I want to know WHEN NY is getting their TAX money from Trump and company, that they let go for so long.....what's the update on this? How can NY continue to not have him pay?
3
We all blame Trump, justly, for baseless, shallow and topsy-turvy dysfunction but state and local democrats give Trump a run for their money. This taxi lawsuit is headline grabbing baloney, pure and simple. We will fund a phalanx of state lawyers for another misdirected AG misdirected initiative, probably the same group that wasted time and state money in the lawsuit blaming oil companies for climate change. (We, the people, cause climate change.) I am sure we can find something productive for these lawyers, investigators and economists to do.
7
It wasn't predatory loans to unsuspecting drivers that caused the medallion to tank. It wasn't passengers preferring Uber to yellow cabs that caused the medallion to tank, either.
It was this: the DRIVERS, responding to a massive ad campaign in 2014 promising them a better deal, quit the garages and defected to Uber in huge numbers, and did not return. New drivers entering the industry didn't go to a taxi garage, as had always been the case, they went to Uber. Without sufficient drivers paying them leasing fees, the owners of taxi garages could no longer meet their overhead expenses and were heading in the direction of going out of business. Investors who were leasing medallions to drivers via taxi brokers suddenly were receiving zero income from what had always been a rock solid investment.
In short, the engine that generated the wealth -- the DRIVERS -- left the stable and did not return. That is why the medallion tanked.
5
I lived in NYC through the 60s, 70s and 80s. Throughout that time taxis were dirty and dangerous, buses crowded, subways very dangerous, parking private cars a nightmarish odyssey of searching and moving for alternate side of the street cleaning.
Uber Lyft and Via are a salvation. That they have rendered medallion cabs obsolete is the nature of progress. The “value” of medallions was always a function of supply and demand. That said, if a municipal government was involved in intentional misrepresentation, ie fraud, to profit from the sale of medallions it must be held accountable.
8
I am not living obviously in NYC, but I struggle with having the City pay restitution when it was the banks that agreed in terms to loans for people who were unable to pay them. Shouldn't they share some of this burden?
7
Tish James taking her marching orders from Cuomo no doubt. Cuomo relishes every opportunity to put the screws to NYC and our bumbling Mayor. James doesn't care about anything but her political career.
6
Those who engaged in fraud, should be punished. None of the mortgage brokers, non-bank lenders, or rating agencies were made accountable.
In this case, the city engaged in financial misrepresentation and perhaps fraud. All parties to the financial ruin of working immigrants should be held accountable, financially, not just the city. As Über broke the back of the taxi industry by violating regulations, it should also be held financially accountable.
4
@Arthur
Sorry my first paragraph should have been deleted as I was thinking of the mortgage crisis, but I failed to state it as a comparison.
1
@Arthur It certainly seems like this was some type of securities violation (whether or not a medallion would technically qualify as a "security"). Sucks that city taxpayers have to be on the hook, they really should go after individuals who were responsible for the misrepresentation.
1
Follow the money! After the collapse of the liar-loan mortgage market, no bankers went to jail. Why? Wasn't there one applicant who would testify he was instructed to lie on his loan form? And then, couldn't that loan officer testify that his boss instructed him to approve the illegal loan? This is the same! Where is the DA? Get a taxi medallion buyer to testify that he was lied to! Then get that city worker to testify that his boss instructed him to commit the fraud! Find out who approved this process! There has to be a paper trail since financial documents were involved! When prosecuting criminals you always start at the bottom and work back to the bigger crook! Do it here and do it now!
5
The moral of this story is don't buy tulips.
7
Corruption is just one of the costs of doing business in New York. Everyone knows that.
6
Though all business transactions are caveat emptor, an endorsement by the TLC makes them a co-conspirator in defrauding so many medallion buyers. I generally don't admire Ms. James, a grandstanding politician like my own state's attorney general, but it appears this blind squirrel has finally found the nut. Gig'em, Ms. James!
3
My friend bought inflated real estate in 2008 .
Everyone convinced him the value will only go up .
The seller the broker , the mortgage broker ...
Then it crashed .
Are we going to make him whole again .
Who is Letita James going to sue ?
Letita , folks who sign the papers on million dollar loans may end up losers but they are not helpless victims .
6
Let's be clear where the money will be coming from -- taxpayers. NYC is not an amorphous, free font of cash. So, is it appropriate for taxpayers to bail out those people who made bad investments? No. The AG should see her mission as protecting all New York taxpayers, not just favored groups. Stop suing municipalities retroactively, or if you have to, seek injunctive relief rather than cash. Better yet, introduce legislation and use your proactive, lawmaking powers.
11
@CHS
Except the city is the one who defrauded their citizens... They made the requirement that taxi drivers have a medallion, then inflated the prices of them to over $1 million (which is absurd) in order to profit off of the working class.
9
@CHS You need to go back and read the article carefully. It was NYC’s Taxi and Limousine Commission that FLEECED these cab drivers by selling them medallions in the $700,000 to $1 million range. It was NYC that also filled its pockets with Uber and Lyft money to operate unregulated unlike taxis. This caused great harm to the taxi industry and those individuals who purchased a medallion from the TLC.
NYC must give back the money that it stole. It should not have to dip into tax payer coffers.
6
@ATOM "NYC must give back the money that it stole. It should not have to dip into tax payer coffers."
Should NYC print the money then?
3
I made some bad investments in the last 10 years and would like New York City to give me back the money I lost. That is not how investment works. You don't get do-overs. I didn't buy a taxi medallion for a million dollars because they were obviously over priced. The people who over paid for medallions gambled and lost. It is not the obligation of the tax payers of the City of New York to bail them out. Will we bail out restaurant owners who go bust? If my apartment goes down in value, do I get bailed out? If the economy slows, there may be a lot of condos which are underwater. Is the City responsible? To the people who bought overpriced Taxi Medallions, I'm sorry you made bad investments. I know how it feels. Please send me money to make me whole on my bad investments.
17
@Michael Green This is not about a bad investment, It's about fraud, manipulation, and about being taken advantage of by a group of people who gamed the system. The 800Mil should be clawed back from them. The city agency charged with overseeing this was asleep at the switch.
11
@Michael Green
So you’re okay with government institutions committing out right fraud? It was NYC’s Taxi and Limousine Commission that FLEECED these cab drivers by selling them medallions in the $700,000 to $1 million range.
NYC also filled its pockets with Uber and Lyft money and allowed operate unregulated and unchecked, unsupervised, unlike taxis. This caused great harm to the taxi industry and those individuals who purchased a medallion from the T&LC.
