell them on. there would be a huge drop value and compensation would be needed.
What percentage of the population just cares about themselves and money?
I would NEVER try and take advantage of someone to get more money yet I read about it every day.
The Morehouse student debt gift proves not everyone is so heartless. So thankful for that story today.
9
@Michelle Never take advantage of someone to get more money? Then you are not a capitalist.
1
@Michelle
So you work for free? You don't take a salary?
1
@Antoine
Capitalism involves a willing buyer and a willing seller where both parties have access to information about quality and price.
Capitalists do not take advantage to get more money. That's socialism you are thinking about.
By coincidence, I’m watching “The Big Short” for the second time. This looks like a similar (less complicated, smaller scale) scam/fraud perpetrated by the same cast of characters. And they said it couldn’t happen again. And that our banks can regulate themselves. Oops.
16
extremely sad but typical usury made all the worse by an all time low in interest rates. although uber etc. has pulled the carpet on the value of a medallion and i would never dream of using such anywhere if i was these drivers i'd take the cars and drive privately
@james gray stoke Suggest that all Uber and Lift cars be forced to buy medallions.
1
Sure, the banks weren't breaking the law, but that doesn't mean what they were doing should have been lawful. It's telling that many banks went to medallions after the housing crisis.
I'm already a believer in regulation - it's the only way for individuals to get a fair shake against larger systems - and this just reinforces that for me. It also makes me distrust banks!
This is all just really sad. I feel for the wife of that man in Queens. It sounds like they had a much better life in Bangladesh.
11
@AM
The owners of the medallions were pumping and dumping. They are the primary malefactors and no one is going to examine their antitrust price fixing of the medallions because they are rich and powerful.
The NYC government colluded with the pumping by conducting auctions where the medallions sold for $1 million.
Most of the loans appear to have come out of "special" lenders who were in cahoots with people selling the medallions at inflated prices. Sounds a lot like Hillary's Whitewater partnership.
Let's see the regulation that would prevent the politically well connected from selling their medallions at inflated prices.
NYC created the problem by their regulation of the industry via medallions and benefited from the inflated prices they got for the auctioned medallions. The immigrants were victimized by the Democrats and their cronies.
Your response is typical Democrat. Create a problem and then fix it by issuing new regulations after your cronies have benefited. Let them help you write the regulations so that the cronies can devise a future scheme which you will "fix" after they have extracted money from the unconnected.
As the government is tightening down on money to be made issuing mortgages on inflated real estate, find another asset that can be artificially inflated by cooperation from Democrats and milk the poor.
Warren wants college costs to be inflated and for the taxpayer to cover the increased profit. It's a Democrat theme.
2
I am very surprised to see the comments blaming capitalism for this. My take was just the opposite. In a capitalist system, supply would meet demand and a market rate would be established. This was clearly the result of the government artificially limiting the supply of the licenses which would of course drive up rates. Why did you not see this issue in unregulated cities? Yes lots of blame and bad characters entered the field. Government should provide oversight on lenders. Once again probably banks were getting government funding to make these terrible loans.
12
@Ed Not that I'm defending NYC's medallion system in the least, but taxi permits are limited in number in almost every U.S. city (but can be renewed on an annual basis). The reasons are a bit complicated, but in a nutshell it's to prevent unscrupulous taxi franchises from flooding the streets with cabs.
Where it gets complicated (in part) is that Uber and Lyft aren't subject to any such limits, at least not outside of NYC, and for the reason you cited: basic supply-and-demand keeps the number of drivers working for them under relative control. Still, taxi permits remain limited almost everywhere, despite Uber/Lyft having now expanded into literally every state and even into small towns.
The main reason is that taxicabs are purpose-specific commercial vehicles -- meaning they can't legally be driven at *all* except during the course of actual work -- and every U.S. city has extremely specific rules for what's called "trade dress": the colors taxis must be painted, the rate cards they have to post inside and out, the exact brand of taxi meters & dispatch systems they have to use, etc., all the way down to the color of the vinyl used in taxis' back seats in most cities. A driver can easily spend $10K on trade-dress requirement -- and then be stuck with an investment almost impossible to sell if he decides to leave.
But yeah: NYC artificially restricted medallion #s far more so than other cities, apparently solely to "protect" the investments of their multimillionaire owners.
3
@Jeff Time and time and again, blaming Uber or Lyft is missing the point. Like totally.
3
@Phil It's not "blaming" Uber/Lyft but it is acknowledging the disparity and the problem. Cab drivers had a system. Maybe it was a broken system, but they have had to play by those rules. Meanwhile, Lyft/Uber doesn't seem to have any rules. They don't have to do anything other than sign up. And we're allowing those companies to perform background checks? The truth is, Lyft/Uber are money-grubbing and don't pay their "employees" well. You have no idea who is driving you, you have no idea how much you will wind up paying and there is little to no recourse after one of these "drivers" attacks you. Read the headlines.
In a democratic country, with a healthy and functioning justice system, these loans would be considered by the courts to be unconscionable and the profits would be disgorged. It is little surprise that we have a grifter-in-chief at the helm of the US, when such predatory behavior is handsomely rewarded, rule of law is considered a quaint concept better suited for nice countries like Canada, and there's no stigma attached to ill-gotten wealth.
6
@Robert
The collapse of this artificial, government-created market and much of the predatory lending took place under Obama. You can blame the Orange one for many things, but not this.
3
@CK Really? Who created those conditions? Does the name Bush mean anything to you? Every time a Republican leaves office, the Democrat that follows has a huge mess to clean up. It's a pattern.
2
Check your dates, the grifter in charge was Obama. Although you wish to blame Trump for everything, Lyft and Uber predated his presidency. The auction of medallions was under democratic mayors.
2
This is a tragic story that is years in the making. The city seems to have created the problem by capping the number of medallions and then allowing Uber and Lyft to encroach on the city's riding public. A better approach may have distributed more Medallions (lowering their price) and requiring Uber and Lyft to wait until the Medallion business wrapped up before going to Manhattan and capturing the taxi market without paying the Medallion-paying taxi drivers.
3
The distillation of every quote from anyone on the lending side is this: I/We adhered to all applicable laws, which is my/our only obligation when pursuing a profit.
Regulation can never keep up with this attitude, which is so prevalent in American style capitalism. So, until that culture is changed to one that thinks about who is being harmed while any of us earn a buck, those struggling at the bottom will continue to be taken advantage of.
How we make money matters!
8
@The Righteous Capitalist
The owners of hundreds of medallions conspired to inflate the price of the medallions, created "lenders" to support the scheme, and got the city government to auction more medallions to create the illusion of high values.
There is nothing capitalist about the corruption, it is crony socialism. The rich and powerful got the government to favor them over the interests of society. They did not conform to the rule of law.
Its always fun when people make up their own definitions. Capitalism requires the rule of law. You should change your name to "Self Righteous Socialist."
1
If these banks thought these medallions were so valuable, then why weren't they willing to offer secured loans using the medallion as collateral? Like a car loan, where if you can't (or won't) pay for the loan the car gets repossessed. Clearly they just wanted to get these people in the legal position where the bank can take it all.
21
When a car is repossessed, if it is sold at auction for less than you owe,
you are personally liable for the difference.
2
@David
The loans were secured by the medallions, but after the pump and dump scheme ended with the sellers scurrying off with their profits, the medallions were no longer worth the loan balance. Lenders foreclosed, sold the medallions and the borrowers were on the hook for the remaining loan balance.
It's the same deal as when your house or car is foreclosed or repossessed. If you owe more than the lender recovers from sale of the collateral, they get an unsecured loan from you for the difference, which you have to either pay or get discharged in bankruptcy.
Anyone who writes a check for most of his net worth, and signs documents without understanding them, all in the same day in. response to a phone call from a stranger is very very foolish.
19
@Johnny Stark but does that justify taking advantage of them?
4
@Johnny Stark
...and easy prey for gangster banksters.
1
@JB, Of course, it wasn't justified. That goes without saying. But someone in a greedy rush to enrich themselves are pathetically easy marks.
2
Lots of blame to go around. But just one area that particularly bothers me. The government created a limited supply of medallions which obviously manipulated the market price of those by supply and demand. You couldn't drive a (your own) cab if you didn't have a medallion. It was against the law.
Then Uber came in. Totally illegal. But what did the government regulators of the taxi and limo service do to support those drivers who obeyed the law and forked over hundreds of thousands of dollars for an artificially high priced medallion. NOTHING!! Uber showed up. Cut the legs out of taxi medallion owners who paid plenty, whether well informed or not.
To me, the immediate cause of the collapse of the taxi industry (financially) is the incompetent regulators who saw fit to inflate the cost of being a cab owner, and then undercutting them by doing NOTHING about illegal UBER types.
As I said, there is plenty more blame to go around but this, in my view, brought the taxi industry "house" down with a thud!
21
@SAH I realize Uber is an easy scapegoat, but as the article plainly states, the blame for the city's medallion crisis falls almost entirely on the shoulders of the predatory lenders who doled out loans at loan-shark-level interest rates -- along with the TLC, which knew exactly what was going on but did NOTHING to stop it.
To quote directly from the article:
"All along, officials have blamed the crisis on competition from ride-hailing companies such as Uber and Lyft.
But a New York Times investigation found much of the devastation can be traced to a handful of powerful industry leaders who steadily and artificially drove up the price of taxi medallions, creating a bubble that eventually burst. Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed...
The medallion bubble burst in late 2014. Uber and Lyft may have hastened the crisis, but virtually all of the hundreds of industry veterans interviewed for this article, including many lenders, said inflated prices and risky lending practices would have caused a collapse even if ride-hailing had never been invented."
11
@Jeff no doubt these lenders were unscrupulous, but I think the point still stands. It all started with the crony capitalism of the TLC and the medallion system, under the guise of "protecting consumers" and ensuring the perfect number of cabs were operating (as if they had even a fraction of the information necessary to make this determination). Without medallions and strict regulations on who could pick up what fares and where, and how much they could charge, the streets would be choked with empty cabs, and consumers would be fleeced left and right.
The advent of ride-sharing simply exposed all this fear-mongering for what it was, a scheme to create artificial scarcity and enrich a few lucky and connected cronies.
As with student loans, where government created a vast system of regulations and subsidies, with lofty goals and intentions, the unintended consequences are always blamed on the market. But even the New York Times recognized that the massive student loan debt crisis was caused in large part by government warping normal market signals.
The moral of the story, exploitation is much easier to accomplish when government creates an artificial "market" that is devoid of any meaningful competition. And of course politicians will scapegoat capitalism- it's worked quite well for them up to this point.
3
@Jeff
No question predatory practices, among other things, set this up.
But the TLC was the legal authority that made the rules that allowed all this to happen and then failed to stand by those rules when Uber came in and played the game unregulated!!
Mind you my remarks are not an opinion of having Uber and Lyft or my. This is a different question altogether. But allowing them to operate not subject to taxi cab conditions was ruinous, no matter what medallion prices would have been.
AirBnB is also related in the real estate/hotel business.
