As you should have noticed in your investigation, in many cases the problem with taxi industry leanding is that loan payments are computed and amortized at 15-year rates while balloon payments for outstanding balances are due after 5 years.
After 5 years of making payments at 15-year rates not much principal has been paid off so in order to make the required balloon payment the medallion owners had to refinance. This means that the borrowed principal would take a very long time to repay.
In addition, since medallions were increasing in value, medallion owners were taking loans based upon the increased value of their medallions and "cashing out", taking more than what they needed to make the balloon payment and pocketing the extra borrowed cash.
Medallion owners became addicted to lenders' money. Typical interest rates were about 5%. Not exorbitant. Fees were charged by lenders to refinance. Let us note that the borrowers are, for the most part, medallion owners, who are investors, and not necessarily the poor little drivers unless they were owner-drivers, which are a minority.
In other words, to a large extent the medallion owners and their complicit lenders did this to themselves. When you throw the advent of new competition from Uber and Lyft into the mix that spelled the end of the road for medallions whose value kept increasing.
The slogan that was applied to medallions in the taxi industry was "Better Than Gold". Change that now to "Better Than Garbage".
11
Sorry Buddy. Don't expect any help or bailout from anyone. "Taxi industry leaders, including the lenders and brokers who arranged loans, have denied any wrongdoing." Business as usual in America, cheating and stealing from as many people as possible.
12
I'm sorry that cabbies r hurting, but they gross way more then 30k. It's a largely ca$h biz. They take in $200 to $400 a shift. Also an owner/driver works 12hrs and rents the cab out the other 12hrs for at LEAST $100 a shift X 365.
In the past when cab medalons were appreciating it may have been profitable, but Uber has changed that.
See the NYTimes article where the cabbie owns 5 medalons and would bid on them at auction just to drive up the price so he could borrow more against his own.
5
Sometimes you have to take responsibility for your own actions I mean come on who thinks they could pay back a 1.7 mil loan on 30000 a year. I feel for them but a business is a gamble some win but many lose the tax payer should not be on the hook for your incompetence.
12
Million dollars for a medallion? That's insane. Where did all of the money go and who were the 'thieves?'
6
It sounds like the con-men went from selling the Brooklyn bridge to selling medallions.
A cheat is a cheat, doesn't matter if they have an official title or working on their own.
7
The taxi drivers made an investment and lost, like home owners who didn’t get bailed out
12
Every time I worry about memory loss, I come across an article like this. 10 years ago, taxi medallions were sold as "better than Wall Street" investments. Most of the buyers of the medallions were investors, who then leased them to the drivers who couldn't afford them, causing loud protests that drivers were being forced to work long hours for little profit. Knowing that nobody else remembers that makes me feel much better.
13
These "lenders" probably lent nothing and just had a note for a million. That way they could foreclose when ever they wanted. Cabby pays a ne skimmed the cash.
1
And what of the “million dollar houses” littering our countryside from sea to shining sea?
How many of them are actually owned by the people who reside in them and how many are actually mortgaged up to the hilt, with the expectation that there is no limit to the number of banks willing and able to endlessly finance these insane speculations?
House prices that go up also go down.
The greater fool theory in alive and well and thriving in Donald Trump’s America.
5
Medallion Financial and companies like them (meaning their Boards and their senior executives) committed fraud both on their borrowers and on their shareholders. Yes, the borrowers should know better, but it’s not a crime to be foolish and borrow more than you can afford. The “punishment“ comes in the form of financial troubles and possibly personal bankruptcy.
On the other hand, it is a crime to knowingly profit from lending more than borrowers can afford and to deceive borrowers. Our criminal justice system is the place to decide how that plays out. Easy cases if politics doesn’t get in the way.
13
@Okie and loook at the Board of Medallion/officers,etc. I believe a lot of political connections were in on the 'deal'!
3
The execs and board of Medallion should all be indicted.
The clearly engaged in criminal behavior and need to be held accountable.
4
“Such a move would be too expensive.” -Bill DiBlasio, on bailing out drivers abused by a city government system that should have protected them, but instead turned a blind eye resulting in massive city profit.
The point isn’t that bailing out the drivers is expensive.
Its that its the right thing to do.
But he wouldn’t understand that. How much of those funds made it his way?