NYC T&LC must give back the money that it stole. It should not have to dip into tax payer coffers.
5
You don’t seem to understand. Government is the taxpayers. Where do you think government gets its money? If taxes aren’t raised to pay for this bailout, then services provided by government will be cut.
2
Banks and credit unions, mostly credit unions, LENT a lot of money to these drivers to buy the medallions.
The banks and credit unions lost far more money than the drivers did since the drivers rarely put up a significant down payment.
It is amazing the New York Times continues to ignore a significant portion of the story.
14
@Tom Wilson And the banks and credit unions should have vetted the drivers and the underlying collateral more carefully. But as usual. their greed overcame prudent credit practices and they got stuck. Too bad...
7
The banks and credit unions were in bed with the Taxi commission. They knew they were making absurd loans and they kept making them.
It’s a tiny version of the 2008 housing bubble all over again.
7
@Tom Wilson Are these loans secured by anything more than the underlying medallion? Why can't the owners/drivers just walk away and "turn over the keys"? Is it that different from a mortgage?
3
Bravo, Letitia James!! You are a ray of light in what too often appears to be a dark age. I look forward to reading stories in these pages about cabbies whose lives are taking a significant turn for the better.
7
@Dancer's Mom As they deserve. To many, buying a medallion was living the American dream. Instead, it turned out to be the American Horror Story!
1
While the city may have supported the auctioning of medallions, we all know what really happened - ride sharing destroyed the taxi cab business as we know it in NYC.
There are approximately 13,000 yellow cabs - de Blasio, under pressure from Uber, put a ridiculous cap of 85,000 on the number of ride sharing vehicles in the city. Uber and Lyft and Via are all subsidized- they lose money on every ride -they’re trying to undercut and destroy the competition- so they can then raise prices.
Uber lost $8.5 billion last year and shows no sign of profitability. The taxicab business model is forever broken - while NYC has some responsibility regarding how it allowed a few wealthy individuals (who donated to the de Blasio campaign) corner the market, it was the ride sharing business which sealed the fate of yellow cabs.
10
The medallion system was always terrible for taxi riders. It was great for fleet owners, who became filthy rich based on their monopoly. Since Uber and Lyft came along I can get a taxi when I need one (including 4 to 7 pm). Bravo!
5
@JMS And DeBlasio sealing the fate of the once great Taxi industry!
3
The medallions are so expensive that they should be protected by securities laws, maybe by the Securities Exchange Commission. There should have been a prospectus for potential buyers warning that the medallions could lose most of their value.
4
@Kay Sieverding They had always been a solid investment until some people artificially bid up the price and manipulated the market. Those are the people who should be held accountable. Read the excellent Times article.
4
@lionelqdeveraux it wasn’t random people who built up the medallion price. It was NYC’s Taxi and Limousine Commission.
2
I do share the concern the money recovered via AG’s position will go to the predatory lenders who hold liens on the medallions. So it is a bailout of the enablers of fraud. Very similar to the mortgage crisis ten years ago.
11
@Suburban Cowboy Exactly. They won on both ends.
2
Uber and Lyft are regulated by the NYC. All these cars have TLC plates. Not like other states and jurisdictions where app hailing cars are totally private.
1
@Suburban Cowboy Uber and Lyft are hardly regulated by the city. It has mostly been hands off. They put as many cars on the streets as they want, clogging them up. Then our esteemed governor comes up with a "congestion pricing" plan for drivers entering midtown the money going to fix the MTA and whatever else he can steal it for. It people were not working 80 hours a week to pay off these medallions, the whole thing would be laughable.
3
@Suburban Cowboy As of April 2019, NYC’s Taxi & Limousine Commission is no longer granting TLC licenses to Uber or Lyft drivers. Prior to this change, Uber and Lyft you had to submit was a application and $252. To get a medallion however, the process is more difficult and fees are somewhere in the $500,000 range!
2
Any major purchase requires due diligence. If you buy a taxi medallion without running the numbers, that’s on you. Nobody is requiring you to buy an overpriced medallion.
12
Except when the seller misleads on the product which is what the NYS AG is asserting and the previous stories on this subject have already brought to light. Give it more time, I suspect a good deal of illegitimate dealings will be uncovered and reported.
6
@Suburban Cowboy Everyone knows who the players were. Look at a list of the people who made the largest donations to MYC politicians!
1
@Liz The market was gamed by insiders who made millions of dollars. Most of these people who bought medallions were immigrants who thought they were buying into the American dream. We have had driver suicides in NYC because of this issue. Shame on DeBlasio and the TLC.
1
'a handful of industry leaders earned hundreds of millions of dollars'. These people knowingly created a bubble. What does the Times think about their culpability and their role in legally taking advantage of people when they intentionally inflated the price because of a demand that they knew full well would collapse. They then gladly sold a dramatically overpriced product as many times as they could before anyone noticed before it would collapse. The City then knowingly allowed for unfair competition (Uber and Lyft) without insuring that both entities played by the same rules. It wasn't Uber and Lyft that caused the problem. It was the result of simple, classic american greed and of normal and typical political corruption. Now the taxpayers will have to bail out the drivers while those responsible go off unscathed. And those same drivers ironically will be paying into their own bailout. Does anyone 'remember' the Flint Michigan water problem. The one that still isn't fixed. What is that old saying: "only in America'. And we only hear about Russian style corruption. It seems that both the US and Russia practice the same type of 'capitalism'.
6
Second fraud.
Owners lease their medallions to an operator. Operator buys car and owns the business. He is an independent contractor. Medallion owners have absolutely no control over business.
But medallion owners were required to take out Workers' Compensation for the lessee operators. State collected millions of dollars in WC from medallion owners. State ripoff.
Uber is not required to take out WC. Uber is billion dollar company, hires big law firms. Uber's drivers are deemed Independent Contractors. What's the difference/
4
@Mike Persaud
But Uber vehicle owners have insurance - condition of signing with Uber.
2
@Erasmus
What kind of insurance Erasmus? In NYC medallion owners must take out liability insurance for their vehicle plus WC insurance for their lessee driver (or Independent Contractor). Uber vehicle owners do not take out WC for their drivers - they are exempted
3
Not a NY story but in Berkeley I once chose a cab because I felt bad for the cab drivers sitting outside BART. The same ride home would have been $7-8 on Uber cost $12-$13 on the cab. Then when I gave the driver $15 he claimed to have no change in order keep the tip. His car was older, seats were uncomfortable and felt overall run down. That was the last time I took a cab. Yes the medallion thing is unfair and Uber/Lyft should pay compensation to the drivers. But as a commuter, if a better service at a lower price puts cabs at a disadvantage, I say more more power to ride share.