2
Another exploitive by capilatism. Limiting uber is not going to fix this ingrained problem of the banks fleecing working class people. Sadly everything about America is fake.
9
America has exploitation encoded in its DNA. It began with slavery and it just keeps going. The United States of Exploitation.
18
This article is equal parts enlightening and horrifying -- and it raises nearly as many questions as it answers. How did the Taxi & Limousine Commission fail so spectacularly in its regulation of the industry? Why didn't it intervene in the earliest stages of the medallion bubble, when it was already clear that "corporate" owners were selling them to individual drivers at borderline-usurious -- and quite possibly illegal -- interest rates? How did *two* different mayoral administrations somehow miss all of it as well?
Perhaps the biggest question: why did the city allow its grotesquely inequitable medallion system to persist for so long in the first place, decades after nearly every other American city began using annual permitting systems for their taxi industries? The ethical standardx (or, more accurately, the lack of them) among "corporate" medallion owners have been apparent for over a decade now. Why did NYC's mayors and city council members fail to act?
24
simple answer : they were all on the take. law makers and their friends in finance all have their hand on both sides of the pot. they will not block anything that makes them money on both sides.
8
@Jeff
NYC, DeBlasio and the City Council share the blame for a large part of this problem. Shame on them.
3
Murstein was brought over as a refugee and that is how he treats others seeking a better life? Good case for points system and English speaking immigration. These uneducated non-English speakers get taken advantage of in every industry. So sick of hearing that immigrants do “jobs Americans won’t do.” These jobs are for slave-labor, indentured servant wages. This whole system of bringing over uneducated immigrants to exploit them has to end.
11
@Allright … not everyone exploits non-English speaking, uneducated immigrants. This is no reason to stop them from entering the country to pursue a better life.
1
As Erich Fromm, a world renown psychoanalyst said in his book "The Sane Society", it is one of the biggest mistakes of the last century to think that an entire society can be organized around the profit motive." No regulation is plain stupid and not only the market crash that Obama fixed is one of the outcomes of no regulation, but a price the entire society pays for the none-stop greed to exploit, and they know what they are doing with their predatory practice. And it's always the republicans!
4
I don't believe in capital punishment for most crimes. It's not a deterrent and too often an innocent person is executed.
White collar crime is another matter, of course. A great deterrent, and fewer mistakes as to innocence.
7
New Yorkers are first to blame Trump for everything but this looks like a self made problem. Scammed taxi drivers, a subway system that works 60% of the time, street riddled with pot holes and billionaire developers subsidized to relentlessly build “gleaming” glass towers in the modern sterile architectural style. I visited years ago but never again. Your precious billionaire class have ruined your city.
7
@thomas jordon Interesting comment, considering Trump's former "fixer" Michael Cohen owned dozens of NYC taxi medallions at one point and reaped millions off of their sale -- quite possibly under the same unscrupulous methods described here.
Agreed that Mayors Bloomberg and de Blasio did basically nothing to help this situation, but if Trump had been elected NYC mayor instead of president, it's all but *guaranteed* that the situation would've ended up exponentially worse in nearly every way. Instead of one Trump associate with dozens of medallions under his control, we could've easily seen THOUSANDS in the hands of "Friends of Trump."
5
@thomas jordon,Let’s not forget your billionaire class includes the current resident in the White House.
1
Bait and Switch practices. What is unlawful in most civilized countries is a wild card in Snakes and Ladders. The best legal minds in the world are American. The problem is that they work for culprits instead of victims. Immigrants are low-lying fruit blinded by the American Dream. It's the perfect crime. The lure of the Big Apple with iconic palaces of commerce and affluent islands within the Island detract from the stark reality that, in America, immigrants are easy prey for the criminal industrial complex that leverages legal smoke and mirrors to steal while the authorities look the other way.
3
And this, kids, is why the American capitalist class will never truly curb illegal immigration. Those famous loopholes America is known for in the rest of the world will operate as intended, and business will go on as usual.
6
The biggest scam of all will be in 15 or so years. It will be hyperinflation. It’s easy to see it coming, but very few do.
It won’t just be taxi cab drivers, it will be people that saved money in their Individual Retirement Accounts.
4
People everywhere are just trying to raise their kids.
What was it Eisenhower said?
"I think that people want peace so much that one of these days government had better get out of their way and let them have it."
Call off the vultures. Bernie. Liz.
3
Where was Mr De Blasio when these poor immigrants were being robbed of their American dream in a city that epitomizes the American dream ? It appears that the city set up a monopoly and then allowed loan sharks to manage it undisturbed. Well done Mr. Mayor !
5
In this overlong article, there are, as far as I saw, two lines about UBER. I lost a profitable business because of Aibnb and even at the time, I knew that I had no-one to blame but myself for not cutting my losses earlier. I did not blame the banks and I did not blame evil or greedy capitalists. The world changes with a revolution as large as the internet and you really have to recognize change. I'm sorry for the suffering it brings but no-one is blaming the City for not putting UBER on an equal footing in this article. No-one is blaming the drivers for not getting out early (or for not following their wives sage advice to buy a home instead. It is just the image of greedy bankers, many of whom lost fortunes by lending on medallions, who are blamed here.
3
@Critical Thinker Guess you also blame automation and the production line a hundred years ago for shutting down traditional businesses?
2
What's ridiculous here is that Taxi Medallions were allowed to be sold. If the Medallion "owner" isn't using the Medallion it should revert back to the government.
2
“Roger Bertling, the senior instructor at Harvard Law School’s clinic on predatory lending...” The one reassuring thing I got from this article is that Harvard has courses on predatory lending. My guess is that it’s a How To course taken by students to get jobs in the banking industry.
5
Who buys a $1 million anything without a lawyer?
If these guys couldn't read and the deal was misdescribed, then they have a fraud defense.
Otherwise, they have no one to blame but themselves. If they have any money left, I have a bridge i can quitclaim to them for a mere $100K.
7
The people who hire immigrants at low wages, or who make them predatory loans, are among those who want our country to continually admit large numbers of immigrants. Their business models depend on our country having many less informed people with limited English.
3
Every person involved in this mess, including the drivers were motivated by on thing ...greed.
6
Terrible circumstances, but a perfect example of capitalism at its worst. Not to say we should scrap it, but the reason we have regulated and should continue to do so. I'm sure it's legal as sure as it is reprehensible, the people in power make it that way. Beware the politicians that enable these things. Nothing wrong with making money, even a lot of it. We allowed them to game the banking and mortgage system almost to collapse, made corrections that they are chipping away at. Obviously greed overrides doing the right thing when the dollars become large enough.
1
Like so many things where speculators, hedge funds, and those with plenty of wealth available to exploit any opportunity..... city government was completely asleep at the switch, or criminally corrupt, in allowing unchecked and unregulated trade in medallions for the taxi industry.
And this is not about an immigrant being deceived and prayed upon.. this could just as easily have happened to any one, citizen, green card holder, or worker on a valid work visa, and of any national origin or ethnicity.
Like so many predatory financial scandals in this country.. those responsible for preying on others through predatory business practices and debt loading will walk away with no government action or accountability.
We are a nation of 1% grifters at the top of the wealth chain doing everything in their very powerful financial and corrupt connections to steal from the rest of the countries population. I honestly do not think it will ever end.. and it will be the ultimate downfall of US society.
3
"The lenders said they believed medallion values would keep increasing"
Guess they never heard of the Dutch tulip mania, the South Sea bubble, the dot-com bubble, the crash of '29, etc. etc.
6
@Ed
As speculative lenders in a controlled commodity market (medallions in this case) ... I'm sure they thought exactly that. Plus... like so many other bubbles that ultimately burst on investors/speculators.. they fully expected a government bail-out if the bubble ever did collapse.
1
I’m more concerned that an educated, employed, presumably not persecuted individual got a green card to move to the US without any clear plan or job waiting for him. Clearly our immigration system is broken - immigration should be for two kinds of people: (1) Asylum seekers, and (2) Professionals with jobs in needed fields waiting for them. This gentleman’s immigration has served no one.
13
Great idea! The U.S. should bring in a bunch of highly skilled immigrant labor to replace the high paying jobs of American citizens that struggled through university to graduate in engineering, mathematics and science! In the meantime, we citizens of the U.S. can scoop up those amazing vegetable picking and cab driving jobs that immigrant labor currently fills! Republicans are so smart! They have very good brains!
4
@WildernessDoc
Your beliefs leave out so many deserving people in search of a better life. This country would be nothing without the immigrants who came here without a high set of skills but made successes of themselves and contributed to the growth of the United States. How skilled were your ancestors?
4
This is not the same world as existed a century ago, or even 20 years ago. There are 7 billion people on the planet, and growing. Wealthy countries can’t take everyone - priority has to go to the truly persecuted, and the skilled. Economic migration only works if there are needed jobs for people to migrate to. And as far as foreigners taking American jobs, the foreigners would be competing on the same playing field, so we’re talking about sectors that desperately need more skilled labor. Makes plenty of sense to me.
In early 1950s when I was a college student I also had a brief experience as a part-time taxi driver. I learned this from Peter a school mate of mine and he helped me to get a taxi driver permit and I had no problem to earn a few dollars after school and during weekends. I also met a number very kind and friendly customers. It helped me a great deal to pay my living expenses each month. I also learned a great deal about American society and what was going on in our country during Truman years. All I need was $80 dollars per month for my living expenses. I enjoyed this part-time job and I also learned a lot about different kind of people through brief conversations. There were very little crime in those years in DC. I never worried about getting attacked by anyone at night. I even encountered a few ladies wanted to invite me to have a drink with them but I always declined their good intentions. I couldn't believe today we have so many problems as a taxi driver in NYC and so many American cities. I am old and I have a pleasant memory as a taxi driver.
11
The corruptions in the medallion loan industry (brokers representing seller, lender and buyer; underwriting permitting loans to rise above borrower's ability to pay; a plethora of phoney-baloney fees) are well documented in the article. What it misses, though, is the extent to which the taxi business has always relied on leverage. Fleet owners, not just naive immigrants, have always hocked (and refied) their medallions and kept their equity thin. Lenders have always bundled and hypothecated their loans. As in the bursting of the real estate bubble, it never would have happened but for the irresponsibility of the large institutional lenders, who are the real source of the money that goes round and round, using the industry credit unions to mitigate risk and to make sure that, when everything blows up it won't soil their nice white shoes.
4
@dbreger good points I believe Deutsche bank is mentioned in a lot of articles for various reasons. I wonder what a dent in the federal deficit could be made if all the illicit holdings were seized? Perhaps N.Y. real estate moguls would have to plan housing that at least two good incomes could purchase instead of someones tenth multi million dollar home.
2
As a long time resident of NYC - 25 years - I have seen the Taxi industry evolve and myself too! The 1990s cabs were horrible, without AC and smelly drivers. It wasn’t until Mayor Gulliani that he cleaned up the Taxis and regulated the cars. That is when the medallion prices started to go up. At that time until 2010 every conversation with the cab driver was about how much their Medallion had appreciated in value. They also knew when to sell and get out - many did. These Drivers were late shift Indian drivers and had their own gang. So - let’s be honest about the mood and approach of the drivers.