9
@B.T. DiBlasio is not much interested in the “little man”. Do you recall he had presidential ambitions soon deferred by his incompetence
3
I propose that: The intellectual elite dip into their 401k's and IRAs and rescue these victimized cab driver speculators. After that, I suggest they rescue the persons who took out equity home loans to vacation in Cancun, buy boats, motorcycles and other toys.
Come on? Really?
4
Most small businesses fail; how are these losers any different?
I'm pretty sure that "competitive risk" has been a part of every "how to start a business" book ever written since the dawn of time.
5
As someone previously mentioned, lending fraud seemed to have happened here, which is a crime (it's a crime to lend more than the borrower can afford and to deceive borrowers).
21
@band of angry dems, rapacious lenders targeting unsophisticated immigrants is taking caveat emptor too far.
3
@band of angry dems
Another "empathetic" republican I see.
3
These drivers should just declare bankruptcy and move on,.
Not really moved by the suicides, plenty of medallion owners made money by letting others use their cabs.
Decades of poor service by the taxis are the reason uber & lyft took over.
I used to live in the city and the excuses that would come from these drivers were endless as to why they could not pick you up, off shift, not going in your direction, the shift is changing over, you are going to another borough, and I was white so not race related which is another topic.
Also the conversations while on the phone as they had no idea where they were going, or had literally just arrived off the boat as my husband encountered when he got a cab in the city and the driver did not know where JFK was and had to direct his own cab ride.
So no one would be complaining if the medallions had made money.
This is a cost that should be btw the lenders and the drivers not the city taxpayer.
14
Amen to your comment
5
I'm glad they're investigating this. The high price of medallions and the poor immigrants targeted has never made sense to me.
5
It remains beyond absurd that a license to drive a taxi in NYC at one point in time, not that long ago, cost 4X more than medical school!!! The amount of corruption it must have taken for such an artificial bubble to come into existence is beyond comprehension.
10
Apples to oranges. Medallions allow the holder to operate a franchise business and have a value that can be traded on. Medical school imparts knowledge and the ability to practice which are never lost but cannot be transferred.
2
@From Where I Sit Why is a government agency operating a franchise business instead just of issuing licenses to those who meet the necessary requirements?
3
@Kohl
During the Depression, the city had an excess of livery vehicles to the point that no one was making money at it.
2
What vultures - there needs to be government laws to stop this kind of exploitation of naïve, vulnerable people. It is up to the government to make laws so loan shark predators cannot do this. Blame the Republicans and their doing away with financial and banking institution rules and regulations.
The loans should be written off and that will teach the loan shark predators a lesson. Its those sort of loan shark predators that cause economies to collapse through reckless and irresponsible lending.
10
@CK You might want to consider for just a second that the medallion system IS government regulation, with all the unintended consequences and perverse incentives to be expected from such.
4
Another version of the Credit Default Swap scams. Everything old is new again. Elizabeth Warren...if your listening
4
The yellow cab drivers have only themselves to blame. Their debt is unsupportable largely because they now have COMPETITION through Uber, green taxis, etc.
And why is there successful competition? The answer is for years (decades) yellow cab drivers refused to pick up many New Yorkers (especially blacks) or serve most parts of the city. This was illegal of course, but common practice. Their competitors have filled that void. Now “yellows” want a bail out. No way. They had it coming.
9
"And they wandered in from the city of Saint John without a dime..." -- Walter Becker & Donald Fagen
3
So you take out a $1.7 million commitment with an income of $30,000 a year? Even an interest free loan and a with a tax free income it would take 56 years to repay the $1.7mm commitment alone.
If you don't understand that this is an impossible agreement, I seriously do not want you driving a cab.
And I am sorry - I have no sympathy either for the borrower or the lender. Something else is afoot here.
A taxi medallion that costs $1million. A standard NYC cab fare costs $3.30 plus $2.50 a mile- average fare say $20 including tip requires 50,000 fares to just to repay the medallion capital cost alone. forget the interest, wages and running costs. Sounds more like a great way to move cash about, doesn't it? Nudge nudge, wink, wink.
