Hidden Document Reveals N.Y. Was Warned of Looming Taxi Loan Crisis

Not the first, not the last time the snakes with capital trap the ill-informed.

It's playing out like a Ponzi scheme. The early investors made a bunch of money and the latecomers lost a bunch of money. It's a sad tale that happens again and again, and in this case, the city may turn out to be complicit. But I think it erroneous to put the blame on Uber and Lyft. Yes, they happen to be the event that caused the crash on medallions, but that market was an accident waiting to happen. If it weren't Uber and Lyft it would have been something else. Let's not forget that the arrival of Uber and Lyft dramatically changed the taxi-riding experience for the citizens of New York City. Remember how it was when the yellows ruled: you could not get a cab to take you to Brooklyn or Queens; could not find an empty cab at 48th and Broadway (this was also pre-pedestrian islands along Broadway) at 5:00 or 6:00PM; you could not get a cab when it rained or snowed. Uber and Lyft changed all that. That's perhaps the reason they have so many customers – they have made the task of trying to get a car easy and simple. And much safer for the drivers.

The collapse of the price of taxi medallions was 100% caused by the flood of Uber and Lyft drivers undermining the NYC government-created monopoly that had caused the bubble in the price of taxi medallions to occur in the first place, not the lenders. Keep in mind that, as is the case with every market bubble that bursts, the latecomers got killed but many, many first generation immigrants from third world countries made life-changing amounts of wealth from investing in their taxi medallions. If the TLC bears any blame, it is from failing to adequately enforce the taxi franchise laws against Uber and Lyft, which openly flouted those laws in NYC, as they have done with varying degrees of success around the world.

The Russian-Ukrainian mafia were involved in the medallions business. This was part of Michael Cohen`s (Trump`s lawyer) business. He has spent much of his personal and professional life with immigrants from Russia and Ukraine. His father-in-law, who helped establish him in the taxi business, was born in Ukraine, as was one of Mr. Cohen’s partners in that industry. Another partner was Russian. And Mr. Cohen used his connections in the region when scouting business opportunities for Mr. Trump in former Soviet republics. More recently, Mr. Cohen and his father-in-law lent more than $25 million to a Ukrainian businessman who has a checkered financial record and a history of defaulting on loans. And Mr. Cohen long held a small stake in his uncle’s catering hall, which was frequented by Russian and Italian mobsters. Cohen owned 230 NYC medallions and 22 Chicago medallions in concert with his mafia partners.

When Meera was confirmed as TLC Chair in early 2014, she promised to uphold the value of the medallion as everyone on the city council present at the hearing bought in and eventually confirmed her. How come no one seems to recall that now? It’s wonderful to finally have these hearings last but if the council deeply, truly cared, they would have capped the number of FHV’s during the first De Blasio administration. Such a shame that it took suicides, foreclosures, protests, repossessions, and a series of investigative articles for this issue to finally be at the forefront... http://gothamchronicles.net

Curb app is like Uber/Lyft but for licensed professional taxis that everyone should be using. Drivers are experienced professionals and local so they know the city well. “Curb is the number one taxi app in the United States that enables riders to hail a taxi from their smartphone. Unlike ridesharing apps like Uber and Lyft, Curb allows riders to book professional and insured drivers rather than just sharing a ride in a private car. What makes Curb different from other ridesharing apps is that instead of hitching a ride with a stranger, riders hail a taxi with a professional, commercially licensed driver.” Ridester.com

The NYC taxi industry has some nerve to blame their financial problems on Lyft and Uber. The taxi industry is responsible for creating what is essentially a $1 million fee to enter the business. How can drivers possibly make any profit after that fee? The ride share companies certainly didn't create the $1 million medallion prices. Riders prefer Lyft and Uber because of the easy process of requesting a ride through the apps, seeing on a map the progress of the car driving to them, friendly drivers, and the ease of payment. Nothing was stopping the taxi industry from similar innovation. You can't complain about competition when someone comes along with a better system and the consumers prefer it to the old.

Drivers who bought a single medallion to make a living should receive a substantial refund from the city. For those who invested in dozens or hundreds of them so that others could be indentured servants barely make a living, I say burn in debt.

Wow. What a week. We have the rugged Bundy-wannabes of Idaho looking to the government to save them from private ownership of the public land for which they despise the government. We got Trump with his hair on fire to allow foreign interests to destroy the world's greatest freshwater resource. And now we have bankers and financiers excoriating government for not saving them from them selves, for not stopping them from defrauding gullible consumers. Red letter days for conservative ideology and the free market, yes?

I take yellow and green cabs all the time. All of these comments about how dirty the cars are and how rude the drivers behave strikes me false. Perhaps they are being made by Uber and Lyft trolls.

Wait a second. Adults borrowed money that simple arithmetic should have shown them they had no chance of repaying. All they had to do was walk away. Yes, medallions got to be stupid expensive. But no one said you had to buy one.

Greed, greed and greed. Predatory lending and misleading and false descriptions targeting immigrant populations. Despicable. Eat the rich. Start with the bankers.