While I see the point about writing shady loans - I encourage the writer to read on the website of the Taxi Commission website their annual budget. It went from 2m to 50m when Uber and Lyft came into the game. The T&LC failed to protect its most important customer - the Drivers. They instead had to get more money from the city to manage all the Uber Drivers Licenses! Those they can issue is limitless. Effectively- our city is paying $50m for us to have Uber too.
Had T&LC protected it’s Drivers they would have enough customers and made enough money. They can’t because the city is packed with Uber/Lyft cars.
Now we have overpriced Taxis and Uber’s - and more people will take Subways. There is an entire industry like this for Uber’s too.
I’m terribly heartbroken for these Drivers. I wish them peace.
7
@Stephanie As the article plainly states, the taxi medallion bubble both pre-dated Uber's entry into the market and would've burst even if ridesharing had never been invented.
The villains in the story aren't Uber and Lyft, much as I'm sure many would like them to be. Rather, they're the predatory lenders who doled out loans and, arguably, the Taxi & Limousine Commission, the entity almost entirely responsible for allowing this entirely preventable bubble to happen in the first place.
7
@Jeff The "leaders" we vote in as well I am a lifelong Coloradan but N.Y. is a special place in the world. I seem to have read about a ferry purchase that looks more like the good of the few than the masses. Citizens should beware when a millionaire is a vote and Exxon mobile is a vote that can use profits to influence, it cancels out a lot of regular people. At a time when proper and needed congressional oversight is being thwarted we could foolishly vote ourselves out of the picture.
1
@Stephanie. Regulators should be protecting the public, not the interests of those being regulated. If the number of medallions had been allowed to rise along with the city population, there wouldn't have been a pent up demand for Uber. But, the current medallion owners wouldn't have liked that.
1
If the taxi industry in New York and other cities hadn't sold their souls to have a government administered and guaranteed monopoly, none of this would have happened. And the need and opportunity for services like Uber and Lyft might not have been there if there was competition and innovation in the taxi industry. The financial risk for new entrants would have been the price of the vehicle and setting it up. If they weren't satisfied with the income they could earn, they could sell the car, lick their psychological wounds, and go into a different career.
7
The Taxis in NYC need to look good again - Uber ans Lyft are just Apps for air conditioned cars... but less safe than a yellow cab ! I take Yellow Cabs as often as I could !
3
The city should not have allowed medallions to be resold like property. Like a license it should have had a set fee, whether one-time or yearly.
Unfortunately it can’t pay back the loans, but surely it can find a way for the cabbies to at least own the medallions outright, depending on how much has been paid and not lose their ability to drive.
I understand that cabbies who paid a lot and in full won’t be happy, but their medallions have already dropped in value.
As for those saddled with a debt they could never pay back, esp in the days of Uber, if Trump can get away with declaring bankruptcy, so can these.
4
The taxi medallion regime is the epitome of government intervention into the market having unintended consequences.
I agree that once the government intervenes (i.e., creates an artificially low supply of government permits and a legal monopoly), the government needs to enact sensible regulations to protect against its own mismanagement. Obviously this was a failure.
But to call the taxi medallion cartel "free market capitalism" is 180 degrees from reality. The NYC tax medallion is government permit that was sold directly by the government in artificially limited supply by regulators captured by industry in order to benefit no one but that industry itself.
9
@Mmm
I agree. Medallions, and how they administered them was ripe for grifters to and crooks to exploit.
Governemnt policy and administration needs to be smarter.. because if there is one constant in US business and society ---> any policy or system can and will be exploited for financial gain by the unsavory with both deep pockets and a willingness to do so.
Since taxis are basically an adjunct service to the public.. it really is a form of public transportation for hire and as such.. it should be administered accordingly...and that includes policy and regulation to remove financial gain and exploitation from the equation.
@Mmm agree but wasn't the comptroller overruled for ferries? This and the comment below seem to portray the city as the whole fault. But in today's world particularly in N.Y. it seems limiting the amount of taxis, ride shares and even yes even private use of vehicles on the island would be for the greatest good. Imagine a N.Y. with the proper amount of vehicles on the island with state of the art public transit ( it is closer than most ) where emergency response can be faster and supplies delivered. Its easy if you try.
1
@Mmm As you say:
It is not free market capitalism as you say. It is socially engineered monopolism. What most liberals on the extreme left these days like. Take a look at the freshman class in the house.
"The city created taxi medallions in 1937. Unlicensed cabs crowded city streets, so officials designed about 12,000 specialized tin plates and made it illegal to operate a taxi without one bolted to the hood of the car."
The city set up a coercive monopoly and then failed to enforce their rules when renegade start-ups flooded the streets with anyone with a 5-passenger car and a driver's license.
Predatory lending is a despicable crime against humanity, but the city set-up the system and, therefore, bears most of the responsibility.
32
Two questions:
1. If the lenders etc. involved in these predatory schemes did NOT violate any laws, how/when will this be remedied? Just like payday loan sharks, these practices SHOULD be illegal.
2. How can the leaders of NON-PROFIT credit unions become multimillionaires?
18
It's a close call, but i think that the only thing that ignorant people get taken in by more than religion, is by money. Both are offering saviour, and those selling it the most despicable people on the planet.
19
@Glenn
These were trusting immigrants who believed in the American Dream. If you re-read the piece, they worked hard and paid large sums for what they were led to believe was needed. I dare say, your take- that of chasing after money- is not supported by the evidence provided here. They worked hard and saved, believing their investment (from hard work and long hours) would provide them and their families a better life: What about this is "being taken in" except they were conned by slick crooks?
2
@Glenn I don't begrudge people their psychologic comfort as long as they aren't stepping on others rights. What I do object to is the behavior of enriching yourself in this manner is contrary to most religion.
Once again corrupt ponzi schemers in NY taking advantage of the little guy. There is a reason they live the life of luxury eating $100 a plate dinners and living in $2000 per sq ft condos while the hard working person is suffering and ultimately committing suicide. Ponzi American Style, it never ends.
10
@John right on. What is the presidential candidate mayor Bill be blasio doing to fix this? Hope nytimes investigates many such new york ponzi schemes, and lets make it very tough for these presidential candidates if they dont give solutions to fix these.
2
This is what happens when hyper capitalism is not properly regulated. Since corruption and grifting has become the norm, and in some cases (Citizens United) the law of the land, who would be surprised at this? Look what happened in 2008, grifters in expensive suits, practicing their grift at places like Goldman Sachs, Lehman Brothers, Citibank, AIG, and many more, crashed the system. Many people were wiped out, but the grifters were rewarded with a bailout, and they paid themselves bonuses. no one went to prison. Now we have an evil, pathological liar grifter, Donald Trump as president. Say that a few times, it is our present reality. So stories like these break my heart, but there will be many more to follow. Until the perpetrators of these crimes are properly punished, nothing will change.
15
But didn’t the lenders lose their shirts?
Yes, they did, eventually. De Blasio opted not to do a bailout. He made the right decision.
But that doesn’t enflame the readership and sell newspapers.
And the drivers declared bankruptcy and got a do-over, which is what bankruptcy allows. They came with nothing, they earned for a while, things got tight and failed, the bad bankers lost money as they should, and the people went on to something else.
And that doesn’t enflame the readership and sell newspapers.
The real failure here is not the immigrant drivers, the banks, the fleet owners, or de Blasio. The real failure, at the end of the day, is that, as a government agency, the Taxi and Limousine Commission sold the medallions for profit, rather than serving the people as a government office should have. That commission never should have allowed the government license (the medallion itself) to be sold as a commodity.
And that is pointing out bad government, which goes against the general bias of this readership, and doesn’t sell newspapers.
10
i got friends that worked as taxis drivers for over 60 year combined their never bought in to the idea to buy a 1.3 millions medallions. Those guys knew the risks of buying a overpriced piece of medal nobody got scammed
11
The New York Taxi-Medallion-Racket is well known; controlled by mob bosses, dirty money and unsavory bankers and politicians. Recall the Mueller investigation uncovered Trump-fixer Michael Cohen's 34 or so taxi medallions and affiliation with crooks well known to New York officials.
The money and prestige of owning Taxi medallions dried up so there had to be a way to keep the con going:
Hopeful immigrants who believed in hard work and the *American Dream*. "There outta-be-a-law..."
17
Greedy conniving people see to always find a way to game systems such as capitalism. It is one of capitalisms most egregious weaknesses. It is absolutely the task of government to protect people from such types of abuse. Unfortunately, greedy conniving people are often a step ahead of everyone else. Without stiff regulations to limit these abuses, and heavy penalties for those who committed related crimes, these tragedies will always continue.
6
Never have they imagined bootleg taxi service could become legalized overnight.
3
"They're coming for your Social Security money. They want it back so they can give it to their criminal friends on Wall Street, and you know what, they'll get it. You know why? It's a big club, and you ain't in it. You and I ain't in the big club.
( did he know it would be Michael Cohen and friends)
"They don't care about you at all, at all, at all, you know, and nobody seems to notice, nobody seems to care. That's what the owners want. Call it the American dream, because you have to be asleep to believe it."
5
Where is my girl, Elizabeth Warren? She is the only gal I know brave enough to go after these kind of unfair lending practices. Evidently, way too many others have turned their heads for years! I hope they jail everyone of them! Saddle a guy driving a car for dollars with million dollar loans - unbelievable how far some will stoop!
10
Thank you for the Name and Shame in this 2 part article. Unfortunately, the individuals so named are clearly beyond shame.
We need better laws, and we need to put some people in jail.
12
hmmm. wonder why people think government is incompetent and corrupt
3
@Mark Rabine What has this to do with government?? These people were private buyers and private lenders.
1
Elizabeth Warren worked hard to found the Bureau of Consumer Protection. Mulvaney and Turnip have trashed it and turned it into a toothless paper tiger. No regulation is the mantra of grinning gangsters in shiny suits aka the Republican Party.
23
@Chuck Burton You do realize most of this corruption took place under the Obama administration, right? Also, this is a NYC problem as well as a state problem.
3
I want to sincerely thank the NY Times fro shedding light on this. There is so much corruption and Ponzi that devastes the little guy and takes advantage of teh little guy. NY times has done a marvelous job here.
Its sad that the rich in NY spend thousands of stolen money on their dinners and clothes and homes while the poor man is suffering beyond belief in the US, the richest country in the world.
Thank you for exposing Ponzi.
20
The city and State are as much a problem. NYS now collects $3.00 from a driver on 95% of the trips in NYC $2.50 for congestion and .50 cents to the MTA. Providing financial relief to the MTA. NYC ISSUES the licenses to the ride share companies, which cause the congestion (125,000) in the City where the Yellow taxi driver paid for a license to operate. No where is the price surcharging UBER and Lyft impose to riders. The city DEMANDS a yellow taxi driver buy a wheelchair accessible vehicle. There are many issues here. Then the whole Bloomberg vs Friedman feud which actually help spark this raging inferno.
It’s not just the lenders. There is so much MORE going on. The best is the NY TIMES inaccuracies!