8
Until the advent of Uber, et al, a medallion was not only a license to engage in a livery business within the City of New York but since they were severely limited in number, held and even increased in value. They were bought, sold and even rented. Contrary to your mathematical example, a single medallion could produce income 24 hours a day. All the while, the owner could drive for whatever income each shift produced followed by other drivers who rented the taxi and made whatever they could as the medallion kept a value based on it being required to engage in the taxi trade.
1
Moreover, most taxis are driven 24/7 by several drivers, not just 1 driver. So, it’s several incomes that support a medallion. The real problem is competition. Everybody I know in the city uses Uber or other commercial vehicles. Most don’t use yellow taxis. Of course money washing is another matter, hiding in plain sight everywhere.
2
I still don’t get why you need a medallion to operate a cab but Uber and Lyft do not. When the City allowed Uber and Lyft to operate on its streets it broke the promise implied in the medallion that it grants the exclusive right to operate a cab. They should have the decency to pay the cab drivers the $850 Mio. To indemnify the cab drivers for the loss of value of the medallion.
6
@The Don Uber and Lyft are not taxi services, why would they need a taxi medallion?
1
I write this a lot, but it fits: I couldn't agree more. The hows (and sometimes) whys, I do not know. I'm aware this is stating the obvious, but it's a truth: Having a medallion today is living on the edge of a razor blade. When I moved to New York City 3 decades ago, medallions were worth about $100k-$125k each. Boy did that change. They shot up to a peak of a 7 digit figure, which is remarkable. In gthe 1990s, I had a dear friend who was a classic medallion owner: He was Greek and lived in Astoria Queens. Along with his 2 brothers, they owned a fleet of 150 medallions and yellow cabs, which they leased (of course). Obviously, he did quite well. He and 2 other friends of mine all went to the same gym (or fitness center). Back then it was called "World Gym". They located on Lafayette Street (or Broadway; I forget) just above Houston St. Shortly thereafter, they moved to Mercer Street on the same block (just above Houston Street. It was a great gym and only cost about $50 a month. Regardless, the 4 of us decided to split 2 field level full season tickets for the NY Yankees. It was 1996! What a great year. I had just given up seats I had for 6 years (1988 to 1994) to the NY Knicks when Pat Reilly left to go to Miami. We sure lucked out, Jeter and Joe Torre in their rookie seasons with the Yankees, and winning the Wprld Series after 18 years. Sorry for the digression. My point is, my friend with all the cabs used to tell me a lot about his business (and vice versa).
I’m not sure predatory lending caused the yellow cab crisis any more than aggressive mortgage lending caused the 2008-09 housing collapse.
In the case of housing, supply outstripped demand and housing prices fell. Easy credit and mortgage securitization which had propelled/propped up the housing market and the resulting correction was particularly severe. Similarly, medallion lending practices had grown increasingly aggressive because medallion prices had never really declined – neither lenders or borrowers had ever seen a sustained and material fall in prices.
Not enough fingers have been pointed at the City in its oversight of the industry. The price of the medallion was a significant barrier to entry that helped stabilize the economics of the industry. When the City removed this barrier to entry by allowing Uber, Lift and others to perform the same service without buying a medallion, it created an oversupply issue that severely impacted medallion economics.
Predatory lending may have made the fallout worse – but patient zero in the crisis was a fundamental change in the longstanding taxi rules by the City that had a predictable impact on medallion values.
5
@John Hackett "The price of the medallion was a significant barrier to entry that helped stabilize the economics of the industry. "
Wrong! All it was was a way for crooks at the TLC to make money off of the cab drivers.
Stabilize? They created a monopoly that offered a horrible service to its customers that no other option but to use them.
Uber and Lyft took off like they did because the taxi companies in this country, particularly NYC, have stunkkkkkkkk.
2
Those who believe in Capitalism and "free trade" should be cheering at the fact that Uber and Lyft are undermining the graft associated with the Taxi business. Monopolies are always bad. The fact that the Taxi business is a government run monopoly makes it all the worse.
Free trade means that there are enough independent businesses so that competition dictates prices, quality of service to customers, and working conditions for employees.
With a monopoly like this, government or otherwise, laws must be written to assure that there is independent competition with no other conditions, particularly anything that bolsters the power of greedy politicians.
As soon as government controls businesses to any extent other than assuring competition graft steps in and runs the whole show.