10
@Anish And when they put the taxis out of business and they are the only game in town, watch fares go through the roof. Uber and Lyft are subsidizing rides in order to drive the taxis off the streets. If a taxi cost $15 for a ride, it does not take a genius to figure out that an Uber can't do the same ride profitably for $7.50. Lyft and Uber are Amazon with wheels!
5
@Anish You're getting a lower price because Uber and Lyft operate with venture capital -- that is, they have borrowed money to cover their expenses which enables them to charge less. This will not go on indefinitely. It's a bubble in itself.
3
@Anish In NYC it's uncommon for an Uber fare to be meaningfully less than a taxi fare (partly because Ubers are TLC-licensed). NYC taxis have generally decent interiors (the suspensions may be another matter!). The drivers, eh. But at least they know their way around. Uber drivers here are beholden to the GPS and in my experience Waze is not that great in the city. So it's rare that I use Uber in NYC. But in smaller cities and suburban areas with no good taxi or public transit infrastructure, it usually works well.
1
The solution: Make Uber and Lyft bail those drivers out. Those criminal companies have the means.
6
@Johan Cruyff The solution is to have NYC Taxi and Limousine Commission, the government agency that perpetuated this medallion fraud, return the money!
1
How is this different than big banks talking vulnerable people into taking subprime mortgage loans the lenders knew were bad investments for the borrowers but great for the banks? In my opinion $810M isn't enough. Bankruptcy wasn't an option for many drivers, particularly immigrants, for multiple reasons. Unlike say, Donald Trump, who filed BK whenever things didn't pan out.
4
@cjpollara No different at all! Excellent point!
1
What's been detailed in this article is really a Ponzi scheme, run by New York City's Taxi and Limousine Commission. Now, when there few buyers for these medallions at inflated prices (increased supply and reduced demand), the price of a medallion falls, and most medallion owners are now under water in their loans. The problem with filing bankruptcy is that probably many, if not most, of those medallion owners used their homes as collateral.
6
For years when medallion prices went up by 200 or 300 percent, no one said the City was selling them too cheap or returned the profits back. Now when the prices have gone down, suddenly the City is being sued. No one was forced to buy these, and there is no reason why public money should be used to bail out private investments that didn’t pan out.
16
@RSSF Please read the article again - would the medallion buyers have bought if the state hadn't allegedly worked with lenders and the medallion's administrators to inflate prices and to assure them this was a solid investment? The city only has itself to blame. And, what did they think would happen to the taxi industry when competitors were allowed in WITHOUT the need to buy the right to drive?
8
@RSSF Because the market was rigged and the TLC and the DeBlasio administration were complicit either by omission or comission!
2
Yeah, have the city compensate the drivers so they can pay off the debt. Genius! Otherwise known as bail out for the credit sharks.
Nonsense, let them go through bankruptcy and leave the loss where it belongs.
12
@theirllbelight The loss belongs with the people who originated the loans knowing full well the drivers would not be able to pay them back. Welcome to New York City where greed is good. A few cabbies committing suicide is a small price to pay for a good payday!
People make poor business decisions all the time.
The taxpayers should not bail them out.
9
If you ran a restaurant and spent $100k on a liquor license and the next week the city said you no longer need a license, would your restaurant no longer be viable? Was it a bad decision to play by the rules?
8
Imagine a different scenario — you sell your lot, and two months later the City changes its zoning rules to allow a building twice the size. Should you be able to run to the City and claim the foregone profit? Of course not. To rely on City decisions is a business risk like any other. The City should base its decisions on what’s best for public welfare, rather than how it may affect somebody’s wealth.
9
One is selling. The other is putting everything you own into buying. And I would want to know why zoning was changed right after I sold it. That’s a decision that should be announced and public.
2
Most excellent! Hope the AG wins.
1
NYC government created a false market for highly regulated taxi medallions and made a profit. I’m sure some city officials took a benefit for then intentionally destroying the market by allowing essentially anyone to perform taxi services. If they found it so important to regulate the market, why did they suddenly flip flop. I would be suing if I had purchased a worthless piece of tin for $1m.
5
Having been a driver in the Black Car industry for 23 years till Jan. 2012. And watched the rise of Uber starting in early May 2011.
As it grew from 20 to 200 by the end of that year . To how 65,000 of those little cockroaches scurrying around the city.
Destroying industry after industry. First the yellow cabs. Then the independent car services. Then the Black Industry. Then the Limousine companies. And then the biggest victims of them all.
UBER drivers themselves.
The APP. Services should have been capped at 20,000.
And everything would have worked fine for every transport service.
Now there are 100,000 App. Cars.
It’s too late.
But that’s only half the story. You ask why didn’t medallion purchasers not realize that the value of the cab medallion they were investing there life savings and in some cases their entire family’s saving too? We’ll it’s complicated.
I’ll give just a hint of one of the corrupt stunts that was pulled off to manipulate the value of the medallion.
Just check out the Taxi Brokers who were helping drivers get financing. Those low level gangster hustlers were intentionally buying up medallions at inflated prices to help push the value up from $ 200,000 to over One Million. And then convincing innocent immigrants that even if they paid those enormous phony inflated prices. The value of the medallion would keep going up in price.
All those bloody brokers should have and should still be locked up in jail for fraud. But they all skated free.
Sorry. Truth.
17
@Michael M —agree. Go after the taxi brokers. They really were the ones who manipulated the system
3
@Michael M Well put!
2
@Minmin But the whole point of this was that the city/TLC was just as guilty.
1
Oh you mean they can’t blame Trump for this?
2
@Unhappy JD Not for this. Unfortunately!
"[D]rivers, many of them immigrants, thought they were safe taking out loans to buy medallions because of the taxi commission’s assurances of their high value."
Assurance of their high value?? There is no such 'assurance'. If I overpay for something, there is no guarantee that the marketplace will help compensate for my overpayment. That goes for buying a car, a home or a taxi medallion.
Could these medallion buyers not do the math? If they bought a medallion for 800k, they had to have known that it would require a lot of fares to make that money back. And unless someone somewhere is alleging that a gun was held to buyers' heads, medallions were purchased fair-and-square----that is, whatever someone is free and willing to pay for something.
All those "assurances of high value" is marketing fluff, nothing more.
12
City Officials were actively selling them as such. This wasn't a private business or transaction. Less astute and more vulnerable members of society are prone to wanting to believe and trust public institutions. When you are part of the public service you should have greater responsibility and compassion to those that put you there. If this was a private transaction I would totally agree with you.