6
These unfortunate victims are but the more immediate casualties of an industry hoisted on its own petard. Why this industry never saw fit to foster regulation of the sort for which London's taxis are so admired and famous had always been one of those lined for fantasies of New York life. Sad as it may be, all too many long outraged riders, drivers, pedestrians and bikers who have haff to endure these taxis and share the streets with them have their sympathy tempered with a good dose of schadenfreud.
2
My dad, the cab driver had another saying. It starts with an “F”, and ends with “them all but six and save them for the undertaker.”
3
Unregulated Capitalism is a plague. Period. It’s the law of the jungle, the law of a predator who would kill way more than he could eat in a lifetime. With stories like these, there’s no wonder why Socialism is back in discussion. Unless Capitalism is regulated and its predatory practices curbed, pretty much like the Scandinavian countries have been doing successfully, Western societies are headed for corrupt, illiberal regimes of either Socialist or Fascist inspiration. Both are populist in their making, both are disastrous for society.
7
Wasn't Manafort's business partner who testified against him involved in this Ponzi schema?
2
Conned into loans with draconian terms by unscrupulous bankers/lenders and deprived of a livelihood as their industry has disappeared in the gig economy. I seem to remember de Blasio weakly giving in to gig economy big wigs within 24 hours of banning Uber. These people surely deserve loan forgiveness and/or loan restructuring as much as people with student debt. Where are the Democratic presidential candidates on issues like this?
3
This started with Reagan selling the idea that government and all it's regulations were just holding
people back from achieving big things. Now we have people taking advantage of no regulation to prey on others, America feeding on itself. This is what Neo
liberalism really looks like.
4
Humans just keep repeating history so decisively and creatively that you can set your watch to it. We think we are so smart with our technology and gadgets. Tulips, anyone? Everyone laughed about how could anyone be so gullible to buy into that one.
1
George Carlin !! Comedy and Tragedy.
Tragedy Won.
1
Whether these predatory loans were legal or not, they were certainly unethical. Yes, "buyer beware," but also there is an expectation that all loan terms will be clearly explained to the buyer. Shame on those who prey on immigrants and anyone who doesn't speak English well or who may not be well-educated.
5
Not defending predatory lending but bottom line is that
taxi medallion is an investment. If you make a bad investment you should not blame anyone but yourself.
No one forced these drivers to invest in these medallions.
9
What can we do to seek justice for these exploited taxi drivers and their families? As a former New Yorker and a child and grandchild of hard working immigrants, I want to help. Pressure NYC government to hold lenders, brokers, and bankers accountable?
Note: If Mr. Hoque had consulted with and listened to his wife, he wouldn’t be in this mess. I wouldn’t be surprised if this is true for many of the taxi drivers now facing bankruptcy. Perhaps this is much a story about patriarchal culture as it is about predatory lending.
Thank you NYT for your extensive coverage of this. It’s good to see my subscription fees are being put to excellent use.
3
The medallions were a legalized protection racket. When those who ran the racket allowed Uber in for free, they betrayed everyone who had bought into it. If the Mafia had done then same thing, there would have been a Valentine's Day Massacre. Instead, every taxi driver who paid their extortion fees got the short end of the stick.
The first day Uber came to town, every cabbie should have gone on strike until a law was passed preventing them Uber from operating "legally" within the city limits.
The cabbies didn't force cities to honor their "blood money", so they ended up losing everything. And it's turned out to be an extremely expensive lesson.
2
Reckless? We are living in the country in which every person can have great financial success if he or she only buckles down and works very, very hard. So, of course, I blame all those reckless people who bought into this myth created and maintained by our mainstream media. Of course it is reckless to dream you can feed your family and pay for their education. And then the mainstream media also carry articles like this one that allow them to show they (now and then) really told the truth and should not be blamed for all the ruined lives.
Who among the presidential candidates is most likely to effectively end the type of corruption, greed, and cruelty so ably described in this article?
Elizabeth Warren.
3
So tell me once again how our barely regulated form of capitalism is great for everyone. That's what Obama said. That's what Reagan and both Bushes said too. The last president to say that maybe some corporate greed in America was dangerous to human health was Carter. That's the last time some bitter but indisputable truth was spoken to us about these matters, by a president.
And the engines of capitalism don't care if poor people die or kill themselves in despair. There's always plenty more where they came from.
Please tell us once again some bedtime stories of how we practice capitalism. That's some good fiction.
3
We had a "scam" going on over here in Los Angeles that involved earning equity in a semi-truck by driving for companies that would eventually reposes the truck, forfeiting all your equity.
These scams just keep going on and on... We should have the death penalty for cons that perpetuate these scams.
2
When you create a Ponzi scheme with wealthy peoples money, ie Bernie Madoff, the feds and regulators come down hard, and the people who lost their life savings are called victims...,when you create a Ponzi scheme by stealing poor non native immigrants’ life savings, nobody gives a hoot and the comments are all about how the victims should have known better and it’s not the banks or loan holders fault.
When small businesses held by white rural America are decimated by capitalism or financial failures (our gov creates programs to help them out with tax incentive investments to revitalize towns) or when small farms go bust because of bad policy ie Trumps trade war, our government puts together bailouts to support them and not lose their votes ...second one since Trump too office.
When poor immigrants businesses’ go bust because of bad policy like poor regulations on banks and predatory loan companies we say it’s their own fault they should have read the contracts.
Racism anyone?
4
As the New York Times so often does, there are parts of this story that do not make sense How did this cabbie sign off on a loan for $1.7 million without realizing it? If it was outright fraud (i.e., he was told the loan was for less), then why isn't the fraudster being prosecuted? And the numbers! The numbers, as always are astronomical without bearing any relationships to anything. Do not run stories without digging deep into the financial side of this story! The commenter who asked, appropriately, who lost money when the cabbie defaulted on the loan, deserves an answer.
5
@Jennifer Not sure why you are blaming the messenger (the NYT.) Someone who doesn’t speak or read English well was pressured and manipulated into signing an extortionate contract. Why is that so surprising? And who knows what the borrower “was told” by the lender at the time? There’s probably not a tape recording! As far as the numbers, they are all very thoroughly documented in this article. There are records of medallion sales & loan documents.
3
It would be interesting to take a single
Medallion and trace the ownership through the years. At each transfer a private citizen made money. It is really a “legal” Ponzi scheme that was doomed to fail even without Uber and Lyft. Buyers took a risk and banks took a risk. There is an inference that there should be a “bailout”. This is really disturbing.
3
This is capitalism at its worst as it brings the worst out in people. It is why many have lost faith in capitalism as we know it and would give it up in a hot minute if they could find an alternative way to support the economy.
Since decency can’t be legislated we’re all doomed to live out our lives at the mercy of greed.
3
I would like to offer a slightly different perspective. Honestly having lived in the US for over 40 years now, I have seldom if ever had a corrupt "system" affect me in anyway. I don't mean to imply that the US is the least corrupt places to live in but like all bad things like murder, theft, robbery and fraud, these things happen in the real world and we have to be very careful and watchful.
Ironically in my travels worldwide, the people who have always left me with a bad taste in the mouth have always been taxi drivers. I cannot count the number of places that taxi drivers have swindled me for small sums of fare money. I know it, but cannot do anything about it. It is like being held at gun-point but less dangerous. I remember that at one point I told a taxi driver in Tel-Aviv that stealing that small amount of money from me would not make him a millionaire even if he does it a million times (which he obviously couldn't).
The stories in this article are sad and as a bleeding heart liberal, I feel bad for the folks affected but there are plenty of bad things happening in the world and this is just one of them.
1
Enforced scarcity is a uniquely Democrat approach to the market. It never ends well. Yet look at the current platform.
4
@Daphne So much worse than market-enforced scarcity, right? e.g., good public education. In SF, private school cost $40K / student. SFUSD spends $8/student. So the market rate is 5x the public rate. Oh, yeah. When the private school doesn't like the kid or the kid has problems that require special attention, the private sector kicks them out to go to the public, which drains the public sector and reduces the expenditure per kid. Yeah , the market ALWAYS works great better than the "Democrat" imposed scarcity.
Also love the denial of medical services by the private insurers who aren't "rationing" healthcare, just making sure that the wrong people (ie those without money) die.
Great system. Employees love their private insurance until they age out. Then they find out how cold it is.
The market -- perfect - fair - moral - abundant in every way.
3
@Daphne
Seriously? That's what you inferred from the facts in the article?
No nefarious behaviors in a rigged scheme that masqueraded as capitalism and free enterprise (the Republican dogma that keeps on giving)?
3
@Daphne So Republican municipalities and states don’t require liquor licenses or nightclub permits? Who knew?
Someone buying a medallion in 2014 is akin to someone deciding to mass market type writers in 1985. Would anyone of sound mind invested in SCM in 1985? All any of these folks needed to do was purchase a car.
Why does the article take so long to mention Uber/Lyft/Juno? The technology sea change is the over arching story here. And whenever these sea changes occur, investments in obsoleted technologies lose their investments.
6
@ColoK This story was about information asymmetry and the war of the smart against the less smart.
The bankers knew all of this. How you can sleep when exploiting their naivety is really a great trick, one that our President has really mastered.
2
I don’t really feel sorry for Mr. Hoque. He was educated and should have done the math before making such a large and risky investment. Language beside, math is math. But in general, where was the regulation here? Giving million dollar loans to low income people?
2
@Ann Smith Oh, don't work. It's kinda like junk bonds. You make this scattershot, and then play the odds. Better yet you get your bonus better the loans hit the fans, and move on to your next (higher) assignment. Kinda like the 3 card monte played in Times Square, but with suits.
I see a Pulitzer in Mr. Hospital's future. Great work!
6
One question left unanswered, who actually ended up losing money on the unpaid loans that were presumably discharged in bankruptcy?
14
Same story repeating over and over again. Somebody wants to get rich quick and somebody quickly finds them and relieves them of all their money. It is not going to stop.
7
The system went wrong when the medallions became an investment vehicle for greedy capitalists. All of the medallions should have been “independent” i.e. operator medallions, reserved for working people that actually drive the cabs. The TLC then went on to perpetuate a system of artificial scarcity while allowing Uber & Lyft unlimited access with basically zero barriers to entry, to the point where the whole system is now obsolete.
12
@Melmoth Lyft and Uber have turned the poor and uneducated into "giggers," unable to organize into a force that can negotiate with the large platforms.
The next great app better be "Unionator" that aggregates contributions from drivers. But that won't happen in our new Shirtwaist Triangle 2.0 Economy.
PS The innovation of Lyft and Uber wasn't echnology. The ideas of distributed driving were around a long time before them. Their innovation was the weaponization of money: the willingness to break laws and then throw armies of lawyers and lobbyists at the local governments.
1
@Melmoth
People are forgetting that Uber and Lyft offered car service to places in the outer boros where cabbies did not want to go. Also there were plenty of private car services pre- Uber and Lyft.
