I don’t think that the people who issued these predatory loans deserve this bailout money.
Instead, the Curley ought to revoke the issued medallions and re-issue new ones. Then the loan sharks can have their loan collateral — the revoked medallions — and the cabbies can stop paying on these ridiculous loans.
10
@Marshall prison is what they deserve and forfeit of their ill got gains.
It’s a shame what happened to these cabbies. Still, I haven’t seen any articles at all about the number of “potential” medallion buyers who took a look at the terms of the loan (with or without a financial advisor) and said, “This is madness! To agree to this financing I’d have to be crazy!” In other words, how many potential buyers looked at the deal and walked away realizing it was a madness.
I’d wager plenty did just that. I feel badly for those who got caught up in this but I wonder if they did due diligence. I realize these people might not be sophisticated in expensive financial deals. That’s why you get someone who is a professional in finance to look the deal over before you commit to hundreds of thousands of dollars in debt, just like you get a doctor to look you over when your sick. You don’t do it yourself when you don’t know what you’re doing!
I’m sorry but these cabbies need to declare bankruptcy. That’s what bankruptcy is for. The taxpayer should not have to spend a single cent here, unless we taxpayers feel it’s only fare to “bail out” ANY business that’s going under leaving a lot of debt!!
Nope! These cabbies should have walked away from this financing. And I’d wager plenty of them did!
6
Predatory letnders should write off the debt and take the tax benefit against future responsible lending (monitored). Tax dollars should absolutely not be used. I was a banker and objected to this kind of thing for years. This ranks with payday loans and tax refund lending. Sleazy.
To the extent industry dislocation/economic damage to the drivers is due to app based ride "sharing", someone should also develop an app based dispatch system for them as part of the program.
5
There are two steps to this: the drivers should be given relief from what was obviously a scam AND the "industry leaders" who deliberately inflated the price of medallions should be put on trial for perpetrating a monumental fraud.
4
2500 hundred people who made bad decisions and we get stuck for 500 million?? Corey Johnson, you're not going to be Mayor.
11
"During the bubble, city, state and federal officials worsened the problems by exempting the industry from regulations. The city also chose to fill budget gaps by selling medallions and running ads promoting the permits as “better than the stock market.”
Taxi industry leaders have denied wrongdoing, describing their tactics as normal business practices and noting that regulators approved their methods. "
For those who cheer the dissolution of "job-killing regulations," they fail to understand that they were passed to protect us from profit predators who don't care if your water is poisoned, if our environment is destroyed, if banks & other lenders trap us in predatory loans for your education, health, or housing. Lack of regulations means that these financial predators can tell you all kinds of lies to get you to sign a contract that courts will honor, overlooking the fraud which they will call "normal business practices." The United States is infamous for selling out its own citizens to these corporations for which we are forced to give huge tax breaks.
It's the same story written again & again. These are the same predators that caused the Great Recession in which millions lost their homes, that crushed out students who found their college loans only grow under repayment plans and degrees/credits deemed worthless in the job market. And a govt that's made it harder for people to fight back by defanging the CFPB.
3
Michael Cohen once owned 10 taxi medallions he was ordered to give up when he became a convicted felon. Was he allowed to pump and dump them? What's up with that?
I'd rather see 500 million applied to outstanding student loans. Taxi drivers can declare bankruptcy - students have no recourse whatsoever. They are forever saddled with huge debts.
6
Absolutely not. Using tax dollars to bail out idiot taxi drivers who paid exorbitant prices for their medallions is like throwing money down the sewer. Nobody forced these medallion owners to take out these outrageous loans in the hopes of getting rich. This slippery slope of bailouts will come back to haunt us.
12
The city will raise money from investors and dictate some rate of return on a convoluted, financial sleight of hand where everyone gets ahead! What could possibly go wrong?!
8
Please do not use even one tax dollar for this .
It would simply be a transfer of wealth from hardworking cautious people, to others who were more comfortable signing on million dollar loans for medallions .
Are working people going to bail out every risk taker .
There are thousands of good people who bought houses at the height of the real estate bubble in 2008 , that in retrospect was grossly overpaid .
They bought an the advice of the real estate broker , the loan officer and their best friend ....
Are working people going to bail them out as well ?
19
@Ben This is so dishonest. We had no problem bailing out the banks who committed fraud to get students and homeowners to sign on the dotted line. According to their fraudulent representation of the services or products being sold, there was no risk. Sign for the loan, and you'll get jobs that will enable you to repay the loan in a few years.
If there is fraud, then these people have been victimized.
2
I agree the drivers who were taken advantage of by predetory lenders need bail-out but the question is, why aren't the banks or brokers who facilitated and profited from the loans paying for the bail out? Similar to the housing collapse years ago, the banks and lenders are walking off with the profits and leaving the public holding the bill. How is this OK?
19
@jd Some reading of The Times's earlier coverage might prove instructive. The reason the banks & brokers aren't paying for it is because they all essentially disappeared shortly after the taxi-medallion bubble burst in 2014. ALL of the lenders in question were small credit unions, and all of said credit unions were apparently established for the explicit purpose of "servicing" the participants in this massive con. While both the Manhattan DA as well as federal attorneys are investigating the matter, no ill-gotten gains have yet been uncovered (or at least none known publicly, and I assume The Times would've mentioned if any had been found).
The NCUA is the credit union analogue to the FDIC: instead of banks, it takes control of the assets – and liabilities – of failed credit unions, though it doesn't offer the same variety of "insurance" available via the FDIC. That's how it gained control of the majority of the defaulted medallion loans *and* the underlying medallions themselves.
The NCUA is a federal agency that lacks the authority to forgive loans of this nature. While the agency would technically "receive" the bailout money, it would be applied in its entirety to pay off or significantly reduce drivers' significant outstanding debts – and that's it. No lenders will be "getting rich off the public dole."
There is no scenario here under which any lenders would be in any way "enriched" via bailout funds.
4
I am not a tax expert, but isn't forgiven debt (often? usually?) considered a taxable event to the borrower? Couldn't the forgiven debt (possibly? likely?) be considered income for tax purposes? So wouldn't this mean that the borrowers would go from the frying pan into the fire (while rewarding predatory lenders, etc)?
https://www.irs.gov/taxtopics/tc431
2
$500,000,000.00 bailout.
Uber's great desruptor, Travis Kalanick, personally cashed how many billion. Uber has crushed the finances of the working poor from sea to shinning sea, including cabbies in NYC,
Get Travis to pay.
5
The Taxi and Limousine Commission is responsible for this.. how about cancelling their pensions?
23
Next up: NYU Student loans?
1
Is the City with taxpayer money going to bail out the Michael Cohens and the Yvgeny Friedmans of the medallion taxi industry? Are we nuts?
12
It is hard not to notice the comments this morning have two distinct flavors. People from New York City absolutely decrying "bailouts" that will eat their tax money (with, of course, the usual bile for "big business" and those making the loans thrown in) and the people from, lets say Connecticut that are telling the New Yorkers not to be cruel and suck up the "bailouts" for the sake of the good of humanity.