11
@David Bartlett Here's the thing -- if a stockbroker puts all of Grandma's savings into internet and biotech stocks, he will probably lose his license and have to pay fines. It should be no different here.
Bravo Letitia James. Uber built a better mousetrap, and the city left all these poor medallion owners twisting in the wind.
8
@beatgirl99 Uber & Lyft and subsidizing rides to buy market share to destroy the Taxi industry. Wait till they are the only game in town. Been to Home Depot lately?
1
Wow!
1
I don't understand how progressives think that people who watch these wealthy, liberal cities such as New York, Chicago and San Francisco repeatedly bungle financial issues such as taxi medallion markets, pension liabilities and housing supply can take them seriously as good stewards on a national level.
12
@The Revionista - I wouldn't think of NYC as a liberal city. Good lord, you get busted for a bag of hemp in NYC.
1
@The Revionista The Cityside of many cities is littered with policies , projects and ideas that were to help the "common person and actually did the opposite
When was the last time that happened?
2
It's not clear to me how the TLC in particular or the city in general can artificially inflate the price of an asset whose price is determined at auction by the buyers themselves.
4
Simple - by allowing Uber to run an unlicensed taxi service
2
Every Uber in NYC has a TL&C issued license plate.
@Nick Because they were asleep at the switch and they were benefiting from the revenues the auctions generated. They dod not care the medallions were being artificially bid up. Greed is good!
2
This doesn’t sound much different than the housing bubble when banks were making loans to people with no collateral. Seems like some of the focus should be on who the lenders were . I’m not trying to absolve the borrowers of their responsibility but the adults in the loan rooms should be the lenders. I think there’s a lot more to this story than meets the eye.
8
@Dan Read the excellent Times piece!
2
Wish we had focused on the plight of drivers over the past two decades while fleet owners exploited drivers; I sure hope this only applies to owner-operators and not the predatory fleet owners who exploited drivers for years.
It seems we find defrauding investors a problem but not abusing employees.
6
I Am SHOCKED at the lack of compassion. Uber bullied its way into the taxi market illegally and ruined millions of lives around the world.
22
James is delusional. If she gets the money she is demanding it will go to the money lenders who have liens on the medallions. It will not go to the poor little drivers most of whom lease taxi medallions.
9
Don’t take my tax dollars to bail out people who made poor financial decisions. No one nails me out if I make a poor decision
27
Don’t think you would say that if you truly understood what happened and the forces at play.
8
@Nycdweller Don't use my tax dollars to bail out taxi drivers who wouldn't pick me or Letitia James up because of the color of our skin .
10
This makes an excellent addition to Bloomberg's resume.
9
@ebmem All 100% DeBlasio!
1
The taxi medallion system has been a financial boon for corrupt politicians. They intentionally created an oligopoly to cheat the public by raising fares. The monopoly profits thus generated are either funneled surreptitiously to the corrupt politicians or paid into the city coffers for the politicians to spend as they desire.
Uber is a company with many faults, but Uber has done an enormous public service by largely destroying the corrupt political money machine that is the medallion system.
19
@Errol "Uber is a company with many faults, but Uber has done an enormous public service by largely destroying the corrupt political money machine that is the medallion system."
Let's also point out that Uber & Lyft created a better product that appealed to riders. People far prefer to use the features offered with the apps than the old way of getting a taxi. Nothing was stopping the taxi industry from innovating, but yet they chose not to. The taxi industry can't complain because someone came along and offered a better product. It's a free market.
2
New York City taxpayers should not be paying for people who were speculators who took a chance spending over $1 million for a tax medallion. True, NYC created a market failure by limiting the number of taxi medallions -- a market failure which was corrected with the entrance of Uber and Lyft.
NYC taxpayers should not be paying speculators and the credit unions that funded their speculation nearly $1 billon.
Instead, the $810 million should be going towards mental health services for New York residents. The ACA never fixed a really important issue which is mental health is under-compensated compared with medical doctors (mental health parity).
According to people who deal with insurance and mental health in NYC, over the past decade hospitals have been closing mental health services. For example, Bellevue Hospital has not been hiring new people to replace those that leave. Beth Israel's mental health practice has been closed down.
Too bad the NYT does not write articles about the declining services for mental health in NYC and the (primarily) poor patients that suffer as a result.
No, instead taxi medallion speculators get the NYT's attention and in the eyes of the NYT and the NY AG, $810 million that should go towards mental health services for New Yorkers should go to speculators and the credit unions that funded their speculation.
14
@David MD
New York cab riders have been paying for those expensive medallions all along in the form of higher fares and reduced availability of cabs. The medallion owners have already recovered at least some portion of the price they paid for the privilege of facing less competition which enabled them to charge higher fares.
If the medallion owners are now also compensated by the taxpayers, then some, perhaps many, of them will be overcompensated (depending upon how much the compensation is and how it is calculated)
6
@David MD David, the city gave $750Mil to Chirlane McRay for her failed ThriveMYC initiative. No one knows where that money went or how many people it helped besides McRay. You want to throw good money after bad?
2
@Errol
Higher fares? Check your facts, Errol in Oregon. NYC's taxi rates have consistently been among the lowest in the country. We went eight years without a rate increase from 1996 - 2004 despite pleas to the mayors and TLC.
Reduced availability of cabs? In all the years I've been driving a yellow cab (since '77) the ratio of miles driven with a paying passenger vs. miles driven empty has always been around 60/40. In other words, nearly half the time a yellow cab is on the road, the driver is looking for YOU, his next customer, and is exasperated that his competition - all the other taxis - are too numerous. It's only during the rush hour when finding passengers is easy.
1
James hasn't got a clue as to what caused the downfall of the New York City medallion taxicab industry. The medallion owners did this to themselves. They kept refinancing their medallions which were going up in value to take out money to spend on homes, education, more medallions, and on good times. It all came tumbling down when Uber and Lyft and smartphone apps came along to offer viable competition. Riders, tired of rude drivers and smelly disgusting cabs, switched from yellows to Uber and Lyft and the value of medallions plunged as did their share of the business.
Most medallions are owned by business people who rent them out to drivers. Some medallions are driven by owner/drivers but they are a minority and they were doing the same thing.
In the end, when medallion owners walk away from their medallions which were the collateral for their loans, the big losers will be the medallion owners and the finance companies, some of which have already gone under, like Melrose and LOMTO.
You have a need to blame someone? Blame smartphone apps, Uber and Lyft though they did not do anything wrong. They presented a more attractive alternative.