3
The NYC taxi medallion was created with the intention of correcting issues with for hire cars early in the last century. During the Depression, there was an oversupply of passenger liveries relative to the number of passengers to the point that no one was making a living at it. That created further problems as exhausted and unqualified drivers, operating poorly maintained vehicles set a poor image of the city. The solution, the medallion, limited the number of cars in the trade and combined with driver requirements improved the business. However, the city failed to expand the number of medallions in circulation until the Bloomberg administration.
1
IMO, going forward, NYC should delimit the number of licenses and let anyone that meet the requirements (decent car, insurance, training, etc.) get a medallion for a modest fee (e.g. $1000). Its the artificial limit that creates the ridiculous prices. Then, cab drivers could start earning a decent living, as the start up costs would soon be covered.
1
@Kristopher H $1000 is way too much but agree with the points you outline.
2
This makes little sense . Banks do not make loans to people or business who they believe are likely to fail . Any bank who does that will be out of business themselves pretty soon .
Also these seem people complaining now would be screaming discrimination of the banks would refuse loans to minorities/low income people.
@Ben "Banks do not make loans to people or business who they believe are likely to fail . Any bank who does that will be out of business themselves pretty soon ."
Seriously? Did you not notice the financial crisis of 2008? That was nearly exclusively caused by banks making loans to people who could not afford the loans. And by the way, those banks did not go out of business, as the government stepped in to bail them out.
10
@Ben
Not heard of many of the banks mentioned at the end of this article, have you?
One unrecognized problem is the nature of the taxi business. You can't put a medallion worth a million dollars on your vehicle. If you get into an accident the injured party will go for the medallion. So you mortgage the medallion making it worthless. Same problem if the medallion is only, say, one hundred thousand dollars. Most taxis have minimum liability insurance. Most recently, the problem is compounded by the falling value of the medallion. You borrowed too much on collateral that is greatly fallen in value. Pay down the loan and you have nothing. And this is not meant to excuse the predatory lending or inflated prices which exacerbated the medallion fiasco!
1
I don't feel sorry for them, especially as an ADOS whose people are denied loans, jobs and opportunities in our country. This speaks more about the racism and economic exclusion of ADOS/Black Americans to have the opportunity to create jobs and wealth yet are afforded to new arrivals.
NYC should own these medallions and lease them to citizens, especially to those this city has a long history of racially discriminating against.
1
@hojo58 That is a sad story. Please tell us more.
@hojo58 There should be no medallions, period.
Greed on all parties. People should not make deals they do not understand. The medallion buyers were basically speculators thinking they were going to get rich. They got duped or duped themselves. I think people need more education. There are very few get rich quick schemes that actually work. I feel the same way about housing loans and student loans. People make bad decisions then blame other and hope for a bailout. Personally, I live within my means and realize that hard work and smart decisions pay off in the long run. If the value of the medallions had gone North instead of South there would be no discussion now.
2
@KC Thanks for the speech. Please tell us more.
@James Speculation. Plain and simple. People had some fairy tale idea that just because something was in short supply that the value was boundless. The smart money sold at the right time and got rich and the stupid money got stuck holding the bag. If you hold this bad investment and owe a ton, you are better off filing for bankruptcy and moving on. Someone already has your money and you are not getting it back. It is called a bad investment.
Claim bankruptcy and move on. This burden is between the lender and borrower. If you earn 30k and borrow 1.7M for a medallion what would you or the author of this article like me to do?
I will do anything. please no bailout, and no new taxes.
3
Comparing the value of the medallion to a $30,000 income is a false equivalency. The value of the medallion is in the business it allows the bearer to operate and the residual value it historically maintained. New York City has long required a permit to operate a taxi on the public streets. To do so, you needed to hold a special permit called a medallion (literally an odd shaped license plate bolted through the hood, updated each year) purchased from the city and which could later be sold outright. Owning a single medallion allowed the car it was fastened to to ferry passengers within the five boroughs 24 hours a day. Owners of multiple medallions created fleets that at one time employed drivers directly and later rented the cars directly to drivers on a shift basis. A city agency, the Taxi and Limousine Commission oversees livery operations. It has had vehicle and driver related regulations for decades.
Having been victimized by a cab driver during my only trip to New York city. Haveng complained with documentation to the New York city Taxi Commission. Having been summarily dismissed by them. I have no compassion or sympathy for a person who speculates in a cab medallion and is unable to get out of the door when the crash comes.