Wow! I think it may be finally sinking in just how the rest of the country feels about free college, canceling student debt free childcare, free (insert liberal cause de jure here).
Those who are incredibly magnanimous with OTHER peoples money have a sudden and immediate epiphany when its their own tax dollars on the line.
Thus endeth the Republican lesson of the day.
13
Excellent comment.
2
It is hard not to notice the comments this morning have two distinct flavors. People from New York City absolutely decrying "bailouts" that will eat their tax money (with, of course, the usual bile for "big business" and those making the loans thrown in) and the people from, lets say Connecticut that are telling the New Yorkers not to be cruel and suck up the "bailouts" for the sake of the good of humanity.
Wow! I think it may be finally sinking in just how the rest of the country feels about free college, canceling student debt free childcare, free (insert liberal cause de jure here).
Those who are incredibly magnanimous with OTHER peoples money have a sudden and immediate epiphany when its their own tax dollars on the line.
Thus endeth the Republican lesson of the day.
4
This is so tiresome. Let the individuals who made the bad decision or investment fail. Put the lenders who exploited them on the hook for the money but I am not the only tired of government agencies who screw tings up yet not to worry the dumb taxpayers will pay for it. They pay for all our mistakes.
Bye DiBlasio.
7
Claw back to the lenders first. They are the most culpable. Just like the lenders making all those junk mortgages pre-Second Republican Great Depression. The public paid the freight on the bank bailouts, yet not ONE white collar criminal went to jail.
Pass a law, if legally possible, to give the medallion holders immediate relief. No payments for a year. Or, just stop making payments. It will take awhile for them to punish these drivers. Their credit? Probably already ruined. Take away their medallions? Come and get them........
NYC is partially culpable knowing full well what was going on.
Yet another Crony Capitalism event preying on the weak. Welcome to 21st century America, immigrants. I feel for you.
8
'Claw back to the lenders first. They are the most culpable."
@Jus' Me, NYT Agreed – the only problem being that they all disappeared after the medallion bubble popped six years ago. As discussed at length in The Times's earlier coverage, nearly all of the lenders were small-time credit unions apparently set up for the specific purpose of furthering this con – despite *knowing* nearly none of the borrowers would be able to keep making the payments (even before the bubble burst).
The gambit here was equal parts simple & appalling:
1. Lend X the funds to purchase a medallion, in exchange for a hefty down payment.
2. Foreclose on the note at the earliest opportunity – but keep the down payments!
3. Repossess the medallion while siccing creditors on newly impoverished borrowers.
4. Rinse & repeat. (In some cases individual medallions may have been flipped a half-dozen times over the space of under a decade.)
After the credit unions folded – presumably after the perps fled with their ill-gotten gains – the NCUA, a federal agency that regulates credit unions, assumed control of all of their assets & liabilities. (It's roughly analogous to how the FDIC works for banks, minus the insured-deposit part.) It "inherited" both the medallions as well as buyers' debts. As a federal agency, it can't forgive local loans – nor can NYC tell it what to do.
As for "punishing" drivers: considering how many have already taken their own lives, I think they've already been punished quite enough.
1
This is a stupid waste of taxpayer money. If the medallion owners feel that they are in over their heads, they should head over to the Bankruptcy Court and file for Chapter 7.
Most medallion owners by far are not the cab drivers, they are investors who bought medallions hoping that their value would go up and to rent them to drivers for 12-hour shifts.
When the value of the medallions was skyrocketing the medallion owners would repeatedly re-finance them and withdraw equity. The equity was used for new homes, education, luxuries, and to buy more medallions, among other things.
When Uber and Lyft came along the value of medallions plunged because those services offered a superior product.
Let the medallion owners be stuck with their decisions. If I buy an asset hoping that it goes up in value and its value plunges will The City bail me out?
26
@MIKEinNYC
Hi Mike, do you remember the Savings and Loan Bailout in 1989. People were wise enough to recognize that the S&L banks were offering much greater rates of interest than other banks. So they put their money into S&Ls. When the S&Ls went bust they all cried to the Government that they were just old poor people who had been conned and they needed their money back.
1
@MIKEinNYC
I agree. It is also criminal for the city to spend this money on this when there are so many people living on the streets.
2
How is a bailout going to fix the situation and/or prevent future issues such as this? What happened should be classified as price gouging, predatory, and illegal. The million dollar loans should be recalibrated to what the price of the medallions should have been-- approx. $200K. Then let the medallion owners pay back what they acquired at a true market value, with fair terms. A bailout allows for the banks and the predatory lenders to get away with this behavior and make money off of it. And what of the city officials who were involved?
9
If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the banks problem. Banks should be the ones to figure out this mess and the ones who are held accountable
15
Judging from the comments, quite a few posters are under the mistaken impression that the guilty parties in this scheme – namely the lenders who fleeced individual medallion buyers in the first place – would be the recipients of bailout funds. This is simply not true.
Nearly all of the lenders here were small credit unions explicitly launched for purposes of loaning money under false pretenses for purposes of buying taxi medallions. As The Times has previously reported, ALL of these credit unions closed up shop shortly after the medallion bubble burst in 2014 – resulting in the National Credit Union Administration "inheriting" their holdings (in this case the medallions as well as the outstanding loans on them).
The NCUA had no role whatsoever in the underlying scheme. It's a federal agency directly analogous to the FDIC: instead of covering the obligations of banks that fail, it does so for credit unions. And while debt forgiveness would be an ideal solution in theory, a federal agency lacks the power to offer any such thing to parties in a single municipal market – or at least not without Congress authorizing it. (They did so when the housing market collapsed in 2007-08, but that was a nationwide debacle, not a local one.)
The bailout funds wouldn't "enrich" the NCUA, either: they'd be used to pay off the still-outstanding debts of all the cabbies that have either already declared bankruptcy or are in acute financial distress due to their original loan obligations.
5
I can't afford to take a taxi! Why should my tax dollars be spent bailing them out? Something is very rotten.
21
@Chief Six Floors Walking Up Because we live in a complex society? I've paid car insurance for over fifty years. Never a claim. "Something is very rotten."
This is insane. Sorry that these individuals made bad decisions. I don't care that they're immigrants. Do we now set different standards for immigrants? Ridiculous. Why should taxpayers foot the bill? At bottom of it all the City should never have allowed medallions to be sold. Use it or lose it.
18
"At bottom of it all the City should never have allowed medallions to be sold."
@Bob Agreed, but seeing as it did, that means it's left holding the bag – which, in turn, means taxpayers are as well.
"Sorry that these individuals made bad decisions."
There's a rather considerable difference between "making bad decisions" and being willfully conned by shady actors with the explicit intent of fleecing a group of vulnerable, low-income buyers. It's not mentioned in this particular article (but described at length in earlier ones), but a core element of these lenders' gambits was selling medallions to buyers they knew couldn't possibly afford to make the payments; accepting their down payments, which in most cases were their life savings; foreclosing on the notes as soon as the buyers defaulted (which, again, the lenders KNEW would happen); and then immediately reselling the medallions to, yep, other low-income buyers.