Time marches on. When's the last time you hailed a horse and buggy?
Any bailout will benefit the money lenders who financed the medallions. City taxpayer money should not be going to that.
Medallion owners, you have a beef? File for Chapter 7 bankruptcy.
31
@MIKEinNYC We have no problem with Uber or Lyft. We have a problem with the way in which these companies flood the streets with cars. There has always been a limitless availability of FHV cars allowed in NYC, however, no company flooded the streets beyond demand and created a race to the bottom in wages like Uber/lyft did. Uber placed drivers in subprime auto loans for 3 - 5 years and then kept decreasing the fare. It was an immoral but unfortunately legal way to tie down driver and treat them as indentured servants. Now no one makes money. How is that innovation? They just completely destroyed a middle class job opportunity for anyone in the business of transportation - even mass transit
13
@MIKEinNYC An example of the business owners/investors owning medallions: Michael Cohen (trump’s former lawyer) and his family.
9
@Gerry
You're omitting the biggest actor in this enterprise, the Taxi King, Yvgeny Friedman, who just avoided jail by rendering cooperation with authorities. Do we want to use taxpayer money to bail out speculators like Cohen and Friedman and the others?
4
I do feel bad for the largely immigrant drivers who are now underwater on their loans for the medallions. However, it's mostly not New York City's fault. Yes, the city aggressively marketed the medallions, which I think is bad. But the underlying problem is that the medallions are now worth far less because of technological change from Uber/Lyft. In Philadelphia, which has a similar medallion system, prices fell from $500k in 2013 to $50k in 2017 after Uber entered the market.
The medallion buyers were betting that the prices would continue to rise as they had in the past, but they were wrong because they didn't predict the new technology of Uber. Similarly, when cars replaced carriages, people who owned companies making carriages lost tons of money, because they did not anticipate the change. We should not bail out people who simply made bad investments. Many medallion holders made a lot of money as prices climbed prior to the crash. We cannot privatize profits, but socialize losses. Medallion holders with huge loans should probably declare bankruptcy and move on with their lives.
19
@Jacob
NYC already has a scheme to provide $600 million to compensate the defrauded medallion buyers, so this lawsuit is political featherbedding.
If the prosecutor were really interested in pursuing justice, she would investigate the leaders of the taxi industry who engaged in the pump and dump scheme. For every victim who paid $1 million for a medallion [other than those purchased directly from the city to finance government], there were a series of transactions that created the illusion that the medallions were worth $1 million each.
But the big beneficiaries of the scam are wealthy, well connected Democrat donors, who long ago moved their profits elsewhere.
Sure, there are medallion holders who sold the medallion they bought for $20,000 forty years earlier for $1 million instead of the $200,000 it was worth. But what about the guys who created the scheme and sold 100 medallions? Don't they need to relinquish their ill gotten gains?
The reality is the medallions were worth $200,000 and now would be worth $150,000 because of app hailing competition. But they were never worth $1 million but for fraudulent behavior on the part of the holders of multiple licenses.
8
@Jacob
Wrong! The City marketed those medallions in the 1930's.when they were issued,and when, for the most part, their numbers were frozen at about 13,000.
5
@ebmem Right! Only Democrats are big beneficiaries of scams. Michael Cohen, 45’s former felon lawyer, a REPUBLICAN lined his pockets bigly from the sale of million dollar medallions.
2
If the City actually writes checks amounting to $810 million to bail out the medallion owners and lenders then there should be a taxpayer strike in NYC.
The medallion owners are businessmen who made bad decisions putting them in a calamitous position. The money lenders who want to collect on the loans they shouldn't have given in the first place made bad choices and they don't want to lose their money but who is to blame for that.
How is this different from every business that goes sideways because of bad choices? Why not bail out the restaurant or bakery that opened in the wrong location so the revenue generated wasn't enough to pay the absurd rent the landlord charges along with all the other overhead that comes with any business. Why not bail out people who relocate to NYC for a job only to lose that job a year later because of downsizing or because that business has become redundant and doesn't exist anymore.
The medallion owners and lenders have an option that doesn't punish the taxpayers of NYC. All they have to do is file bancruptcy. Why is this article and the AG's actions supposedly about the drivers when it's really about saving the money lenders the drivers are indebted to?
$810 million is money better spent for hundreds of other things that residents actually their pay taxes for and not bailing out people who don't have to be bailed out.
Finally, why aren't any individuals being prosecuted if there was somethng really wrong done here?
Just asking.
20
@Fred
And why hasn't the NYT reporter asked these very sensible questions, and specifically, what's in it for Ms. James. Campaign contributions from the lenders, perhaps?
1
Hallelujah!!! Praise God! Finally justice is coming. Now let it come to San Francisco where the very same bad practices have led to bankruptcy, broken homes and suicides!!! I know some of these good men who have suffered and drive literally day and night barely clearing $1,000.00 a month struggling to feed families. This is something that should never happen in our country.
10
Sounds like a bailout. I went to
CUNY. Where’s my compensation.
9
“Freddi Goldstein, a spokeswoman for Mr. de Blasio, said that the decisions that led to the taxi crisis were made during the administration of the mayor’s predecessor, Michael R. Bloomberg.”
I get the feeling this whole article’s purpose was this sentence. And, De Blasio just endorsed Sanders, so of course.
5
Blame it on the previous administration...wasn't it the Deblasio administration that allowed unlimited ride hailing cars like Lyft & Uber to come into the city in unlimited numbers with no regulation?
And the notion that Stringer is on it is a joke. He sill has not launched an investigation into McCrays grossly mismanaged Thrive NYC iniative? $750 mil down the drain and unaccounted for.
7
I hope any settlements will include the survivors of those who died.
6
Here I think Bloomberg should pay. It happened under his watch! For him a couple of pennies. Also politicians should be held accountable!
4
Who do you blame for taking out a $1,000,000 loan to drive a cab other than the person who took out the loan? Who on God's green earth would think THAT was a good idea?
20
Any relief should go only to individual medallian owners. Not multi-medallian owners who contributed to and profited from this scheme.
5
Nonsense, DeBlasio and the T&LC gave uber a free pass to put 70,000 cars in Manhattan. Think of the leverage we had to make uber buy medallions, (and also, imho, to use only electric vehicles - think of the electric power station infrastructure that could have been put in place.)
Now do my taxes have to pay for this crime of avarice?
5
All this to bail out the banks which (very profitably) loaned the drivers money and would be hurt by the drivers defaulting.
Shame on the opportunist Attorney General. She should work for the Trump administration!
3
OR...