6
At what point does stupidity reach such a lelvel that society has no reason protect the person complaining? Just a simple calculation shows the absurdity. Ten opercent interest on a $1.7 million is $170K per year against a $30K income. These people were betting that the price of the medallion would increase andcoud be resold and they lost. Why reputable lenders were involved is beyond me, but that is another story.
I remember years ago a man was selling watches on the corner of Madison Ave. and 38 St , out of a carboard box, for $20 a watch . A "savy" shopper asked "what happens if it doesn't work when I get it home?" The seller responded "bring it back its guaranteed." She bought the watch
4
Great news. I believe you have just saved so many other drivers lives from suicide.
Let the wrist slapping begin!
1
Michael Cohen was involved. That's how you know it was a racket.
8
Will the financial shenanigans ever end? Bankers and their cohorts destroying our country with their endless, bottomless greed. The mortgage crisis, the student loan crisis, the taxi medallion crisis....and the list goes on. And as these leeches of society suck the blood out of the rest of us, they claim it’s all legal. They don’t claim it’s ethical, just legal.
7
All I see here is predatory lending with a capital "P." And probabaly the "F" word as well. ( F-R-A-U-D)
3
This strikes me as a “I’m shocked that there is gambling going on here” moment. I was born and raised in NY, and predatory medallion prices were known 50 years ago.
This is nothing new. This remains a cartel and the people receiving the money, and the loan providers should be fully exposed and taken to task for this clearly predatory practice.
15
Generations of drivers speculated in the same way and realized fantastic wealth. But now the music has stopped, and they want others (lenders, regulators, taxpayers) to bear the burden of their reckless risk-taking. If the losses were ill-gotten, so were the gains. Sounds like heads-I-win-tails-you-lose.
8
Many people at fault here: the lenders (who makes a $1.7 million loan on an annual income of $30,000??); the borrowers (if you do not understand the terms of a loan either you are being lied to (not impossible) or you need to reduce your expectations); but most of all the NYC taxi system itself. If purchasing a medallion is the price for conducting a business then why are not Lyft and Uber drivers required to hold a medallion? There could be classes of medallion for classes of service. But to allow a change of business model which overnight devalues the price of admittance is simply beyond comprehension.
37
@Andrew The medallion system is an unsustainable criminal racket that needs to be stopped immediately. In what universe does it make any sense for there to be a rule that says "in order to drive a cab in NYC you must first pay upwards of $1mm?"
The owners of now worthless medallions are no different than Blockbuster stockholders. They both thought they could buy something now to sell at a profit later.
7
@Kohl In 1937 NYC's Haas Act set the price of a medallion at $10 - it made sense at the time that customers could assume some sort of regulation and minimal quality system. Of course the cab companies quickly realized that if the medallions were limited, they were a license to make money and good old capitalism did its thing. A good idea swamped by greed. And yes, like any number of stocks I have bought in the past that are now worthless, no-one should be bailing out the owners. If they were lied to by the sellers then that's a different matter and there are legal recourses.
1
Let's hope they act quickly. Too many drivers and families have been left to ruin by these scam practices.
7
Someone is induced or required as a condition of a taking a job to make a bet that. if they lose, they cannot possibly pay. Such an inducement or job requirement should be considered fraud (or perhaps a form of indentured servitude).
Maybe the Democratic majority in the NYS Legislature can set this right by writing a law outlawing such exploitative forms of financial speculation. (I'm a New Yorker in exile hoping for the best from his home state.)
Whether current laws can be the basis of a successful prosecution, I have no idea since I'm not a lawyer.
3
Seems like this happens every 10 years since 1970!
2
There's a Shakespearean play in this story somewhere. A business, debt, default, "pound of flesh", and death - but this time it's the borrower. Wishful thinking by both borrower & lender can kill.
9
New Yorkers have known about the "taxi scam" for decades. Geez, this would have been "old news" for my parents!
20
This is nuts. Someone takes out a loan for over a million dollars but turns around and said they did not understand it? A government created monopoly blew up and they got caught in the middle like a lot of people and companies. Look no further than the TLC that was financing the city budget by selling billions in medallions. While everyone was making money exploiting the monopoly it was great. The only losers were the consumers who paid high prices, had terrible service, could not get a cab outside Manhattan or a few select neighborhoods. If you were black a cap was out of the question as they were never in your neighborhoods and even if you were in midtown they would not pick you up anyway.