BTS how about some commentary on the recent extra taxes stuck onto cab fare in the city by none other than De Blasio and his soak the little people allies including City Council and the State Legislature. Can't tax the rich!! A luxury tax-- no way!! but we had one in the 50's -- so old fashioned. adn out of date like the 95% bracket.
1
NYC government created this problem by imposing an artificial monopoly — the medallion system. The monopoly then overtly sold an asset that represented the government’s permission to make a living by providing taxi services. It should be no surprise that this scheme was immediately gamed and corrupted by crony capitalists. The answer in this case is more free market, not more government games — eliminate the medallion system, which will illuminate its exploitation and crony profiteers.
My heart goes out to the victims of this scheme.
13
@Eddie
You've just described the recipe for a race-to-the-bottom economic meltdown.
Not really a road to good outcome either.
3
@WJG Exactly right. The answer here is to impose employee and benefit obligations on gigger platforms. Sure consumers will pay more, but isn't that the point. The price of the product should reflect the cost of provision at more than subsistence levels.
Unless those with money like being serviced by people who are poor, without power, wracked with anxiety, and 2nd amendment enthusiasts.
2
@WJG I described a recipe that has resulted in a historically unprecedented period of world prosperity. Government can still manage excesses and outliers, but market fundamentals must be allowed to do their work.
1
Well researched, excellent writing, just a really well done story. Great work everybody!
19
This is also the result of a culture that encourages borrowing and incurring debts. I can’t count how many times I have been discouraged from making large down payments on my house. The worst example is our own government who borrows exorbitantly with no strategy for repayment.
20
@Qcell The mortgage industry post world war II was a policy that morphed into fantastic subsidization for the people with money. Imagine, leveraged growth, tax benefits, and analytic predictive software (e.g. FairIsaac) that silently redlined real estate, making transgeneration accumulation of wealth more than a little difficult for black people (let's stop the people of color meme, this was aimed at blacks).
"They were insisting on this,” he said. “What are you supposed to do? Say, ‘I’m not doing the sale?’”
Uh, yes? Children require external controls to behave morally, but adults are supposed to have internalized such control. This is the primary argument made for deregulation: adults don't need the nanny state.
Except this is demonstrably untrue. When in comes to greed, "adults" do not demonstrate self-control. Worse than that, as long as the costs are socialized while profits privatized, this behavior will grow and grow until there is a systemic collapse, like with the Great Depression.
The cab driver "losers" here are canaries in the coal mine for the rest of us.
11
So typical of the ethics of modern America: smart people making money figuring out how to take what little the vulnerable have. And such greed always finds a way to salve what little conscience they may have (if any): they had a chance to read the contract, didn’t they? Such cruel “let them eat cake” logic now resides in Congress and the Supreme Court, where fine-print arbitration clauses, no escape from credit card bankruptcy, and elimination of reasonable limits to usurious interest rates reflect how much the ethics of American capitalism has changed since Reagan.
9
And, all of this was legal...wow.
The law of unintended consequences....should it not be the responsibility of the agencies that issue the medallions to regulate their use and sale ?
7
Buying medallions at a high cost based on the expectation that the price will go up is not a Ponzi scheme. To quote Wikipedia “A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds.”
8
@Carrie Schneider More like Amway, the foundation of the fortune than enables Betsy Devos to shape the educational opportunities of our nation, made greatly ignorant again. As Donald Trump says, we "love the uneducated."
Organized crime used to run loan sharking and other rackets. Now they are operations of "legitimate" businesses. One thing that hasn't changed is rake-off to corrupt local government officials. The first step in setting up a similar business opportunity is getting government to limit the supply of whatever you are in the process of cornering.
6
According to Donald Trump and the Republican Party, the path to prosperity begins with the end of regulations. Sure it does - for the wealthy that have no moral conscience.
27
In this example, the market-driven approach would have been to allow taxis to drive without the regulation of medallions. As you learn from reading the article, it would have been much better for the drivers, and indeed a path to prosperity. And yes, like a Republican would do.
But then instead, government agencies (7 of them!, per the companion article) got involved in creating and monitoring the medallion system. The government agencies were bloated and incompetent. Of note, nobody at the government jobs had any skin in the game, and had no risk of losing their job, since it was the government.
Just as in so many other sectors of the economy, what started as well-meaning regulation turned into bloat and government incompetence. That is why many good, intelligent people desire less government.
If the government were efficient and competent, things would be different. But the fact that government is not accountable to market consumers is the very reason that it won’t be efficient.
Imagine a restaurant. If it has good food, it succeeds. If it doesn’t, it fails. But if the government office doesn’t do something well, it doesn’t fail. In fact, its budget will likely increase to hire more supervisors, auditors, etc., until the whole system is garbage. Government waste is indeed a very apt phrase.
4
@Doctor It doesn't take much imagination to propose regulatory requirements that would have protected immigrant cab drivers seeking to be entrepreneurs in their own right (i.e. my idea of a legitimate free market). Some of these "loan instruments" were misleading, at best, but overall, predatory, to unwitting victims. And then big banks came into the picture to use these niche medallion lenders as a way to bypass the regulatory requirements the banks had to follow. Look, I'm not going to quibble with your issues about inadequate government oversight, but if more and better regulations were on the books, this bankrupt class of cab drivers/quasi-owners would have greater recourse for restitution - legally and financially. The fact that one cab driver was on the hook for $1.7M does not suggest to me that he would have thrived in your concept of a free market economy.
[[A Pakistani immigrant who thought he was just buying a car ended up with a $780,000 medallion loan that left him unable to pay rent. A Bangladeshi immigrant said he was told to lie about his income on his loan application; he eventually lost his medallion. A Haitian immigrant who worked to exhaustion to make his monthly payments discovered he had been paying only interest and went bankrupt.]]
What were the ethnicities na d backgrounds of the men from whom they bought the medallions? Were they conned by their countrymen?
2
@Third.Coast Affinity cons are quite common. Bernie Madoff played this card to the max. Who would think the menschy landsman would take in "his own people" -- pull in a few big names, Steven Spielberg, for example, and then the rest will follow.
1
I'll give it a 99% chance that was the case.
1
Confirms my view that the US is the most corrupt nation in the world today. We try to enslave anyone mainly through debt. A horrid nation.
20
Capitalism in it's glory. Americans talk about other countries being corrupt? We are the most corrupt. Please stop the world, I wanna get off.....
17
According to the article the primary lenders and fleet owners were immigrants themselves. Murstein was a Russian refugee, another was Polish immigrant and another Greek. Immigrants preying upon more recent immigrants.
1
Loan sharks that make the juice loan operators jealous.
3
Exploitation at its finest. Incredible set of stories. Can't wait to see this on the Weekly, too. Some people deserve to be behind bars for this. Immigrants everywhere trying to get to this country for their small slice of the American Dream often find a nightmare.
14
A next article should follow the money in even more detail. Rather than profiling victims it should do more extended profiles of the individuals and families who lived off of these abusive practices. Folks living in nice neighborhoods, going to fancy schools, participating in snazzy social circles need to know that their friends’ money is dirty money. Legal regulation alone doesn’t fix this; some informal social control via shame and ostracism needs to be in the mix too.
65
We can’t rely on these sorts of fraudulent opportunists to police themselves because of conscience. That won’t happen. This scam, blatant as it is and operating relatively openly and legally, is what the Republican brand represents.
What is needed now is for one or more of the Democratic candidates for president to focus a campaign on this kind of greed that is turning our country into a banana republic. It is a level of bold rapaciousness, characterized by graft and corruption, that operates in plain view and takes advantage of ordinary, unsophisticated citizens, and it is exactly what Republicans are calling for when they scream about the need to reduce regulation. What appeals to Republican power brokers is the vision of creating more of this sort of “opportunity” by loosening regulations to allow them to take advantage of unsuspecting people.
The Republican Party, bought and paid for by its wealthy enablers, has become the party of greed, and it is why Trump is their standard bearer. That’s the main issue, and the theme that on which Democrats should be campaigning. All of the other specific issues should be tied to Republican avarice, because the graft and corruption will, if unchecked by regulation, only grow more pressing on ever wider segments of the population.
If we want to be like Russia, which clearly Trump does, then let’s let greed allow Republicans to incentivize more wannabe oligarchs to game the system for their own benefit.
2
@Dan Ryan
Someone needs to go to prison.
The same government that took the money for the medallions allowed Uber and Lyft to operate in the city without one. Uber and Lyft should be forced to compensate the medallion owners until a fair playing field is achieved.
21
@Catania why should Uber and Lyft contribute to inflated Medallions which was the result of Government failure and corrupt practices by bankers and industry players.
3
@Dharma They were allowed to operate without the huge cost of a medallion which the yellow cabs were forced to pay. They also are not required to comply with certain rules (i.e. handicap accessible vehicles) as yellow cab drivers must. The government i believe has some duty to protect those it takes large amounts of money from as it did with the hotel industry and Airbnb.
This was a bubble financed by predatory credit and fraudulent speculators. The greed and moral corruption of the lenders and intermediaries is shocking, even in this day and age. It’s time for the prosecutors to get to work.
17
Thank you NYT. stories like this are the highest form of journalism and the reason that this is the only news paper I've ever subscribed to. This story brought tears to my eyes's.
19
The recurring theme I see -
borrower didn't speak English.
( you know what goes next )
7
@JB
Help us out here JB, what goes next? Is it “Borrower should learn English before signing a contract in English”?
The horror of life under trump and his minions. This was once a great country; it is now a banana republic. Chairmen Schiff and Nadler must immediately remove trump via inherent authority and install Secretary Clinton as caretaker until Sen. Harris assumes all power.
1
@Fred
As I recall, Trump was not the president in 2012, and did not, to my knowledge, have anything to do with the NY (state or city) taxi, or loan industry, other than being a borrower of loans for himself. There is a lot of finger pointing, as this story point out, but the point is that Trump, here, it seems, had nothing to do with the problems (other than taxis taking people to his properties, I guess). Perhaps the NY Times might also look at the political contributions of some of those involved to see if that had anything to do with the lack of oversight. Or rather, blindness. But if you are suggesting that Trump's plans for reducing restrictions on banks and loans (including pay-day loans) may be problematic then you have a point.
4
@Fred
The horror of life under the monopolistic New York City council and mayor. The is not Trump...
1
I am no fan, but how is this Trump’s fault?
1
I only take taxis once or twice a year. I only get ripped off by cab drivers once or twice a year. No sympathy.
It’s as if because I’m in their cab they think I don’t know my way around. “Why are we going uptown when I said downtown?” “Why are we on the Van Wyck when I want to go to Brooklyn?” And my favorite, “Why are we going to LaGuardia when I said JFK?” The cab driver actually said “LaGuardia, JFK, I always get those two confused.”
8
So take the subway.
1
"it is unclear it violated any laws" you're kidding, right? indentured servitude contracts and no laws were violated? Welcome to America
12
This makes me cry. My dad was a cab driver, a second job to pay expenses, not in New York, but he drove for Yellow Cab. He took me to school in it one day and the kids laughed at me. Then my older brother teased me to tears, when I told my mom what the kids had done to me. I still when in a city trust the drivers who drive at Yellow. And, when the New York City Library sold clocks made out of old medallions and taxis, I bought one, for my father. I hope they put every scoundrel in jail who made an unfair dime off any of these men!