Some individual medallions were likely "flipped" a dozen times or more. This is criminal activity. Period, full stop. "Bad decisions" aren't to blame for unambiguous fraud, nor does blaming the victims help anything whatsoever.
1
This is exactly the reason people are leaving NY State in droves. 80,000 last year alone. Will be nothing but a carcass of a city in 20 years leaving liberals to see who can out tax each other the most. Lol.
10
@BO Krause
It's a Texan fantasy that New York isn't growing. In 20 years Texas will have fire tornadoes like Australia.
1
@BO Krause I am so glad that I do not live in Texas.
Excuse me but the phrase "public/private partnership" often is political speak for "let's work over the people who did NOT profit from this onerous scheme".
Restitution and prison should be the fate of those who got uber-rich doing this---and that includes politicians who stood by for decades while it happened.
Bailout? No.
13
"Restitution and prison should be the fate of those who got uber-rich doing this---and that includes politicians who stood by for decades while it happened."
@Mary Melcher Agreed, except all of the uber-rich parties that participated in the scheme fled the city (and most likely country) right after the taxi medallion bubble popped. That said, I definitely agree any politicians who had a role in it should be investigated.
In any event, the entity left holding the bag in this case is the National Credit Union Administration: a federal agency. It has no authority to unilaterally forgive loans in any single U.S. market – well, unless Congress passes a bill ordering it to do so, but suffice it to say that's an extremely unlikely possibility.
Since there are likely few, if any, credit union operators to pursue, and none of the debts in this instance can be forgiven, unfortunately the only real option is a bailout – all the more so considering NYC should've eliminated its taxi-medallion system decades ago, as was the case in nearly every other major American city, explicitly to prevent abuses of this nature. The city operates using taxpayer money; ergo, taxpayers end up holding the bag.
No, this is not a good thing. It is, however, the necessary thing.
1
Sorry, but what exactly is wrong with just letting the drivers default on the loans? That would mean: 1) the predatory lenders lose their money and end up instead owning just the (severely devalued) medallions they tried to foist on others, and 2) the drivers extricate themselves from a very stupid business decision with minimal future consequences. Seems like the ideal outcome.
23
@AaronB The NCUA is not a predatory lender. They are left holding the bag filled with excrement of the predators. Long gone.
How about bankruptcy?
Isn’t this the Republican definition of unfettered (unregulated) Capitalism and “Buyer Beware”. You vote for Republicans and this is what you get. Zero consumer protection. No regulations to protect consumers from predators in the market.
Now the taxpayers have to bail out Republican economic policies again? This is the same pattern as the “for profit” junk colleges and the taxpayers are bailing out the student loans there too.
Didn’t we learn any lesson from the mortgage industry scandals?
3
@Patricia Brown You seem confused about the details of what is going on in this situation. There are no Republicans or Republican policies involved. The city made money for decades overselling medallions and not regulating all of the illegal drivers using someone else's medallion. The buyers borrowed money from banks to make an investment, which made both parties money for years. The industry changed and these investments lost their value, as do all kinds of investments. The owners will default on their loans and the banks/lenders will have to take that loss. They are now trying to use Democratic policy to push these costs on to the public, which is crazy.
11
Thanks for the correction to the above comment.
Bail them out if it warrants but not with tax payer money. Regardless of where the drivers came from I know few people of color who have not been passed by when trying to hail a Yellow Cab. There was a time when these cabs would not go north of 96 street in Manhattan.The Black cars came about because of the Yellow Cabs refusal to pick up people of Color. It would add insult to injury to use people of Color taxes to support any one or anything related to this industry. Not too many years back African American actor Danny Glover told of his trials trying to hail a Yellow Cab in Midtown. When I was a child a taxi medallion cost 6500 dollars. If the cost these people are reported to have paid is true the people who bilked these people should be in cuffs and not benefiting from a half a billion dollar bilking of city taxpayers.
12
This is what bankruptcy is for. Any company in a similar situation to these medallion holders would file bankruptcy and move on. Yes, it sucks, no it's not fair to these drivers who got kneecapped by Uber and Lyft. But it's also insane to allocate $500M of public money to simply make the banks whole again.
Another whiplash moment for the "principled progressive" de Blasio. This time he's directly coughing up money to the financial industry for bad loan decisions. What does de Blasio stand for? It gets murkier and stupider every single week he's in office.
21
The tax paying middle class screwed again.
23
I paid too much for my house when I bought it should the taxpayers bail me out? It sounds like a back handed way of helping the Legal Loan sharks who prey on the poor and under served..
13
And the Loan Sharks? Left to continue their business waiting for the next wave of gullible victims?
If you dont legislate against these thieves, you will never stop it. Punitive fines is the only answer.
5
@Don F The loan sharks have low friends in high places.
3
@Don F This would be fine if the loan sharks in question hadn't fled the scene – ill-gotten gains in tow – long ago. Also, their actions were unequivocally illegal, so additional legislation wouldn't do much good here.
What the city *can* do is shut down the secondary medallion resale market in its entirety, or at least among the "corporate" medallion owners (e.g. former Trump fixer Michael Cohen) who played some of the biggest roles in this massive criminal fraud. If it fails to do so, that's where NYC voters can exercise their rights at the ballot box, and vote out the politicians who sat idly by as this nightmare took place. (And yes, many of them are still in power.)
2
Good for them. Reparations of sorts. System wide response for a system induced financial handicap for the owners but a exploitative practice by the financial masters.
Wow. Does this sounds familiar?
1
Bail out medallion owners. Heavily fine and throw the lenders, those cheating industry leaders, in jail.
who is really being bailed out? money given to the cab drivers will just be given to the lenders. It is the lender that is being bailed out, what a scam.
13
The ride sharing folks should bear some of the cost even though the predatory lending criminals need to disgorge some of their ill-gotten gain
Ill-gotten gains? The ride-sharing services have done and continue to do a great service to New Yorkers. The guilty ones are the NYC politicians who created the medallion system and now propose to double down on their misdeed with a bailout.
3
Those who benefited from the exorbitant prices charged for medallions should absorb the cost. If NYC profited, let them pay the debt. Exploiting taxi drivers with unreasonable taxes and fees is morally indefensible.
4
The problem was never the loans but the introduction of competition into the market that made owning the asset unnecessary and therefore far less valuable. The city and the industry ran a regulated monopoly for decades. Consumers of course benefited when the monopoly was broken and, if his plan is implemented, they will now be subject to a clawback.
2
I'm frankly chagrined to see so many comments here that are unabashed victim-blaming, and I can only assume these posters haven't read The Times's extensive series of exposes over the past year covering the myriad – not to mention felonious – abuses within the taxi industry.