Boy, are our counsels and government agencies great at running outraged hearings about decades old travisties (and then doing nothing in the end, because it is really too late) while ignoring the new ones today that they are responsible for (and knowing the worst that will happen to them is is an outraged hearing when they are retired or dead. And as an aside: the taxi industry is NY (and everywhere) is dead, just like the typewriter repair shops). The last time most young people ever rode in a half-broken down, dirty cab with a driver who didn't know how to get anywhere outside of the neighborhood was many years ago. What, we're supposed to stand half-way in traffic, in the freezing rain, in a line of people waving our arms for a rare empty cab to pull over (if we're white)? Yeah, right. At the end of every scam, it is the last ones holding the bag.

This breaks my heart. These are new immigrants to our country and NYC has let them down horribly. They were willing to work very hard and make sacrifices for their American Dream, but the system was rigged. This should never have been allowed to happen in the USA. We are better than that. They deserve debt forgiveness and an apology.

Interesting and sad, but I can't help feel the article is lacking. For one thing, I question whether the article should call the loans exploitative like that was a fact. More importantly, I wish the article would more clearly note that the medallion system was part of a monopoly created to benefit taxi drivers. A lot of people would realize that this would come at the expense of customers, but many non-economists would not see how it drives up prices to enter and how new taxi drivers pay that price.

We have the same situation here in HK but without the predatory loans. Medallions are traded in the open market and the current price is about US$1 million. I don’t for a moment understand why a government-issued permit is allowed to be bought and sold at whatever price the market will bear. This is the fault and it should be stopped immediately. The medallions should be issued by the government, priced at some nominal value, valid for a fixed term, then reissued or revoked based on factors such as performance and productivity. Fares and other aspects are already regulated and medallions (let’s call them what they are: taxi licenses) should be treated no differently.

When I moved to New York City in th late 1980s, I immediately joined a fitnes center ("World Gym") on Lafayette Street just above East Houston; shortly thereafter, they moved a block over to Broadway (with the entrance on Mercer Street). I had a close fried, who was Greek. Hand his 2 brothers owned 150 medallions (and lived in Asroria, Queens of course). At the time, a medallion was worth about $125,000. In 1996, 4 of us (including my taxi owner friend) bought 2 seats of season tickets to the NY Yankees, field level. As everyone knows now, that was amagica year for the Yankees, winning the 1st of many World Series, Derek Jeter and Joe Torre's rookie season with the Yanks. My friend with the medallions didn't talk about them much; in fact, none of us did (talk about our incomes). I just remember being stunned that a license which started at $10 in the early 20th Century was then worth 6 figures. Now, people have ben ruined, terribly by the market for these things. It is tragic; however, it is life. I had a business I bootstrapped with a $10,000 loan and hard work. It was a unique, niche type business, and we were good at it for over 25 years. Unfortunately, due indirectly to the banking crash and severe recession in late 2008, I lost everything. By 2015, I was in debt, and barely managed to pay off the IRS and leave the next year with the same 2 suitcases I had moved there with almost 3 decades before. My point is, I would do it all over again; if only for the experience.

Riders have been left out of this discussion but in fact riders were also paying for these inflated costs of the medallions. When the cost of a medallion exceeds the cost of an apartment or, but many factors, the cost of a car, something is wrong. Imagine having to pay a million dollars for a driver's license or for that matter a passport. Personally I thank Uber and Lyft for bringing this corrupt practice to an end. But I notice that the city does not like these two companies because they interfere with the corruption.

The issuing of taxi Medallions was closely guarded for years...every so often a limited number of new medallions was allowed to come onto the market after some intense skirmishing. Then Uber comes along and blows the doors off the entire process. I recognize that reporting reflects that much of the financial losses seems to have arisen due to financial scheming between banks and investors of some sort or another...but permitting Uber to enter the market has decimated the taxi industry, whose medallion owners and drivers lacked lacked the wherewithal to take on Uber. Uber riders surely knew this, too, when they hoped into an Uber for less than a taxi. Saving a few bucks for the riders was all that mattered to them. It's somewhat akin to the NYT piece on investors scooping up starter homes the other day. Investors make money, but people trying to buy starter homes pay the price. That's our culture these days. Everyone wants to make as much money as possible with little concern for the impact this has on other people and, often, on themselves as well.

The medallion scandal is a typical speculative bubble, and it is not the first and won't be the last. From Wikipedia: Tulip mania was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637. It is generally considered the first recorded speculative bubble.

Financialize, create a bubble, insiders win, duped bagholders left with the bill. Classic American-style capitalism. Oh, and don't forget to exploit this further, doubling down with venture money to break all the rules these people had to operate under, and create an unregulated competitor that subsidizes rich people to avoid public transport. (Im looking at you Uber and Lyft.)

Please.......Yeah, and they were not responsible for overcharging coming from JFK!! Theses Taxi drivers are not victims, they knew exactly what they were getting into, except they thought they market would turn out to be a lot more profitable!! It's time they take responsibility for putting themselves in this position.

No one should ever have to pay a million dollars for a taxi medallion. That is just wrong and New York should have stepped in to control the pricing. Another case of the open market creating a disaster as government looks the other way. Private business will always need public oversight as greed or bad management always get in the way sooner or later.

This is an example of what give Government a bad name. Shame on them, yep it's tough being the whistle blower, but someone needed to do it.