The driver like everyone involved except the TLC will have to declare BK. Its a business investment that went bad, its not criminal.
Good reddens to this terrible system the government created.
19
Seems to me that medallions are licenses to operate a business - the taxi. How the #nyc government ever let their licensing process be corrupted by allowing resales on the open market is beyond me. A simple but very hard fix could be for the city to repossess all of the medallions, hold a lottery (not an auction) to reissue them giving preference to current holders, and charge a reasonable fee for them, as they do with other licenses and permits.
The city doesn't allow resale of their building permits, why would they allow it for taxi medallions.
Take back the taxi medallion system and don't relinquish it again.
32
It's now clear that a significant number of these medallion buyers were deceived by the lenders/mortgage originators. However, I am opposed to a general City (so taxpayer-funded) bailout. Instead, force the mortgage originators and the banks behind them to live up to their responsibilities.
I am also troubled by the example of the driver who borrowed $ 1.7 million with a claimed annual income of $ 30,000 points to both deception by the mortgage lender and great negligence by the borrower. Unless the loan agreement hid the total amount in a fraudulent (criminal) fashion, borrowing more than 50 times one's claimed annual income is reckless at best, and understanding that does not require any special knowledge of business or finance. Thus, that example does not engender the sympathy one would otherwise have for the many hardworking drivers who were ripped off by unscrupulous lenders. His best option is likely to "do the Trump" and declare bankruptcy.
11
I think it would be helpful to identify those persons who engaged in this predatory practice. While issues of criminal responsibility are up to the courts, this identification hopefully might deter further ventures of this nature and provide the public with the names of those who ruined the lives of those who could least afford it.
6
I am puzzled why the city doesn't "own" the medallion and lease the medallion at a rate that allows the cab driver to make a profit. The problem with selling a Medallion is multi faceted.
1. It's a permit not a piece of property.
2. The "financial value" of the ability to drive a cab would be the present value of future income from driving the cab. If you paid that price you would never make any money without raising your prices. That is why the cab fare in NYC is way above the fare for lyft or uber.
Seems to me the City needs to wake up and start leasing "public transit" medallians to anyone providing public transit - including uber or lyft drivers. At a very low price.
42
@Mike ryan
If the city did that, a market would exist for access to those leases, or subleases. Or you could end up with something like subsidized housing where you have a few lucky winners who win an apartment or medallion and many many more losers who don't and never will.
@Mike ryan Simple corruption.
"I hope they help us". Another plea for a bailout from somebody who obviously was not prepared financially for the purchase of a taxi medallion. As with the call for college debt forgiveness, somebody has to pay the bill, and as usual it is going to be the taxpayers.
14
@Paul, correct....brace yourself, this is how it starts, another housing crisis...the banks can be blamed however, it is a shared burden for the recipients and not you and me. I took loans my income could sustain, not hopefully afford if everything goes well. Mark my words...this will only be the tip of the iceberg. Sigh....
1
@paul I agree. Taxpayers shouldn't pay, the predators should pay by the city taking back control of the medalion system and just wiping out all the debt.
16
@paul. The people making the loans are who should pay- let them go under
4
The problem here is a little with the borrowers, but a lot with the lenders. A legitimate lender has an obligation to be relatively certain that the loan can be repaid. When a bank, a credit union, a taxi fleet company fails that basic responsibility, someone high up in the org should go to prison.
#OrangeJumpsuitDeterrent
48
@Hank: You would think the lenders would have fiduciary responsibility to whoever they got the money to lend from. You would also think that somewhere down the road someone is holding a lot of worthless paper and they would be mad. Apparently not. Or they are just quietly hoping that ruining some cabbies will generate enough sympathy generated to get a bailout. This reminds me of the CDO crisis. No one claiming responsibility and everyone asking for a handout.
4
So many drivers have had their lives destroyed so the least the city can do is give them a break on the upcoming congestion pricing.
NYC should do it sooner rather then later before these drivers start a class action lawsuit.
5
If someone owes $100 and you can't repay - he has a problem.
If he/she owes $1.7 and can't repay it the lender has a problem!