The drivers who bought taxi medallions didn't simply "make a bad investment." They were subjected to the machinations of a secondary resale market where a criminal conspiracy took place among monied taxi interests to both artificially inflate medallion prices (by nearly 14x between 2002 & 2014) and fraudulently misrepresent the terms of the loans given out to individual medallion buyers. (One example would be "forgetting" to mention that the first five years of repayments only covered the interest on the underlying note, and not any of the principal amount due.)
To frame it in a different way: do you think Bernie Madoff's victims are "responsible" for his actions? Or that they should've simply "declared Chapter 11" and moved on? That's essentially what's going on here: while the medallion bubble wasn't quite the same as a Ponzi scheme (if only because their values "only" fell 80%-90% instead of 100%), the outcome in nearly every case – loss of victims' life savings, and enrichment of unscrupulous actors – is the same.
1
@Jeff
No, Madoff's victims were greedy, to a man, for expecting a constant 15% return. Their greed is, indeed, their own, and nobody else's fault. NOBODY should be paying for someone else's greed. And NO, I'm not saying the situations are even necessarily equivalent. What I am saying is do not expect me or anyone else to feel sorry for the wealthy/greedy Madoff victims.
1
@Jeff Madoff victims weren't bailed out with any public money. Huge difference.
2
@Jeff
Well, if you are correct then I sit corrected and admonished. But I am still not sure you have it all correct. Then again, I wonder how anyone could expect to pay off a $500K to a million plus loan by driving a taxi? But what do I know? I haven't taken a taxi in NYC for years. But somehow I always felt taken advantage of, I guess I was not the only one. By the way, I was in Mexico City on business a month or two ago. Used both Uber and a taxi (which was 10X's) the Uber charge (for twice the distance). Enough said.
Why would the city burden its taxpayers with this? The loans were clear exploitative, so make the lenders foot the bill. I don't live in NYC, so I don't have a dog in this fight, but it seems grossly unfair, and seems to be just another extension of what happened before the Great Recession; the financial industry run amok, sticking the taxpayers with the bill, and laughing all the way to the bank. Only once there is accountability and these lenders put in prison, as commenter Alice suggested below, is there even a possibility that this sort of non-sense will stop.
9
"Why would the city burden its taxpayers with this?"
@Danny Because the city not only failed to exercise any oversight of the secondary resale market for taxi medallions; it also directly fueled it by marketing newly released batches of medallions as investment tools that were "better than the stock market."
In this case, both medallion buyers *and* taxpayers are the victims of the city's own failures. Those unhappy with this state of affairs might want to start looking at the elected officials who played either indirect or direct roles in this scheme. Who might that be, you ask? As it so happens, The Times published an article on the topic nearly eight years ago:
https://www.nytimes.com/2012/07/18/nyregion/de-blasio-reaps-big-donations-from-taxi-industry-he-aided.html
Its original headline – the one used in the print edition of the paper, as well as its header (altered slightly for online publication) – says quite a bit: "De Blasio Reaps Big Donations From Taxi Industry He Aided."
2
Repeal the so called "congestion" tax which forces the elderly and disabled to become shut ins. Take away other surcharges levied on taxi rides but not UBER. The State and City should attack its 6 billion dollar deficit by reducing graft, eliminating unnecessary capital expenditure and placing a high tax on each extra floor over Fifty in billionaires row condos, instead of taxing the taxi industry with phony, so called "congestion" taxes at completely uncontested times of the day.
3
"The panel is also set to recommend more changes that would strengthen the taxi industry and shield it from increased competition from ride-hailing companies."
No. Don't shield the taxi industry from competition. Shield it from fraud ("industry leaders artificially inflated the price of a medallion").
If the taxi industry is not competitive, let it die. (It won't die btw, because they'll figure out how to be competitive, but not if they are shielded from competition. For now, they are hard to hail and cost a lot, so I personally try never to take one... maybe if I get it reimbursed by work.)
3
These helped taxi medallion owners by exempting the industry from regulations. This is evident to anyone witnessing the behavior of yellow cabs, from within and without. As part of the bailout bring in that regulation. Additionally any bailout must include clawback of revenues from those who sold medallions at wildly inflated prices.
7
NYC officials created this problem and now expect the taxpayers to foot the bill for the consequences of their ill-conceived policies. As liberals like to say, elections have consequences, and this is a typical consequence when liberals are placed in charge. $500 million. Those dollars would have been much better spent fixing the city’s decrepit subway system.
4
@MDB Nice try, but the part you're omitting is that this all took place under the watch of two Republican NYC mayors: Giuliani and Bloomberg (in the latter's case before he left the party).
2
And of course, the vampires behind this scheme go unpunished because what they did wasn't "illegal."
3
@george eliot Quite the contrary: it was illegal six ways from Sunday, and both the Manhattan DA's office and federal prosecutors are investigating the extensive series of crimes that likely took place here. Presumably topping the list are "criminal conspiracy" and "fraudulent misrepresentation," at both the state & federal level (which I say as a lawyer).
Unfortunately the vampires behind the scheme may, in fact, go unpunished: the various credit unions – most of which were solely in the medallion-lending business – that schemed with medallion resellers to "plump" the market fled like rats from a sinking ship shortly after the medallion bubble burst. At this point their ill-gotten gains may very well be gone for good, or at least impossible to track down.
1
So many more worthy causes need our support. Homeless at the top. Subways too. This is absurd.
How about charging Uber 500 million to keep New York?
2
@Jeff
I don't care. 500 million dollar bailout for a handful of businessmen when thousands are homeless is a travesty.
1
@T The fact that NYC has ample other areas of need doesn't change the fact that the city's own role in this nightmarish scenario was a considerable one. As noted in the article, it directly *fed* the ruinous medallion bubble by promoting sales of newly released ones as investments with "better returns than the stock market."
And while I realize Uber is guilty of myriad sins, it's nonetheless not the villain in this particular tale. As also noted herein, the medallion bubble culminated way back in 2002 – well over a decade before Uber came to town.
2
The issue is with the high price of the medallions and the dirty loans.
Attorney General needs to investigate the trial of the dirty loans. Most of the people that signed these loans papers don't speak English, so how could they read a loan agreement?
Ban such loans in NY state.
Find a few lenders willing to do business with the cab drivers and at affordable rate.
Penalize the initial dirty lenders too (looks like they have been selling and re-selling the loans).
Put a cap on the price of a medallion.
We took out a car loan last year for 2.9%. Mortgage rates are under 4%. What interest rates have they been paying for a simple business loan?
This is far from over. There are so many layers to the corruption here. NYT needs to keep this story on the front page to pressure politicians to start changing laws and investigating the criminal activity and bank fraud.
4
Great to help drivers. But the plan should not benefit the wrongdoers (those who originated and then bought and sold these loans, mid represented, took advantage, etc.), NY Times, focus on that. Yes, help drovers. But this sounds like something that medallion financing companies might have lobbied DeBlasio and Cuomo for behind the scenes. Help drivers, yes. Help the bad guys? No!