21
It would have been interesting to know if the ”prominent businessman” who sold Mr Haque the million dollar taxi medallion was himself an Asian-origins immigrant. Newer arrivals tend to rely on older established migrants from their own backgrounds.
3
In some ways, large loans to poorly informed people for instruments of little value sounds a lot like poorly informed people paying large amounts for college degrees of questionab
6
Something needs to be done to help the taxi drivers. Banks and the New York City are responsible for what happened. They should be held responsible for the problem that they created.
5
Everyone operated ouut of greed in this little vignette(!). It's just that some of the players were vastly more shrewd and sophisticated than others.
The City of New York, which seems to spend the majority of its time figuring out ways to skim off some of the commerce being conducted inside the city limits ("Congestion tax"? What a joke!), speculators, drivers who had no business being either given or taking out predatory "loans," all of them are to blame, in varying degrees.
By the way, ALL non-profits ought to be done away with. Every one of them is, in fact, a profit making enterprise. Including churches.
4
I don't think anybody who spend some time driving around NYC has much compassion for yellow cabbies.
Apparently their financial behavior is as reckless and unscrupulous as their driving. Not surprised.
2
The city needs to reimburse all the medallion owners.
They set up a system in which to run a taxi service one had to have a city license called a “medallion” with a limit on how many could circulate which raised their value. Then, after this market was established for decades, the Bloomberg administration let Uber and Lyft come in a behave just like a taxi without the huge burden of buying a medallion. What is up with that bait and switch?
How is Uber and Lyft any different basically than a dispatch taxi service except more efficiently managed through an app and gps. If it walks like a duck and quacks like a duck, it’s a taxi just like a yellow cab.
All those immigrants who saved to buy a medallion as a step into the middle class American “dream” have been seriously damaged by the city father’s negligence. They should be reimbursed and the medallion system scrapped.
15
NYC has long had both medallion taxis with “street hailing” privileges, and on-call “black car” services. These on-call services valeted for the wealthy, and also served moderate-income minorities in the outer boroughs.
Well, Uber revolutionized on-call car service. They united a fragmented business. I fault the City of New York for looking the other way when Uber X was introduced, with amateur drivers in their Hondas (vice what became Uber Black). This is what killed the licensed medallion taxi driver.
2
sorry, no sympathy. who came to the rescue for the ice man when the refrigerator was invented. who came to the rescue of thousands of secretaries when the answering machine was invented. who bailed out the planning book companies when word files and excell was invented. let the buyer beware. I opened a cheese shop in 1977. I did my research. who nearby sold cheese. does the neighborhood need a cheese shop. will they afford my prices. stop being bleeding hearts for peoples bad decisions. we have no unemployment. get a different job. companies are desperate for employees.
11
Andrew Murstein. I remember being contacted by him out of the blue in late 2012, and subsequently going to meet him in his office on Madison to discuss alternative investments he was interested in. It was clear he thought he knew more than I did about my area of expertise and that he thought he was the smartest guy in the room - he was self satisfied, smug, and full of himself. Subsequently, he contacted me on the phone to follow up about something, and when I tried to politely explain that his opinion on the investments we had discussed was uninformed and uneducated, he went into a rage and screamed over the phone at me that he worked with famous professional athletes and politicians all the time (his version of the 'do you know who I am?!?' diatribe), and who was I to contradict his opinion? As a businessman he is clearly successful, but as a person, I felt like I needed a shower after meeting him...
6
What a brilliantly classic piece of reporting about a common theme in our society "Its someone else's fault, not mine". This reporter couldn't even get original,. "Blame the bankers" a cliche gripe dating back to the Medici's. What cost the taxi drivers of NYC their livelihood and, by extension, the value of their Medallions, was a corrupt, oligopolistic system which was fat and happy on no competition ( reminds you of the Soviet Unions 5 year plans). As such, it didn't innovate and got its head handed to it by creative technologists in the form of UBER and LYFT. This article, rather than whining about what happened to this segment of the economy, would have served you paper better to accentuate how this is a proxy for political and societal thought in America. The " Let's try and defeat ever new economic thing that is successful by taxing it or regulating it such that all it does is serve the masses. The race to the intellectual economic bottom." Think about it.
2
DeBlasio wants to be the Democratic nominee? I think not.
This is a good example of why government regulation is important.
I’m surprised Don the Con wasn’t involved in this.
5
@Upstate Mom He left that to his "fixer" currently residing in federal prison..
3
To those commenting that this is a result of capitalist greed, you are wrong. This is a result of NYC greed. Don’t blame an entire system, which works well for the majority, based on corrupt actors in one corrupt city.
4
@American It's not only in NYC. Many US cities have gone to the medallion system and it's pretty much ruined the business across the nation.
3
“Mr. Familant made about $30 million in salary and deferred payouts during the bubble, including $4.8 million in bonuses and incentives in 2014, the year it burst, according to disclosure forms.”
And this guy works for a “non-profit”? What a joke. Apparently any group of Ponzi scheme rip off artists can call themselves a non profit these days. I’m sure Trump U. was one too, before the class action.
7
@W.H. Apparently non-profits are the most profitable of them all these days..
3
@W.H.
Religions are "non-profits", too.
Just by being a non-profit doesn't mean it's not a con.
3
I'm curious how Michael Cohen and his father-in-law and their Medallions might fit into this tale? Maybe, maybe not?
9
Fellow NYC homeowners, do any of us fear the same will happen when the WeWorks, AirBnbs and Mega Developers redefine affordable housing and co-living? Will the value of a NYC property eventually fall, ending this incredible market run for good? Are the international buyers driving the market in a controlled manner? Driving prices so high to keep the dream alive? Would love to hear thoughts or reasons why this may or may not be the case.
4
The first step to stopping this kind of thing is regulation on loaning practices. But a second important step is financial literacy education so that people are more able to spot an exploitative scam. Loan sharking - whether for taxi medallions, college scams (Trump University anyone?), real estate - preys on people's financial ignorance to get them to sign first and understand later. This doesn't replace the need to put legislation in place to make these practices illegal. But it can help individuals protect themselves.
8
Excellent story. Role of city and authorities get off too lightly. I travel frequently through LaGuardia on business. In the past I’ve tried to take taxis to help these guys out even though ride shares are 40% less. LaGuardia is making that onerous - when you come out of terminal D you can walk right out the door and order/get a ride share but to take a taxi, you have to wait in line, TAKE A 10 MINUTE BUS to the taxis. Who is going to do that? It seems to me the LGA authority wants to put a nail in the coffin of the yellow cabs.
3
@Cindy I agree that's a problem, but it's the result of trying to rebuild one of the busiest airports in the world while keeping it in full operation. Hopefully, that problem will end once the construction ends.
1
As Keynes incisively observed, unregulated capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.
Americans should have learned from the 2008 crash that unregulated markets are not self-correcting.
But allowing financial predators to profit from the destruction of uninformed victims is in the US, unfortunately, admirable as long as a dollar is made. A sad commentary on a sad country that deludes itself daily by affirming it is the greatest nation on the planet.
12
@MacDonald The root cause of this problem was the decision of the government to create artificial scarcity.
4
Perhaps I've missed it, but there's a story that I haven't seen covered anywhere.
Just how did Uber and Lyft get approved in NYC and elsewhere to run their own taxi service outside of the medallion system?
Did government officials just let them do this?
20
@Edward medallions give you the right to accept street hails. Uber/Lyft don’t require street hails.
4
@Edward Just think of the opportunities government could create if it decides to limit the supply of all the other services and goods we want.
3
@Edward
On a technicality I guess. The taxi is still the only legal means for a street hailed ride. Ride shares are App based hails and car services are telephone based hails.
2
So many of the comments are blaming “capitalism” for creating this problem. In a purely capitalistic system, taxi medallions would not exist and this problem would not exist either. Instead, this article shows how the government often creates artificial barriers for people seeking to do low-wage jobs (licenses for hairdressers, taxi medallions, etc.) Finally, it shows how well intended economic regulations often lead to regulatory capture which harms both the poor, here taxi drivers, and society writ large, here everyone who hails a taxi.
22
I'm sure the next move for the city is to issue medallions for Uber and Lyft drivers to create another bubble.
4
At the root the problem is the artificial limit imposed on the number of medallions. A medallion should be a quick permit granted in a few days, not a false asset that represents the collusion of government with a few owners cliques and their bankers.
By artificially enforcing a false value on medallions, government encouraged corruption and malfeasance. DeBlasio wants to be President? Maybe he should move against these corrupt individuals as an early campaign move and as a show of good governance.
44
@Yoandel You can rest assured DeBlassio will do nothing to ruffle the feathers of the well heeled if it means the loss of 1 single dime in campaign contributions.. Of course the same can be said of just about all pols..
back in 2006 my son and I had the sickening feeling that there was a shell-game going on as we used savings and borrowed for his college education. There was so much convincing hype from the Fin Aid people and the college president. "your dreams will come true here; you'll grow and flourish." Even then with scholarships plus loans, my son's instinct as he created his excel spreadsheet to start tracking his loans, kicked in quickly. He saved his excel sheet with the filename of "indentured servitude for life." He was 18 years old then. Bankers always win. Always.
24
I see some issues not highlighted in this situation.
1) The diversity visa lottery is bringing many immigrants who are not ready to effectively mingle/function in American society. Most of them can't even speak/write English. These immigrants either get taken advantage of or become dependent on state for their sustenance. Chain immigration's effect is also very much the same. Being an immigrant myself, I have seen all kinds of abuse from close quarters. Often, the victims are not even aware that they are being exploited and consider the abusers as saviors. The US before issuing immigration visas should ensure that visa grantees can speak English at the minimum.
2) Due to the steady supply of immigrants waiting to be duped, loan sharks indirectly caused the price of medallions to soar. As a result, taxi driving/owning in NYC became an indentured slavery for many.
30
By creating the medallion system, NYC created an artificial monopoly. These systems consistently result in outrageous prices for medallions. For example, Greece issued a limited number of trucking medallions and they were at times being sold for $400k each. The NYC government should be blamed for creating this horrid system. NYC laws forced drivers to take out enormous loans simply to drive a taxi.
14
This is great reporting marred by the lack of proportion shown in likening this situation to the subprime crisis. Subprime mortgages became one of the largest types of financial asset in the world; nearly all the top banks in the country were involved, one way or another; the collapse of the market brought down not just homeowners but investors, lenders, and many others; the collapse triggered a global financial crisis, the repercussions of which we are still living with.
This is a handful of lowlifes exploiting a vulnerable subsegment if the population. It never should have happened. But a replay of the financial crisis? A little proportion, please.
10
@Peter Greiff The NYT loves it's victim stories. Just an update of the ancient adage of journalism- if it bleeds, it leads.
Some legal practices in its their core essential is immoral.
Do you remember that insurance ad on Tv nowadays.
It turns out to be only immoral. not illegal.