The NYC and NYS legislature allowed for unfettered and unregulated competition that plummeted the price of a medallion.
The attorney general was part of that government. I wonder if she spoke up about it when it was happening?
4
The taxi drivers are merely small businessmen who made an unwise investment. It happens all the time -- so what?
And are these the same people who give us cabs with foam rubber spilling-out of cracked vinyl seats, broken a/c, poor knowledge of the City and are lost all the time and don't know the streets?
10
You missed the part when the city promoted these as providing a reasonable income all the while allowing unregulated Lyft and Uber cars. I rarely took cabs when I lived in NYC but I also understood that the drivers for the most part were struggling to make ends meet.
5
@Observer If that were true, there'd be no small businesses. They were lied to, and taken advantage of. That kind of fraud hasn't gone on since before World War II. With all that debt to pay off, no wonder they couldn't replace seats. And you have the nerve to complain?
3
I wouldn’t say “so what” when people’s lives are ruined...
4
Yeah, Bloomberg did a great job running NYC.
I hope the other candidates question him on this at the next debate. Then, they can bring up the MTA.
2
What happened is that Uber/Lyft came on the scene and the value of the medallions dropped. Everyone in every business is exposed to competition. I see nothing in this article that explains how the prices were fraudulently inflated. There is no duty on the part of any seller or lender to be certain that the buyer/borrower can repay their load.
3
@Rich. Why would the other candidates bring up the MTA? One of its main problems is that the NYC Mayor has very little say over it. Although an nominally independent agency, in practice the Governor is the one who calls the shots.
So, has Governor Cuomo recently thrown his hat into the ring? Did I miss that little news item?
2
@Rich The mayor has no control over the MTA.
1
It was the medallion owners themselves that lobbied heavily to limit the number of medallions in order to reap huge capital gains. Uber and Lyft just burst their balloon. The same thing could have happened if city suddenly issued many more medallions.
7
Yes a similar outcome could have happened if the city had issued new medallions. But it would have been REGULATED and would not have necessarily
turned NYCs cab business into that of a third world city.
3
"Taxi industry leaders have denied doing anything wrong, characterizing their actions as normal business practices."
that right there says it all.
7
So NYC decides to create an artificial market by setting a arbitrary cap. The market causes a bubble that ultimately got popped by Uber/Lyft. Regular citizens benefited from better customer service, upfront pricing, reduced discrimination, and greater convenience. So naturally, what does the government do, repeat the process with another cap.
6
@Andrew It was the medallion owners that fiercely lobbied City Hall to limit any increase in the number of medallions. Uber and Lyft just bypassed that barrier.
4
So if I love money in an apartment or the stock market the government will bail me out? What about using this money for something useful like fixing the roads? No one put a gun to anyone’s heads and obliged them to do it.
9
How about charging back the taxi owners who pd 30 grand and sold for hundreds of millions. Why is the tax payer on the hook, not the guys who made the profits.
21
@imamn Exactly. The medallion buyers were betting that they too would make money as prices climbed, money that they would have kept, not the taxpayers. We should not bail them out because that didn't happen.
1
Let's recall that Michael Cohen was investing in medallions, as were a whole class of speculators like him.
The entire medallion program is a deregulated mess and proves once again that the Invisible Hand of Capitalism will smack you down if unshackled from the Commons.
The taxi industry in NYC, particularly in the regulated zone of Manhattan, is a commons. Therefore it must be regulated and maintained as such.
Cohen and others reaping profits from this special exclusion zone is unconscionable and should be illegal. Uber and Lyft should be restrained as well from the exclusive street hail zone.
As an ex-cabbie I speak from 3 years of experience driving a yellow cab in the early 80's.
15
@Smokepainter*
How in the world can you can you call one of the most government regulated program an 'deregulated mess'?
The medallion system was created in 1937 as a government imposed limitation on the supply of taxicabs
New York did not sell any medallions until the mid-90's, when it auctioned slightly more than 2,000. This resulted in such a shortage that by 2014 they were selling for more than $1 million.
This the poster child for the heavy hand of government regulation totally messing up what should have bee an open market
Exactly like Uber and Lyft proved conclusively
3
@Smokepainter* - You have it backwards, the medallion scandal grew out of over regulation. A government created monopoly on street hails and the City cashed in.
3
@Smokepainter* They were not speculators. They were manipulators!
Works out to about $100 a head for each NYC resident. For NYC taxpayers it works out to several hundred dollars a head.
2
@Mandrake Claw it back from the people who gamed the system.
1
This is ridiculous of course. Can I get a refund for the stocks I bought that went down?
15
@Paul Schejtman It was manipulation. Not a bad stock pick.
1
@Paul Schejtman
You can join a securities class action if you were defrauded. Our firm generally is on the defense side though, so maybe I shouldn't say more . . .
1
@lionelqdeveraux This happened in every city with medallions. In Philadelphia medallion prices fell from $500k in 2013 to $50k in 2017. In Boston, they fell from $700k in 2014 to about $40k today.
So a program that starting in the Bloomberg era, and largely occurred during the Bloomberg era, ripped off workers/drivers.
I'm shocked. /s
4
@Yaj - Taxi medallions have been around and traded since at least the early 1960's.
6
Bail them out, take from the many to give to the few.
These loans should be declared null and void. Period.
3
@Martin Exactly! The people who initiated the loans were complicit. Let them take it in the shorts!
1
@Martin
End the socialist thought. No bailouts, large or small.
2
@Martin If that is your attitude, then everyone should give me a dollar.
I imagine the executives at the Taxi and Limousine Commission received bonuses and additional compensation for the inflated Medallion prices. All city money from this thievery is probably gone.
2
Instead of hitting NYC taxpayers with a bill for a situation in which they had no involvement, the NYGA should pass legislation to erase the loans so that the slimeball banksters who put the cabbies on the hook finally get to feel some pain.
16
@Charles Banksters? Don't take the money from my bank. Take it from the people who made millions as the price of medallions rose - the medallion owners themselves.
3
@Charles EXACTLY!
1
Uber spoiled a perfectly good fleecing scheme. Before Uber, we all knew better than to get into an unlicensed taxi. And we trusted the Medallion to ensure the ride would meet the standards of the TLC. And who would ever question the long-term value of those Medallions, those guarantees. Then some geek made an App and the city didn't stop a bunch of amateurs from underselling our Taxi service, devaluing the Medallions and bankrupting our drivers. That's on you, Bill.
11
@wfw The medallions were artificially inflated by lenders. Read the Times piece.