5
@RX As reported in some of The Times's earlier coverage of this criminal conspiracy, nearly all of the lenders guilty of loaning money to impoverished borrowers under woefully false pretenses fled the scene long ago – presumably taking most or all of their ill-gotten gains with them. These were mostly credit unions focused on this solitary niche, and all of them declared bankruptcy shortly after the medallion-pricing bubble collapsed.
While I completely agree that the recipients of bailout funds should primarily be the individual cabbies who were conned into buying medallions, the article notes that at least some of the funds would go towards individual owners who've already declared bankruptcy – but even then still unambiguously had their lives destroyed in the process. I would assume forgiveness of their remaining debts (via paying them off through the $500M fund) would be a core element of any bailout.
1
And, exactly why would the taxpayers of New York want to bail out bad business decisions?
How about the students who took out loans then did not finish school or don't get the job of their dreams? Where does it end?
Ridiculous. This kind of thinking is why people are leaving NY and NJ.
11
This is crazy. Taxpayers, especially those who are careful with their debts, should not have one cent given to folks who gamble on such things as medallion purchases. I am fine if the money comes from criminal or civil recovery from those who benefited however.
10
@David A question: were the thousands of individuals who let Bernie Madoff manage their investments guilty of "gambling"? Or were they the unwitting victims of an elaborate criminal conspiracy explicitly designed to fleece them of their life savings?
If you think the latter is true – and you should – then I'd suggest you stop trying to blame the victims here. The antics of the malicious actors who orchestrated the medallion pricing bubbles may not constitute a literal Ponzi scheme, but it's a lot closer than you might realize.
And to be clear, what's *definitely* true in both cases is that the actors involved engaged in a smorgasbord of felonies at both the state and federal level – which is why they're under investigation by both the Manhattan DA as well as federal prosecutors.
1
This is simply bailing out those who made or bought bad loans whether it is the banks or loan companies.
If those who took out the loans can't pay, bankruptcy is the remedy the system provides and few in these situations have any other assets to go after.
The exploitive crime was the City along with the Taxi industry monopolizing the medallions. The monopoly was finally busted by Uber, Lyft and other on-demand companies. But only after the taxi owners sold their medallions effectively to sucker banks.
The repeats that the funds will somehow come from "donors." Who in their right minds think that this will come from anyone other than the taxpayers.
5
How about the so-called "Industry Leaders" being held accountable. Shouldn't they have to be part of the solution? After all, these criminals created it!
3
When I lived in NYC in the 60s,70s and 80s, my experience with Yellow Cabs was horrible. Then, they wouldn't take you to the Bronx from Manhattan because,
1. Too dangerous
2. Can't get return fare back
this despite the fact, that the law required them to pick up all travelers. They locked their doors, and drove off. One time I had to ask a cop to order the driver to take me.
Yeah, I feel sorry for them but NYC should prosecute the lenders for fraud first and get settlements from their bankers and brokers.
Now i just use Uber when i can
4
Since the city chose to exempt the taxi industry from regulations, it should help repair the damage that was done. I hope the predatory lenders end up in jail, and that the lax city council members are voted out of office.
1
I’m torn over bailing out medallion owners. On one hand, buying a medallion is like any other business, some survive and some don’t. On the other hand, medallion prices were over inflated, encouraged by city government and believed by mostly naive immigrants, not understanding they were being sold a bill of goods, and different rules governing the same industry. I feel for yellow cab drivers, especially after reading about the suicides in their community. The playing field screams inequality & the city or state government needs to correct this injustice.
2
Why couldn't I get a 'Bail Out' for my Student loan debt? It took me 18 years to finally pay it off.
10
"The panel is also set to recommend more changes that would strengthen the taxi industry and shield it from increased competition from ride-hailing companies."
So let's get this straight, the geniuses who created this mess, the NY pols who created artificial scarcity by restricting the number of medallions, limiting both the quantity an quality of supply, are now going to use $500M of tax payer money to bail out the taxi industry and then move to curtail the ride hailing companies that the voting public has, with its actions, already indicated is their preferred choice. I bet that most of the members of said council receive hefty donations from the taxi owners and unions.
This is the same flawed logic that gives you rent controls, used ostensibly to provide low income housing, but in reality stifle new construction, leading to a paucity of housing.
I lived in NYC for five years. You never could get a cab or if you did it was filthy and disgusting because both supply and competition was restricted by ridiculous medallion limits instituted by the NY pols and the industry cronies who had them in their pockets. The pols are now reaping what they have sowed.
Leave the free markets alone and let the riding public vote with their own dollars. You will see that ride hailing services like Uber and Lyft will fill the void as they are much preferred over the lousy taxi services provided by the cabal that created this mess.
5
@Simple Truth Outer borough residents use Uber/Lyft to reach Manhattan's top-tier hospitals a well as for trips to the airports. A few months ago I had to go from my home on S.I. to the Hospital for Special Surgery on York Avenue. Uber arrived on time at 5am in a nice clean Camry with a courteous driver. A few days later I used Lyft for the return trips. Again a nice Camry with a nice driver.
Without Uber/Lyft I would have had to call a local car service and hope that they show up on time. For the trip back, try getting a Taxi to take you to S.I. at 4pm from York Avenue.
NYC Taxis are generally beat up sedans with surly drivers. That's why Uber/Lyft are doing so well in NYC.
2
What isn't being addressed in all of this is how the situation was aggravated by NYC allowing Uber/Lyft/etc to operate in the city and thereby destroy the value of taxi medallions -- maybe an unintended, but easily foreseeable, consequence.
To the extent that NYC could be seen as part of the problem perhaps it does bear some responsibility for medallion owners' dilemma and ought to compensate them to some extent.
After all, NYC benefited from the inflated medallion values when they were sold at higher and higher prices to drivers. Maybe the least it can do is refund the difference between the later insane purchase prices vs. the average price before the medallion price manipulation began.
1
Their medallions are worthless because ride-share services provide a highly superior consumer experience. You don't have to physically hail a ride-share, here's no shift changes, there's no discriminatory practices of drivers passing by people of certain ethnic backgrounds, there's nobody asking "where are you going?" with scrunched up noses before deciding whether to take your fare, no disgustingly dirty cars to climb into, etc. etc. The rating system creates a level of accountability that is completely non-existent in a yellow-cab.
In general, ride-share drivers are also better drivers, which isn't hard, given the god-awful driving that is daily on display by NYC cabbies. Most are too timid to be on the road, the rest are certifiably insane. Hardly any of them get out of the way to let off and pick up passengers, though they easily could, causing traffic effects that reverberate throughout the city each time. Lyfts and Ubers make much more of an effort to get out of the way.
The loans may be predatory, but the plummeting value of cab drivers' medallions has been a long time coming and is nobody's fault but their own. Let the highly inferior industry just die its natural death.
4
If Uber et. offer a superior service for less it's largely because venture capitalists subsidize every ride for that money losing company.
Once fares rise to actual real-world costs (including paying drivers a living wage), there will be a lot of surprised passengers and a lot of corner-cutting by drivers and the Ubers of the world in order to maintain/increase profits.