The lender who knowingly made a loan it knew never could be repaid is involved in criminal neglect.
Every time have these taxi medallions were repossessed a crime was committed and a life destroyed.
I know that a lot of people will blame ride sharing companies like Uber or Lyft, but these companies just might be part of the solution as well.
The taxi service industry is in for for a big overhaul and the playing field must be leveled. One way will be to stop issuing taxi medallions and level a fee on the ride sharing companies that would then buy back all the medallions.
12
Who issued the loans?
What was the interest rate --fixed pr variable?
Why did it jump from $200,000 to $1.7?
Who in NY made this decision and set these prices?
Spell out the terms and facts for the public.
1.7 million dollar loan over 30 years period translates into at least $5,000 monthly loan payments and that does not include interest.
Cab drivers in NYC are not pulling down that kind of money to make these loan even financially feasible. So again, who issued the loans without proof of income to pay? This has racket written all over it.
Dissolve the loans and all payments already made should be put toward a new financial agreements. Ban the practice of charging 1.7 million, or anything close to that, for medallions. It is criminal. There has been criminal charges on the horizon and many players involved.
30
@Hope
Yes! I also would like to know who these people are that were arbitrarily Handing out these medallions, and where exactly does the money go? And what kind of sales commissions do these people make? And how exactly does one get a job at the Taxi Commission making money off these taxi drivers driving to ruin and suicide? March them out in public, show their faces, luxury homes, cars, and lifestyles...front page! Why is it so secret? Let’s see em!
3
Speculation is a risky business. Speculators shouldn’t be portrayed as victims.
11
@PaulN
Speculators would manipulate the market to get naïve people to invest are criminals. It's illegal to manipulate the stock prices to make a killing in the market, so why shouldn't this be illegal? The banks that made loans to people which no ability to repay should be held responsible but the fleet owners that manipulated medallion prices to convince unsuspecting drivers (and the banks) that buying a medallion was a safe investment should also be prosecuted.
8
"They have described their tactics as normal business practices, noting that regulators approved their methods."
If business owners are going to continue to make this argument with a straight face, then the rollback of regulations needs to come to a squeaking halt. Either business can self-regulate, for employee safety, consumer safety and quality, ethical labor practices, environmental responsibility and so on, or the government can do it for them.
17
All involved were convinced, including the borrower, that they will be able to offload the medallion to a greater fool for greater than $1.7M.
It did not matter the price was $1.7M. Price could have been $500M for that matter.
No different than the housing bubble.
40
I would not not do business with a financial firm that wrote loans that people obviously could not repay. What firms made the loans?
9
@Bill R
Why do you assume they could not repay when the loan was made. At the time the loan was made the cab drivers were making a lot of money. Its only after they lost their monopoly and the business changed that the driver could not cover the debt. If we had a crystal ball and knew which investments would make millions and which would be a disaster then we could avoid things like this.
4
@Chris
"Why do you assume they could not repay when the loan was made. "
Would you push someone to borrow $1.7 million if their income is 30,000/year?
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@Chris
To say that cab drivers were making a lot of money before Uber is ridiculous. A good driver (working many long hours) could not clear more than $50K a year. What bank would give a mortgage of $1.7 million to someone making $50K much less a business investment?
8
This is the way it works.
Find people who are industrious and want to work. Find people who believe that by working hard they will find a better life, and provide a future for their families.
Bury them under crushing debt. They'll work until they drop, because that's what we do in this country. When they die, debtors, after paying nearly everything they've made to handle the debt - find another.
And another.
Make it impossible to work unless they accept the terms.
Make it impossible to get a college education - unless they accept the terms.
And then you own them.
There is nothing new here. Read your history. This is the MAGA vision.
Future - same as the past. Same as always.
81
@Iceowl
There is countless stories in NYC of immigrants starting businesses working had and making millions. A immigrants advice to their children. Start a business. If it fails start 2 businesses. We would be much better off in America if more people followed this advice.
I suspect though the government will put up more an more barriers to starting businesses and in the end we will all be forced to work for companies.
3
@Iceowl
Twenty-first century slavery 2.0: ownership of working people through debt--- on everything. Call it a variation of "indentured servitude."
5
@Chris
A SCAM is not a business. Free enterprise is great, criminal enterprise is not.
6