2
Terrific reporting thank you. Another insidious side to this that needs to be covered is that the value of these licenses belonged to the public and there was a transfer of billions of dollars of public assets into private hands. The regulators failed not only the drivers but the r public as well.
6
Joe Biden says he's a "union Democrat." But where is the union for these drivers? What did Barack Obama and Joe Biden actually do for unions for eight years while they were at their pinnacle of power in the U.S.?
Yes, they bailed out the auto industry in 2009 and that saved a lot of union jobs. But that's just an argument for not electing Mitt Romney or any other Republican. It's not necessarily an argument for nominating Joe Biden as the 2020 Democratic candidate for president. The fact is that virtually every other Democratic candidate running for the nomination would have bailed out the auto industry, too.
Where was the swell of union jobs during the Obama-Biden years? There was none. But there was a swell of gig economy jobs for those eight years. The gig economy -- those $7 and $8 an hour, benefit-less jobs at 1980 wages. That's what swelled during eight years of Barack Obama and Joe Biden. And where is the hub of the gig economy? In Silicon Valley, Nancy Pelosi's backyard.
8
@sthomas1957--What can a president to do for unions, other than express support? The president has nothing to do with unions. Either workers in an industry want a union or they don't. States sometimes pass laws that make it difficult for unions to exist, but the federal government doesn't control that. The president doesn't control wages, either. Actually, the president has very little he can do to influence much in our lives, other than speak about it. He can call for a higher minimum wage, but he can't implement it.
Obama couldn't create union jobs during his term. He lacked the power to create any jobs at all. Trump takes credit for job creation, but it's really just luck if jobs increase during a presidency.
5
@Ms. Pea No President and his administration can create jobs?? Didn't FDR create jobs through massive infrastructure & governmental R&D investments, which bettered the competitiveness & undergirded decades of the economic prosperity for a rising middle class in the USA? All before this era, greatly advanced by Reagan the spokesperson, and deepened by Gingrich & his neocons, who twisted the truth and Bill Clinton, guided by snakes like Norquist, who stated that 'government was the problem' to be 'drowned in a bathtub', while (crony) 'capitalism is good'. Add FoxNews propaganda and its paranoia, racism, scapegoating and xenophobic hate of immigrants. Hence, we have gross income inequality, soaring and untaxed private profiteering, unpunished bank fraud, vilification of unions, and the lousy jobs without benefits or decent wages. The top 1% bought more government and corporations dominate the media machines. So we arrive at today's Orwellian and Trumpian times, with propaganda engineered for the ignorant, willfully ignorant, the tuned out, the 'normalizers', the confusion of 'deep division', the cable news noise. V oting blocks jacked up on 'evangelical movement', dumbed down, the Fox News bubble, prone to scapegoating, fear-mongering, distraction -- by haters, racists, xenophobes and liars. Now comes a rise of fascist and 'strong man' claims. A law and norm-breaking, subpoena-ignoring Senate, a regressive Supreme Court, weakness in neoliberals, an end of democracy?
@Ms. Pea So many have the misconception that administrations can establish jobs. At times some policies will create or save jobs.
Jensetta. You got it right. Look at the subprime mortgage case. If ever something cried out for federal prison time that did. Everybody walks so the rich and politically connected continue to get away with wrecking the country. Wanna get tough on crime let’s start with the banks and Wall Street
10
Don't sign anything you don't understand. Don't lie about your income on a loan document.
36
I was a banker for the better part of 30 years and did credit assessment for almost another 15 years. Any bak that did not understand that the underlying meanings and cash flow did not justify the value of the asset they were underwriting, albeit indirectly, was either feckless or desperate and probably both. Unfortunately, banks get into this kind of lending - as they did lending to consumer loan companies in poor neighborhoods back in the 70s and 80s and maybe latter - because they lazy, stupid and irresponsible and are allowed to be so by management. Disgusting and forgetful of their real primary responsibility, which is to protect the funds of their depositors. Taking refuge in the notion that "everyone is doing it" is nothing more than the complete abandonment of first principles, though most banks these days parrot these with an embarrassing lack of sincerity or conviction.
9
@Petros If you really were a banker for the better part of 30 years, you know that what you wrote is demonstrably false.
For the past 30 years, and particularly since the Clinton administration, banks reward their employees for sales targets, nothing more.
The news is rife with banks like Wells Fargo, TD, etc. having insane sales targets for their employees and firing people who did not meet those sales targets.
Banking is not about "protecting the funds of their depositors". Banking is about loan orgination and administration while investment funds take the risk.
3
@Viv Viv, You are assuming on absolutely no fact available to you that I was a banker over the LAST 30 years. In my career, the goal was ALWAYS the defense of the bank's soundness and, therefore, the depositor's funds. You are obviously thinking about a more recent banking model relying on wholesale funding and, as you say, syndication of risk. We simply didn't do that. The thinking applied to some fairly widespread international banking activities, so don't think, on the other hand, that my bank was a small community affair wither. Sorry, but if you weren't there you can't know.
Apparently Muslims and Christians who live their lives based on the Bible had the right idea. Usury is not a fair or ethical idea as victims discover daily.
DeBlasio has lots of work to do at home rather than in DC. Or did the Mayor give up and NYC just going to continue to be the Ponzi capitol if the world?
7
If you are a Republican, you admire the deviousness and greed of the loan sharks, and are contemptuous of the plight of the cab drivers. This is a validation of American style capitalism; the strong preying on the weak, the savvy preying on the ignorant. A few winners, many losers.
If you are a progressive Democrat, you feel anger at a society that allows this monstrous perversion of Capitalism and cries out for retribution for the dead and ruined: the jailing of these loathsome predators and strong regulation of their business practices, the absence of which allowed this exploitation to flourish. You long for a system built on fairness and empathy.
38
Beautifully stated. Thank you.
2
And yet, this occurred in NYC, the most heavily Democratic city in the country. How could NYC’s progressive liberals, all uniformly yearning for fairness and empathy, allow this to happen?
11
NYC is hardly progressive.
"Behind every great fortune lies a great crime."
--Honore de Balzac
88
@george eliot
Great quote. We should all look at the book, Winners Take All: The Elite Charade of Changing the World. By Anand Giridharadas.
Regulation is key, and Republicans have made it a dirty word. It is finance and banking that need regulation, not small businesses. If everyone understood this, we would be able to do it.
12
@MJB who deregulated the banks??? It was not George W. Bush, George Bush, Ronald Reagan, Gerald Ford or Richard Nixon. It was Bill Clinton.
6
In South Asia, Crooks are visible. They say, "pay me this amount or I will cause trouble". US is just as or more corrupt but Crooks are sophisticated. The threat from crooks is wrapped in legal lingo. It is very easy for South Asians to get duped because they do not recognize the threat..
Finance industry is full of crooks.
15
Welcome to America, the land of the opportunists. Loan sharks, crook banks, etc. Government deregulation orchestrated by Republicans always targeting the working class.
19
All you have to know about the taxi industry is that Michael Cohen was involved. The city needs to recall all medallions and start from scratch.
9
Incredible that newspapers need to make these kinds of investigations, because governments regularly fail to do so. Journalism truly is The Fourth Estate.
84
Greed is just a euphemism for dopamine-induced money, power, and status addictions that are every bit as real, pervasive, and destructive as gambling and drug addictions (which can be linked to the same powerful neurotransmitter).
The bankers, brokers, lawyers seducing and manipulating the taxi drivers' needs aren't all that different than the despicable drug lords (or Sacklers) who've reaped billions by seducing the addictive needs of victims whose lives they've callously ruined.
It's no accident the symptoms for all (dopamine-induced) addictions are the same. Denial, self-deception, an irrtional commitment to continuing even the most irrational addictive behaviors, and a cold/heartless indifference to the incredible damage the addictions cause.
DopamineProject.org
6
@Charles Bam, you nailed it. I will look at your website.
1
GREAT reporting NY Times. I see the case for a class action law suit here. Predatory lending by banks and brokers. Sound familiar? When will this end?
7
A story of greed as old as the country. American exceptionalism at its finest.
7
If the Taxi driver, foreclosed home owner , students with hundreds of thousands of dept , farmers who's crops are worthless from the trade war all instead of committing suicide tracked down these bankers and politicians to bring themselves justice the world would become a kinder and gentler place real fast.
5
Looking at the work ethic of the immigrants who were conned: Working dozens of hours each day, paying ungodly sums on ungodly interest-only loans-yet never getting out of debt. Contrast that with those who did nothing (more) than sell the medallions at inflated prices, bankers, handlers and credit unions who literally got *filthy* rich.
This story is not new just a different product. But it still breaks the heart. The state of New York knew better; it did nothing to protect and allowed this exploitation and still washes its proverbial hands saying: We did nothing wrong.
18
this isn't a tale about taxi drivers, its a tale about capitalism and the American bankster.
8
I think the "American Dream" is a vicious lie made up by crooks, thugs, gangsters and killers dressed in designer suits. I am always floored by immigrants who flock to this country entirely ignorant of how deeply racist and economically unjust this country is. I supposed if they studied the history of people of color and the white working class they may decide that living in a poor country where they can live a human life is better than living a life of unending stress, unpayable debt, crippling social isolation and poor health. I abhor the city officials who turned a blind eye. I refuse to vote for another politician who is not obviously and consistently anti-capitalist and anti-Big Banks. I am done throwing away my votes on mainstream Democrats. Never again. Never again. Say NO to debt!!!
9
"It is unclear if the practices violated any laws."
UNCLEAR????? What is wrong with this country???
Oh yeah, unregulated capitalism.
17
Is there are subject that the Times will not award a whining victimization story? How about remembering the old adage "if a deal seem to good to be true..."? How about reading a contract before you sign it, or getting advice if you annoy or do not understand it? For that matter, never enter any agreement you do not understand. Are there people out there who will take advantage of ignorance? Yes. All the more reason to be on guard. Look out for your own.
10
@Daphne Have you ever walked into a bank to get anything? Like literally anything?
They do not let you take the contract home to read it over and and decide if this is what you want to sign. They constantly talk to "explain" the terms to you so that you specifically do NOT read the fine print of what you're signing. Every single loan is like that. Every single investment agreement is like that.
2
@Viv
I have never taken out a loan without first calculating the full repayment cost, principle and interest. I do that when looking at investment and savings options as well. It's called financial responsibility.
2
@Daphne If loan agreements only involved the simple fact of communicating what the interest is, they wouldn't be several pages long. All you would need to know would fit it the brochures they have advertising different financial products.
Funny how that's not how it actually works once it comes down to signing the paperwork. Funnier still that the people who most crow about "personal responsibility" don't even them selves read their loan contracts, or their investment contracts.
1
I remember one trip to NYC about 15 years ago. Taxi ride to JFK. The driver told me that the best financial decision I could make would be to invest in a taxi medallion as an investment. Forget real estate. It was a sure thing—like printing money.