In that scenario, we may see the same degraded service you complain about vis a vis today's economy medallion cab industry.
Sign me up for giving to this fund. I've sent checks to three different taxi drivers, thanks to one of the early NYT articles about this crisis. The Times and, sadly, the son of a taxi driver who took his own life, referred me to the TLC, which gave me the names of drivers who are in dire financial straits.
More than my annual gifts to charities, the ability to help hard-working immigrants impoverished by predatory loan practices has become my way to celebrate Christmas and other holidays.
4
@NR
Sign yourself up. Leave me out of it. I take the increasingly broken subway. Filled with homeless.
1
The greed of loan sharks like house flippers before the Great Recession are only part of this problem. The medallion system was created in 1937 when anyone with a taxi shingle could carry passengers for pay, creating a glut in services that essentially made it impossible for any driver to make a living. Enter Uber and Lyft into the modern age, created by modern oligarchs spending other people's money to capture the market by selling their services below cost. It's impossible to compete against someone who doesn't care about a profit, prices services below the cost of production, and drives out legitimate small business owners trying to make a buck. The proposed bailout should include hefty fines on Uber and Lyft that will essentially make their prices competitive with taxi drivers trying to earn a living.
2
Absolutely. I have a close friend who (with his 2 brothers) owns over 150 medallion taxis. I know he has had a serious fall from grace. For the single owner, it is that multipled a hundredfold.
1
Not a lawyer but it seems pretty obvious that the city is culpable from this statement:
The city also chose to fill budget gaps by selling medallions and running ads promoting the permits as “better than the stock market.”
3
This is absurd. No tax payer money should be part of this conversation. Libraries are in trouble, fire houses have been closed, the subway system is in dire need of repair and little is being done because of a lack of funds.
Let the drivers declare bankruptcy and continue to drive under the same regulations as Lyft and Uber. It isn’t the job of city government to bail out failed business owners and that is what the taxi drivers are.
27
@Fred Exactly. In the end this isn't a bailout for the drivers, but a backstop for the lenders. A mini version of 2008 all over again.
4
What?! While the banks make millions off of ruining these hard working folks?
Read the earlier parts of this story in the Times.
@Louise Stracke
Banks are actually losing a lot more than these folks . Do the math .
They bought a medallion for 1,000,000.
Folks put down 200,000. Banks put up 800,000.
Turns out the medallions are only worth 250,000.
Who lost more ?
I can't afford to take taxis.
No public funds should be given away to anyone--driver, medallion seller, financer of this mess.
35
That is a flawed assertion. Any group of people travelling crosstown (say, 86th or 96th Street) across Central Park KNOWS it is much more economical to take a taxi than take the buses.
So this all hinges on a single not being able to afford a taxi. I believe this must be looked at objectively; not subjectively.
@Easy Goer Having gone crosstown through the park on numerous occasions, I have to disagree. The bus fair is $2.75 ($1.50 for me, senior), the initial cab meter drop is $2.50 plus a MTA surcharge of $.5 and then 50 cents per 1/5 mile (or 60 seconds in slow traffic which the crossing almost always is) bringing the cab ride to at least $5 (with tip). Both take about the same amount of time.
2
Bankers make the money off individuals who are easily duped and should not be able to take a loan and finally the hard working public has to bail them out with no one paying the panelty. I remember before 2008 crash I had relatives who requested that I take a loan and buy an apartment because mortgages were easy to get. I looked at my finances and decided I would not be able to afford the mortgage and decided not to buy an apartment. However, as a tax payer I had to bailout the banks who made bad loans. This cycle needs to end and a few bankers need to go to jail.
23
What I don’t understand—someone please educate me—is why public funds are being allocated to repay this debt, rather than just enacting a law to cancel the debt. I read the original piece, and in many cases the loans were sold through deception and outright fraud. The debtors should be made whole at the expense of the lenders, rather than the rest of us.
I realize that many of the loans are no longer owned by the original lenders, but if I unknowingly buy stolen goods, I don’t get to keep them. Both the debtor and the current owner of the debt are victims here, and the current owner can and should seek civil recourse against the lender that sold this fraudulently-obtained debt. Some banks may go under. Tough. Savings accounts are FDIC-insured. So, ultimately, some of the debt may get repaid with public money at the end of the chain. But as much as possible will be paid back by the institutions that willingly took part in this scheme.
We have this attitude in our society that financial institutions are neither good nor bad, they just exist to make money. There’s a “don’t ask, don’t tell” policy when trading assets, commodities, debts in bulk, without any thought paid to whether the instrument was obtained ethically. I’m not sure I’m OK accepting that.
21
@Luke Tyler Downey I have a feeling there are some influential banks and other well-connected lenders that are preventing the "canceling" idea.
2
@Luke Tyler Downey
Exactly! No taxpayers dollars to bailout. Hold the dirty lenders accountable.
3
I am still not clear on why and how a system of permits ever became a salable commodity! In NYC, this is the result. In Boston, it has led to very poor quality service, aggressive/abusive drivers, underinsured cabs, and complete redlining of entire neighborhoods - the kind of stuff that makes Uber and Lyft able to take over. Bail out the drivers - then abolish the system in favor of permits issued to drivers and qualifying cars (and then make Uber and Lyft vehicles and drivers subject to the same standards).
8
It seems so irrational that to be allowed to pick someone up who summons with a raised arm you need to buy a medallion but to do the same via an app, you don't need one. I support a taxi bailout. But I also think something has to be done to level the playing field between ride sharing services and cabs.
9
@LSR
It seems absurd that you need a medallion (as some form of certification) in order to do business as taxi driver or taxi company. Set up the rules and standards and a mechanism of enforcement (via inspection) and let all players into the field.
And where is the money coming from? Ah....right me, a tax-payer. I have no problems per-say with the "bailout", but I think Students.....nationwide should be given a "break" on their loans. I also think the City and State has done a poor job keeping Taxes down - and many, many persons are moving out of the tri-state area for less expensive and greener pastures.
13
My question is how did the city allows this deceptive practice to exist? Is it because the banks have the city in their back pocket? What is the difference between this and the so-called loan modifications during the housing crisis? That was such a boondoggle, and this will not be any different. The banks never lose. It’s a corrupt enterprise that was allowed to flourish under the cities blessing, and lobbyists’ hard work.
8
Thiss is not a "bailout" -- it is an effort to restore some of what the economic system took from the drivers who bought medallions with the loans that were pushed on them by the system.
Until the tech industry ramped up ride sharing, that was the business model fhat had worked for drivers for decades.
No banker or city official appears to have been prepared to second guess that business model based on the potential for ride sharing to gobble up the industry.
Don't blame the drivers for what was done to them.
Why did this happen? The impetus was good old greed. Rich investors sought wealth (and power) unimaginable and had no qualms about what they might do to individuals or communities in that pursuit. They could have chosen to push drugs ("legally" of course), but they chose to push ride sharing instead of opioids. Just to make lots and lots of money.