1
@wfw Not sure you’ve ever been in a yellow cab, based on your comments. As a non-resident of NYC who visits 3 or 4 times a year, I can tell you that service has improved because Uber is there; cars are nicer because Uber is there. The “bunch of amateurs” you describe give better service with better cars than medallion cabs. Like rent control, Marxists in NYC can believe what they want. Market will settle it.
2
@JPE —I think you misunderstood wfw’s comment. He was comparing Gypsy cabs to yellow cabs before the apps. He’s not saying they weren’t a fleecing then, but that the presence of the medallion provided a level of trust.
1
Such complete nonsense. The entire concept of medallion as a valuable license was designed to restrict the supply of taxis and create a tradeable asset for the "right" to own a cab. It never protected drivers. It created an asset for "owners" and investors. In fact, a $1M medallion created a "cost" that needed to generate an income for the owner. In simple terms, if a right to drive was worth $1M and had to generate a 10% return for the owner, it created an additional cost of $100K per year for each cab beyond the cost of the cab, insurance, maintenance and driver compensation. It actually burdened the public with higher costs and capped driver compensation. Only the owners made money and now the city wants to compensate speculators and owners (like Michael Cohen of Trump fame and his Ukrainian mafia in-law). This has been a typical NYC fraud from the outset, limiting service, comp for drivers and increasing costs to consumers
10
The hook the politicians are using (and the media is going along with) to engender support for a bailout is that some (many? most?) of the drivers were also owners. Of course, the owners have nothing to lose by allowing this to become the narrative that supports their rescue. Struggling immigrants putting their life savings into an honest business opportunity? Opportunistic speculators? Every case is slightly different and having taken cabs for years (before largely switching to Uber), I'm sure there are many examples of both the Michael Cohens and the unlucky immigrant strivers.
1
Timing is everything (and Tish is certainly not above using her good office to further her political career with DiBlaz a lame duck) and this is putting another millstone around Bloomberg's nomination ascendancy.
The D Machine, National, State, and Local, is pleased.
Is it lost on anyone that the whole lawsuit is less than what Bloomberg has spent on ads and staff, so far.So far.
The people will pay for this in taxes. Just like they paid for the subway extension to Hudson Yards Luxury Community (and new home of CNN):
"The recently completed Second Avenue subway on Manhattan’s Upper East Side...cost far above average, at $2.5 billion...per mile." NYT: https://nyti.ms/2pR3IlH
The people will pay, just like the bailout of the Hudson Yards, $359M; with the whole public cost, $6 BILLION so far:
"In all, the tax breaks and other government assistance for Hudson Yards have reached nearly $6 billion, according to public records and a recent analysis by the New School." NYT: https://nyti.ms/2EYNRXN
And Tish was a Member of the City Council from 2004-2013 and City Advocate from 2014-2018. Don't you remember her vociforouis opposition to all these deals?
Isn't this-as Bernie would say-Socialism for the wealthy?
No, no, she didn't oppose Socialism for the Wealthy.
Ladies and gentlemen, The Democratic Party.
6
I wonder how much impact this will actually have on the national political scene. Outside NY, unclear if the public will care enough; in NY, I would think Sanders and Bloomberg have strong enough bases of support to limit the impact. Same with the other cases you cite - who outside NY pays attention to Hudson yards or the 2nd Ave subway as a political issue? AOC doesn't count as "outside NY"
The medallions were an eschema by the haves with the victims , as usual, the have nots ie have money and have no money.
Party A: The brokers and banks schemed it up making a fortune on the loans and moving the medallions around.
Party B: The city willingly participated in the farce, advocating and advertising getting its pile of medallion tax / cash. Painless tax money.
The losers, as usual , were the little guy. Some immigrants, 1st, 2nd or a few 3rd generation basically all just scuffing along. Sold a scam by money. See Party A and B above.
Meanwhile a Uber and Lyft scrambled in, pumped their stock and laughing to the bank. Of course Uber now moving it’s Corp jobs to Manila I believe? The “service contractor drivers” making minimum wage .
What’s new?
Nothing.....
5
It is such bull that a given mayoral administration washes its hands of past city practices. It is not the Mayor that runs every aspect of every City department at all times. Each administration's successes and failures rest on the back of past history going back decades. Each mayor represents all those past events, and not just what they themselves do now. deBlasio represents the City. As another example, Trump's economic achievements were a clear continuation of Obama's success in turning the Great Recession into huge growth. Trump acts like everything that happens is just because of what Trump does, not simply his additions to past history. This is deceptive. I cannot believe the voters are so dumb as to not see how the present flows from the past.
7
Ban Uber and Lyft for ten years to give yellow cabs an opportunity to catch up
3
@Patrick. That would work!
Finally, some action as a result of the ongoing Times investigation into the medallion bubble and the lending practices that ruined so many who bought in before the collapse in prices!
While this is a key part of the story, much more needs to be looked at closer. Why were Uber and Lyft able to grow stratospherically for years on end and allowed to charge whatever rates they wish, undercutting yellow cabs in the process? Why did the TLC ignore the wishes of the yellow drivers, time and time again? Why was a cap on ridesharing vehicles not put in place until they numbered close to 100,000? Why wasn’t *any* type of environmental, traffic, or economic study done on the growth of FHV’s in a city full of red tape, rules, and regulations? Lastly, why hasn’t anyone responsible for this fiasco, from the current and former Mayor, the current Governor, previous TLC chairs, and City Council members responsible for not reigning in these companies, *ever* been called to testify about what they knew and when they knew it?
Keep up the good work, New York Times. This story, and battle, are far from over...
http://gothamchronicles.net
12
The will of NYers want UBER & LYFT. Yellow taxis are disgusting and you can never find one when you need one.
Please do not fail to highlight that taxi medallions were enthusiastically championed by Mike Bloomberg.
3
@HS Yes, Bloomberg increased the number of medallions against the wishes of the existing medallion owners. Adding more medallions made the existing ones worth less, not more.
2
@HS I do not like Bloomberg, but he actually did the correct thing by issuing more medallions, which lowers their value. Otherwise the bubble would have grown even more.
Sounds to me like Cuomo and de Blasio are at it again. Meanwhile, New Yorkers suffer. Both should be thrown out of office.
4
Why is there no mention of the several tragic suicides of taxi drivers in the last few years?
3
I don't understand why the city is saying it wasn't them, it was the earlier administration. There is no legal significance to a change of administrations. It is the same government and the same liability. Letitia James is not the deepest book in the law library but if that's the city's defence, it is less than a makeweight.