2
Is anyone truly surprised? Bankers and brokers are known for being sociopaths whom couldn't care less about others' lives or the society they live in. They live in a world of "I've got mine and that's all that counts." In 2014 they saw Uber and Lyft coming, knew taxi medallions would become virtually worthless and also knew it was time to cash in. After all, they had nothing to fear. They've watched as no one (read that as banker or mortgage lender) was ever held responsible for the fraud that occurred in the housing crisis and were quite aware that in the US, no one ever stands up for the little guy, except for Bernie Sanders and Elizabeth Warren.
3
NY and other cities could do away with medallions tomorrow and open up the taxi business to anyone who could pass a test and get a license. But they won't. That would only lead to more complaints as the million dollar medallions would then be worth nothing. The same is true for the cost of housing. Progressives make the right noises but no one really wants to see the the cost of housing drop. What would happen if supply really met demand? If mortgages were not subsidized? If buying a house was not seen as another get rich quick scheme? If the price of housing was cut in half tomorrow (a reasonable stating point for deep blue coastal cities) I can guarantee the the screams of anguish and betrayal would drown out the cries of relief. It will never happen.
5
Mr. Hoque came from a country where corruption is common. Now he lives in America. Becoming just another 3rd world country full of corruption. The CFPB was created to protect consumers. But the Republican was having none of that. We The People are nothing but a bunch of pockets to pick as far as the Repubs are concerned.
6
@Chris
It's not just the GOP. Obama and the Dems let the banksters walk. All Americans will pay dearly for this - bigly.
2
@HarlemHobbit You have to be able to PROVE something. Plausible deniability at the top. Very expensive for the country and very divisive. Plus, as of 2010 Repubs had control and would have made the fight unbearable.
Yet again blame the reckless loans instead of the reckless borrowers; business as usual.
6
@PaulN
Reckless loans are nothing more than mass theft. Period. People become reckless borrowers because of lack of sophistication and education about the problem.
Yes, I blame the banksters.
2
Why does it seem more and more like capitalism has turned into a giant con game?
7
I wonder if a bunch of bankers had gone to jail after the financial crisis it might have made these predatory lenders think twice ?
7
I know 2 NYC cabbies. I was friends with them. Both were illegally here (overstayed their tourist visa). Both had no meaningful education (they had degrees but could not speak good English). One actually had a medical degree (MBBS).
This was in the 2000s. Like all these immigrant men, mentioned in the story, they were addicted or drawn to fast cash rather than getting some education.
One married a local citizen and stayed back and the other was denied entry when he tried to re-enter the country.
So many cabbies here claim that they didn't know what they were signing up for. This is what we get when we start depending on uneducated/under-educated foreign immigrants. A permanent underclass.
3
This is incredibly written and sheds light on the plight of many immigrants who are conned consistently in this “medallion marketplace”. My heart goes out to me. Hoque. I myself am a Bangladeshi Immigrant and would love to be able to financially help. What are my options for helping ?
"Mr. Familant made about $30 million in salary and deferred payouts during the bubble, including $4.8 million in bonuses and incentives in 2014, the year it burst, according to disclosure forms. "
Apparently he was running a non-profit. In what world does this make any kind of sense?
10
Although I feel bad for the guy, nobody put a gun to his head to take that loan. Where is any mention of a personal responsibility? Most new small businesses in this country fail within first two years. That guy should not have been able to get such a loan in the first place.
5
Eye opening article but the one thing that runs through this is that many Immigrants do not speak or understand English,
as the U.S.C.I.S clearly states
“Basic understanding of the English language, including the ability to speak, read, and write simple common words and phrases, and
a basic knowledge and understanding of U.S. history and the U.S. form of government, also known as civics."
Once again if the U.S simply followed existing laws on the books then perhaps these burnt drivers would have been in better equipped to understand just what they were signing!
Perhaps our government should take into consideration the fact that most (if not all) Refugees at our border do not speak English and we would be releasing them into a country whose citizens have no problem taking advantage of them.
3
The thing about English is that, people can often and pick it up very easily you know.
@Ray L. This is the requirement for naturalization - there is no English language requirement to become a permanent resident.
2
Wait, so bankers got rich by conning working people and didn’t get punished for it? How could this have happened in America?
8
Another feather in the "Free Market" cap.
5
The city should recompense all of these drivers, then incarcerate the officials and others who need it. They can all go on PBS with their cooking show after they pay their debts to society.
3
Taxicab medallion debt forgiveness....Warren 2020.
7
You would think the Trumps would want MORE ignorant immigrants to fleece to come into the country...
I think the borrowers did know something about the risk of the loans.....they do talk to each other after all, it's not a vacuum. So yes, responsibliity must be lowned.
The drivers should avail themselves to the other great American benefit...claiming bankruptcy, and "playing by the tax code and the rules...."just like our President brays about concerning his own bankruptcies, defaults and well hidden tax evasions.
Or maybe open "Taxi Universities" to train others how to succeed in taxi....sounds like a viable plan, doesn't it?
(Taxi Airlines, Taxi Wines and Taxi Steaks can follow....)
On another note...the picture with this article of 1945 streets of NYC..... notice that the CARS are fat and the people are thin.....take a good look!
4
What about Uber and Lyft and green cabs?
A brilliant piece of reporting. We need more pieces like this to shine a light on corruption and immortality. With so much media space dedicated to issues of divisiveness, we lose focus on corruption and immorality in government and business. Fraud and corruption are not Democrat or Republican issues.
5
Wow. Mr. Hoque should have listened to his wife. She is a smart woman. Purchasing a home in Queens after the financial crisis would have been clever, and at least they would have a more comfortable place for their growing family to live. Instead, he seems to consistently follow the latest fashion among his friends. Whether it is leaving a great career as an educator in Bangladesh to play the U.S. green card lottery or purchasing a taxi medallion, he seems to consistently make unwise decisions. What a pity.
This article points to the great problem of financial illiteracy. The most effective regulation would be simple disclosure of loan terms in multiple languages and credit counselors who can explain the more complicated or important provisions to borrowers. If fraud didn’t exist, and it appears not to have, then financial ignorance is the problem. We shouldn’t put one person in jail for another’s ignorance. We should educate the less informed party to even the negotiation.
9
Capitalism like communism has failed. It is running amok and without serious regulation and change, I see a future of social unrest and and right wing demagogues driving us toward horrors I cannot even begin to imagine. It seems to be quite impossible to negotiate with the current group of Republican true believers. I can see no option but to cast our lot with someone considerably to the left of Joe Biden.
7
I just read part 2.
People need to be arrested. Trials must be public.
The system must cleaned up by overseers with ethics and it must be completely public: every step, every penny accounted for.
7
@Currents
Can you suggest what laws were broken? We still live in a country of laws. In the United states, the Government cannot arrest people unless they break a law -- at least not yet. There wasn't fraud here, there was inequality in financial sophistication. Mrs. Hoque was right to want a home for her growing family rather than a taxi medallion. Smart woman. She should insist that Mr. Hoque do his homework next time before investing all of the family's savings. We, as a society should work to get Mr. Hoque the resources he needs and to require easy to understand contracts with explanations in multiple languages and credit counselors to help guide the unsophisticated.
@Philip
Check out Wells Fargo.
How many of those medallions did Trump's ex-lawyer hold? Talk about deep into the corruption, if he was already into buying and 'renting' Taxi Medallions then it had to be an easy step into Trump's world of overpriced apartments and stiffing the repair guy.
But while the lawyer for the criminal does jail time, the criminal is still our President. Do the Republicans believe in our Constitution or not? Will they hold these people responsible, Fully?
While Trump is in office I am not gonna hold my breath!
5
A heartbreaking story, and one that painfully illustrates the lack of personal responsibility at every level in our society:
“There were lots of players, and lots of people just watched it happen. ... It was a party. Why stop it?”
“What are you supposed to do? Say, ‘I’m not doing the sale?’”
“I’m not the bad guy. I’m just the messenger from the bank.”
2
Woody Guthrie:
“Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
And as through your life you travel,
Yes, as through your life you roam,
You won't never see an outlaw
Drive a family from their home.”
6
The morals of this story are: (a) in a capitalist system no one should expect the person on the other side of the deal to be looking out for anyone's interest other than his own no matter what they tell you; (b) if you don't understand what you are signing don't sign it, especially if the documents are written in a language other than your native language; (c) if you're not sure what you are signing call a lawyer before you sign it (no matter how distasteful that concept may be to you) not afterwards.
5
In one way, we should be more like China. When there is obvious corruption and people are cheated, those who grow rich on the suffering of the poor go to jail, or worse.
In America, of course, it is usually just thought of as business as usual. It is also why I always vote for FDR, or whoever most resembles him.
Roosevelt once said that...
"The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it comes stronger than their democratic state itself. That, in its essence, is fascism - ownership of government by an individual, by a group".
He also said that" government by organized money is just as bad as government by organized mob".
Hugh Massengill, Eugene Oregon
1
@Hugh Massengill The trillion in Chinese money laundering siphoned illegally from China beg to differ. Or you could walk on the campus of any top American university and see who's driving the Maseratis and living in mansions.
330 million people do not have access to basic sanitation (water, plumbing) in China. That's the equivalent of the entire US.
1
Excuse me if I have some problems with the main character in this article, Mr. Hoque. He seems to have some trouble making rational life decisions. According to the article he had a good life in Bangladesh. He left to come to America, obviously with the belief he will become rich in doing so. He fails to recognize the inflated prices for his dream of owning a medallion and, over and over, goes way out of his financial means to get it. And there's another problem. No one can live on $1,400 a month in NYC with a family of four. According to the chart of expenses for Mr. Hoque, he was making over $120,000 a year driving his taxi, most in expenses. That means he paid zero taxes, qualifies for all kinds of social network supports. Why no mention of this? Something is not kosher with Mr. Hoque.
2
Yachts, waterfront properties and Nicki Minaj at a birthday party — this is how the wealthy spend the money they steal from the most vulnerable Americans?
At least the Bourbons built Versailles.
5
Why aren't these taxi permits sold by the City of New York, like other business licenses are? Not being a New Yorker, it's difficult to understand how this system of "medallion brokers" came to be in charge of taxi licensing. I don't get it. NYC should be issuing all business licenses, like other cities do, end of story. It's crazy that taxi licensing has gotten so out of hand.
5
The problem will be solved if we embraced communism. Then the supreme State can regulate taxi industry and provide accommodation, uniform, schooling and healthcare to bankers as well as the taxi drivers alike.
It will be utopia at its best.
3
Greed and ignorance a very bad combination. A very real part of capitalism that needs constant oversight. But oversight from who?
1
Taxi driver suicides are common and make me weep. Taxi drivers need protections and changes to loans that make them affordable under today's conditions.
What is deBlasio doing? What is Cuomo doing?
The families need help now.
2
The Post probably would have titled this sad article, “Three Cab Monte.” This issue was my initial thought when Uber came to NYC: The medallions cost a fortune. There’s no way the cabbies will let Uber into the city since the medallions are going to be worthless. I was thinking the high prices were controlled by someone powerful—foolish me, I should have known they were a scam. Great article about the unexpected effects of change. It at least gives a heads up notice to other industries waiting to be obliterated into obsolescence by AI and technology.
1