After being kicked out as CEO of Uber, Travis Kalanick is worth $3.1 billion.
He can fund this as a straight out return of ill-gotten gains.
Find a way to make that happen.
10
@W.B. McKeown I find these continued attempts to blame Uber for the taxi-medallion bubble rather amazing, considering nearly every article The Times has published on the subject over the past year has pointed out that neither Uber nor Lyft had anything to do with it – including this one. To quote directly from this piece:
"The new [ride-hail] apps have reduced the revenue that yellow cabs receive, but virtually all of the hundreds of industry veterans interviewed by The Times said the bubble would have burst even if ride-hailing had never been invented."
"Ridesharing" didn't yet exist in 2002 when medallion prices started escalating 1400% over the next 12 years, thanks entirely to long-running manipulation due to the efforts of medallion brokers and lenders so ethically lacking as to make Uber look saintly in comparison.
While I'm not even remotely excusing any of Uber's own underhanded tactics in general, the company is nonetheless not the villain in this particular tale. If you want to attack some of the actual instigators here, I'd suggest starting with former Trump "fixer" Michael Cohen, who at one point during the bubble owned at least two dozen medallions. Alternately, try the TLC, which allowed this grotesquely inequitable medallion-resale market to grow & fester either without sufficient regulation or – worse – possibly knowing what was up, but doing nothing so as to avoid "angering" moneyed taxi interests.
9
Oh. You were able to blame Trump for this. Great job.
The city should be in total control of the medallions and the rule should be that these are rented and never owned by the drivers/owners of the cabs. When a driver/owner no longer has a vehicle related to the medallions that medallion comes right back to the city within 30 days of no supplied service. To start the city should prevent the current debt holders from being forced into bankruptcy by creating this new law and then should offer to the current debt holders’ maximum of $100,000 per medallion where the city takes back title to all of the medallions. The holders of these debts are not the most caring people even when you learn that they too might live in that city which never sleeps when it comes to making more money at the expense of whomever they can take advantage.
16
@David Gage Totally agreed. Never understood why cities are selling the medallions instead of renting...
4
@David Gage A more simpler way of putting it would be for NYC to transition from medallions to annual permitting for taxis – which nearly every other large American city, with a handful of exceptions, did decades ago. While moneyed taxi interests have devised ways to game that system as well, none are remotely in the same ballpark as what's gone on within the NYC taxi market over the course of the 21st century to date.
5
@Fatih I never understood why they aren't permits to operate based on whether or not drivers and cars qualify ... with all who apply being welcome if they qualify.
What on earth is this city thinking? These people made a decision to take these loans. There was plenty of information available to them before they chose to do so. The world changed and the outrageous loans turned into a very bad bet. If they want out of their obligations, then they need to file for bankruptcy. That's what businesses do when things don't work out. It's not the responsibility of the people of the City of New York to give handouts to yet another group of unlucky people.
We don't have money to fix the subway, yet we're going to burden taxpayers with an extra $500 Million for people who should have known better? This is nothing more than a corrupt handout for, as John from Brooklyn points out, the banks and sleazeballs who made the loans and for the politically connected taxi industry. An industry which, btw, thwarted transit development in the City at every chance they could. Now the chickens are coming home to roost.
72
@O My
I am in 100% agreement. Let us also note that by far the medallion owners are investors, not the drivers. Owner/drivers are the exception.
6
@O My If we can hold the drug manufacturers responsible for the opioid crisis, we can hold the tax medallion industry responsible here too.
4
@O My I can only assume you haven't read The Times's series in full. It outlines in considerable detail how individual taxi-medallion buyers were flat-out lied to by both brokers & lenders in its secondhand market. Further, *they* were the ones that schemed to create the taxi-medallion bubble that forced prices up 1400% over a 12-year period; drivers were only one piece of a heinously devious game – one that violated a wide variety of federal & state laws regarding disclosures & fraudulent misrepresentation.
You're also inaccurately claiming this bailout will only help the "corporate" medallion owners that orchestrated this scheme: in reality, nearly all of them closed up shop shortly after the bubble burst, thus precluding any realistic chance of holding them accountable.
Considering the TLC's near-absence of regulation over the medallion-resale market was a core causal factor, it's entirely reasonable for the city to be on the hook for a bailout in response to a situation that was both avoidable & in significant part their own fault.
Put more simply, you're blaming the victims. They weren't "unlucky"; they were prey.
2
Vultures swoop in when there’s no regulation. The ‘public’ part of public-private represents our tax dollars at work.
The medallion bubble would have eventually burst. Uber et al should have been regulated from day one. Their presence has made far worse the taxi drivers’ plight.
4
@Ruben Kincaid The problem here WAS the regulation. NYT coverage has shown very clearly that the City was all-in on creating this bubble in order to make money. There were other ways to regulate the number of cabs, but NYC chose the way that was best for them financially -- to pump up the price at the expense of cab drivers.
Some regulation on Uber would be sensible, but it is a completely separate issue from the medallion bubble.
10
I with the majority that the taxpayers should not be paying for the predatory loans that were handed out by the banks. Everyone is at fault in this situation.... who takes out a million dollar loan on a taxi cab salary? Who in their right mind would give out a loan of that proportion. There is plenty of blame to go around. I think both parties should be held responsible but don't stick the bill to the taxpayers. Who is going to pay for my mortgage if I default?
43
@Anthony This was done in your name.
During the bubble, city, state and federal officials worsened the problems by exempting the industry from regulations. The city also chose to fill budget gaps by selling medallions and running ads promoting the permits as “better than the stock market.”
4
@Anthony The city bears some responsibility, given that a) it created and controlled the market for medallions, which it exploited to generate revenue, and b) it then ran ads targeting immigrant entrepreneurs advertising that taxi medallions were a fail-proof investment
5
@Anthony Let them default on the loans and surrender the overpriced medallion. City in turn may choose to provide a new medallion for these defaulted drivers at a reduced cost. Bailing out will only help the lenders.
7
Did no one do any basic math?
The average taxi fare in New York is below $15.
There's no way a medallion is worth $1,000,000.
Just to make the principal, over 5 years a driver would need to make 36 trips every day with no days off.
31
@Dave you are right, but that was when they had a complete monopoly over NYC. that's the only way the math works out for them.
3
Therefore, why should the City bail out bankers, who are clearly very math-savvy people? I can understand why the immigrant cabbies didn’t understand the obligation, but the bankers surely knew.
@Dave Perhaps the loans were interest-only, the idea was that you could re-sell the medallion so you never had to cover the $1 million.
What appears to be a nice story in its face is really a backdoor bailout for the banks and other lenders who made these predatory loans.
I would be VERY skeptical of any “partnership” in which investors simply forgive the loans as a “donation”. There is more to this that will be worked out behind the scenes when nobody is looking. And the result will be that our tax dollars will go to pay these monsters back rather than fix our subways, improve our schools, and provide critical social services.
Even more distressing is the fact that the Federal agency holding many of the loans plans to sell them off to private entities beforehand. Guaranteed these vultures will buy the debt for pennies on the dollar and NYC will end up paying them back the full value of the principal plus interest. This is a costly move to score cheap political points.
Let the drivers restructure their loans via a Chapter 11 process so that the lenders share in the pain but the drivers keep their businesses and pay back eventually on more reasonable terms. No more bailouts.
103
@John - I totally agree. I am not sure why we are bailing out the banks who enabled people to take out such ridiculous loans. Instead of a bailout where it sounds like taxpayers will essentially cosign for the debt, we should be providing assistance, clinics and referrals for taxi owners who want help going through Chapter 11 bankruptcy.
7
@John Living in California, I don't really have a stake in all of this. Although I truly like your thought. Structure the Chapter 11 so that the underlying asset is retained by the Taxi Driver and let the court re-structure the note with reasonable amount going back to the institution in which holds the note at say .50 on the dollar. This will make both parties share in the cost, but also let prosecutor's go after those who made the profit in speculation give up assets to go into the pool as well.
8
@John I can only assume you haven't read The Times's series in full over the past year. Nearly all of the lenders who orchestrated this criminal fraud – artificially increasing medallion prices on the secondhand market by 1400% over a 12-year period – scurried back into the woodwork shortly after it happened. Seeing as they've basically disappeared – presumably for purposes of avoiding criminal prosecution (and they're likely guilty of a smorgasbord of both state & federal crimes) – they most certainly will *not* be the recipients of any bailout.
Suggesting that drivers should "bail themselves out via Chapter 11" really isn't that far akin from suggesting Bernie Madoff's scores of victims should do the same. All the ones in both instances were the victims of an elaborate series of criminal conspiracies designed to artificially increase the value of their "investments." While a pricing bubble isn't quite the same thing as a Ponzi scheme, it has a similar outcome: lives are destroyed when the scheme ultimately collapses. (And to be clear, ALL of them eventually do, including artificial bubbles.)
1
It's a problem of the city's own making. The hack license bidding process created this mess, and must be discontinued immediately! Find a reasonable fee for a license and reimburse those who paid more for theirs.
And if that works, come to Jersey and help us to fix our equally arcane liquor license laws!
16
Instead of forgiving the debt, setup an institution that buys the bad loans for pennies on the dollar using the model charities buy medical debt. Funding should come from ride sharing companies since they are as much to blame as the speculators and brokers.
4
Bankruptcy is the correct path. The banks never should have made the loans, they need to suffer the consequences. If the banks already sold the debt, they should be fined an equal amount.
66
@Mike ryan Banks had no role in this scam; a small group of purpose-specific credit unions set up shop explicitly to "work" the medallion-loan market. As The Times has previously reported, all of these credit unions folded shortly after the medallion pricing bubble burst in 2014 – presumably with ill-gotten gains in tow.
The NCUA is the credit union analogue to the FDIC: it automatically "inherits" both the assets & debts of credit unions that fail, which is what happened here. They didn't "buy" any of the debt at issue: the NCUA is merely a federal agency that ended up with both ownership of the underlying medallions – along with all of the outstanding loans on them – by default pursuant to federal law.
If there were any banks / credit unions to actually *pursue* here, then obviously they should be the ones financially (and legally) responsible. Unfortunately that's not the case: the NCUA can't recover any funds from operators that have, in many cases, moved all of their funds into offshore tax havens or simply vanished altogether.
Finally, it sounds like you've also assumed that the entire bailout would come from taxpayer money. This, too, is inaccurate: most of it would come from private parties, e.g. entities buying the medallions out of bankruptcy. (Also, while Uber's not involved in this particular scheme, it previously offered a $200 million taxi bailout in return for loosening some of the restrictions it's under. The city should perhaps revisit this idea.)
Great, but who is going to pay for this? The already overburdened taxpayers, both corporate and non-corporate? NY like NJ seems bound and determined to encourage an exodus of individuals and businesses to lower cost states such as FL and TX. At that point, with fewer taxpayers, what's next on the agenda, more tax increases? The real villain is NYC's extortionate pricing of taxi medallions. If reasonably priced, no bailout would be necessary. NYC has again shot itself in the foot.
49
This is simply crazy. The tax payers should not be picking winners and losers. And people wonder how Donald Trump made it to the White House.
@Mike F.
Actually, not great. The City is in actuality trying to bail out the holder's of the notes who would get nothing as the current owners of these worthless medallions one-by-one go bankrupt. Yes the overburdened taxpayers will be the ones to pay
1
@Mike F. Let me guess: you think the massive tax cut for billionaires "paid for itself" and incessant adventure wars to prop oligargarchy is "good for the economy", but bailing out a small number of victims of neoliberal privatization is going to break the bank?
You need to learn to do math.
Instead of addressing the root cause of this, and going after those who exploited the system, let's just use taxpayer dollars to bail everyone out. As it is, the loans were supported by taxpayers since the NCUA is the largest holder.
Loaning money to someone who can't possibly pay it back, and subsequently dumping that loan, should be a crime.
36
"Loaning money to someone who can't possibly pay it back, and subsequently dumping that loan, should be a crime."
@Tom It *is* a crime – one of the sizable numbers of them that took place here. This is why both the Manhattan DA and federal prosecutors are actively pursuing charges against the perpetrators. Whether they'll succeed is another question, given that most of them folded up shop and fled down with their ill-gotten gains shortly after the medallion bubble popped six years ago.
As for the NCUA, it's not a "perp" in this situation. Nearly all of the entities that lent money to (predominantly impoverished) cabbies were small-time credit unions focused wholly on this particular niche. Once they fled town, the NCUA essentially inherited their obligations – much like the FDIC does when any American bank goes under.
While the NCUA may have possess of many of the medallions at issue, the cabbies who were fleeced in this scheme are still stuck holding the bag, financially speaking. Even in bankruptcy they have to continue making repayments on their original loans, albeit at less usurious interest rates than before. Despite the NCUA being the ostensible "recipient" of bailout funds, they would be used for purposes of substantially reducing – or eliminating – the debts of bankrupt taxi drivers. (In other words, drivers *would*, in fact, benefit from it, not the lenders – and definitely not the ones who ran this shell game in the first place.)
Let them declare bankruptcy. Taxpayers should not be paying for bad investments by bankers or anyone else.
97
One could argue that NYC taxi drivers were not sufficiently protected by NYC during the rise of disrupting app ride share technologies.
Medallions were being sold by the city to individuals at rates that were more realistic before the dawning of Uber and Lyft. These medallions were not cheap, peaking at over $1,000,000.
An industry was disrupted, and these taxi drivers, many being immigrants seeking out the American dream, were left in the cold. You may recall stories published by the NYT of some committing suicide out of desperation.
I realize that we Americans flinch at the thought of bailouts following the 2008 financial crisis, but these taxi drivers are truly suffering. I have no connection to anyone in the industry, but what happened to them was not fair and to some fatal. I personally believe something must be done to alleviate their burden.
3