3
Those medallions were a traded asset. The demand for a limited supply kept the price high. Sad to see an attorney general not understand the basics of markets. A disruptive technology upended a sector - enough said. I refuse to pay for someone else market loss. It might be time to leave New York.
7
Those medallion owners signed the contract. Tough luck. It was a gamble, and some lost. Pay up, or declare BK.
8
@lionelqdeveraux But we can't bail out everyone who loses money on their investments. Why are taxi drivers more deserving than everyone else?
3
@Simon You have a heart like a whale Simon!
1
This investigation has a lot of merits. Medallions are traded like shares in a public company. The TLC unnecessarily limited the number of Medallions; thereby artificially increasing the cost of the Medallion, and indirectly, the cost of a cab ride. If public companies manipulate the cost of shares, they are investigated. The TLC should be no exception.
11
Letitia James is suing the City for actions that took place while she was a leading member of the City administration? Is it possible to sue oneself? Who will do the cross-examination if she calls herself as a witness? Will she be considered a hostile witness on direct examination? on cross-examination?
The taxi crisis was caused by many factors, most of which lead directly back to the administration and City Council of the past 6 years. It was clear from the start that allowing the unfettered growth of Uber and Lyft would destroy the yellow and green cab industries, would inflict significant damage on our mass transit systems, and contribute to the greatest increase in automobile traffic in decades.
9
@Midtown Apt None of that is true. Tish James never worked for the city's administration during the events in question. She was a city councilperson and then the public advocate. Not the mayor. Not a commissioner. Not an executive official in the administration at all.
3
@R.J. The job of the public advocate is to advocate for the public. Taxi drivers and medallion owners fall squarely in that class. In the nine years James was on the council, the council did nothing to help taxi drivers or green/yellow medallion owners.
6
Before Uber and Lyft came to NYC, there was no taxi 'market' -- it was a city sanctioned oligopoly where medallion owners paid to participate (hence the inflation in value of the medallion over time). This arrangement benefited both the city and medallion owners to the detriment of taxi riders, who overpaid for lackluster service (ever tried to catch a cab at LaGuardia after Thanksgiving 10 years ago?). The AG's argument that the TLC defrauded medallion owners (and it's not just immigrants who own medallions, but publicly traded companies like Medallion Financial) leaves city tax payers holding the bag twice.
24
@Frank
And it's the taxpayers that elected the officials (mayor and local politicians) who appointed the commissioners.
The only way to bail out the drivers, i.e., to reduce their debts, is to bail out the lenders. But they are the bad guys (if there are bad guys here), aren't they? If a driver owes, say, $700,000 and the lawsuit get the driver, say, $500,000 (paid by NYC taxpayers), the driver still owes $700,000 until he pays off the lender. Perhaps the AG's lawsuit includes the lenders, as well as NYC, so that they can be persuaded to give up some of their claims.
7
@Gary Marton
Naw, it's a total bail out for the lenders (advertised as a help to the poor can drivers- the same one who refused to stop to pick you up in the rain) and the same way the Obama administration bailed out the banks/Wall Street (remind me how many of these Eric Holder went after? That's right, none to speak of). Wonder where all the money is going.
2
No one was cheated.
Medallion prices were sharply rising so cabbies borrowed money to buy them thinking they will make a nice profit.
This is no different than a housing bubble.
26
The bubble burst because of the illegal entrance if Uber.
@JQGALT
This is nothing like a housing bubble because it is the city that affected the change in supply while at the same time encouraging the cab drivers to continue to buy these medallions.
The city and the TLC were complicit in overvaluing medallions and creating a bubble.
Uber or Lyft can’t be blamed for this. NYC dug the graves for the poor cabbies, while the TLC watched.
If we feel comfortable punishing monopolists in the private sector, we should be able to do the same for government monopolies.
NYC must pay!
8
Kudos to Attorney General James. This action is long overdue.
27
Who held a gun to the cabbies’ heads and forced them to buy?
Nobody.
6
@Charles
They overpaid because they thought the market for medallions would continue to rise and they could make a profit selling them ( many did). But quite a few did not recognize it was a bubble and lost (big). How is this different than asking Las Vegas to repay losses of gamblers? Good luck with that.
4
So glad the NYAG is taking action against the City for the scam run by the Taxi and Limousine Commission. Hopefully this results in some compensation and relief to the victims in the taxi medallion scheme. Thank you to the New York Times for shedding light on the predatory practices of the loan sharks that made questionable loans to cab drivers and exposing the underbelly of the taxi industry that enabled them.
22
I don’t usually agree with the AG but on this issue she gets a solid: I AGREE. They did all of that and then calmly and happily welcomed UBER and LYFT on to our streets. Their actions cased the value of medallions to crash and our streets to fill up with massive SUVs rolling around waiting to be called. Did someone get a nice campaign donation?
The mayor smiled and laughed. The governor said let’s deal with the congestion with congestion pricing! More New Yorkers were unable to use cabs while public transport became dirtier, more unreliable and more unsafe. Does anyone go into government to serve the public? It’s really sickening.
I hope the AG wins and I hope the defrauded cabbies do too!
42
@Justice Holmes
The cabbies won't win. The money will go to the lenders. Watch it.
1
The taxi medallion crisis is a criminal scheme to defraud working-class immigrants of millions of dollars. Many medallion owners mired in debt have committed suicide in the face of unregulated on-demand apps. Everyone involved in this, up to and including the mayor, should face criminal charges.
29
This is ridiculous. The cabdrivers are adults not children and knew or should have known to investigate the return on medallions before making an investment. You do not need to be Professor Higgins or have a PhD in Finance to know that minimal income + minimal assets + million dollar loan = disaster. These drivers chose to go into debt to purchase medallions, they were not rooked and they should not be bailed out. They took the risk, let them deal with the fallout. When will nonimmigrant Americans receive financial assistance from the government? Many are in need, such as homeless veterans, can they be helped first?
24
@Lynn in DC
I agree that non-immigrants are in dire need as well but that does not make this issue less worthy due to the the immigrant status of majority of the beneficiaries.
People fall for scams all the times-hence the need for law and its enforcement.
The vulnerable need protection from predators in civlized societies.
2
@mari Except this wasn't a scam and the medallion buyers are not vulnerable. They knew the deal going in.
2
@Lynn in DC If you read the series of articles in the Times last year or the mention in this article you would know that the City issued hundreds of NEW medallions, engaged in an auction scheme bidding up the value to unheard of prices and lured would be medallion owners in with statements that it is a great investment and better than the stock market. If it had been anything other than the unregulated NYC taxi medallion market, the SEC and state regulators would have been on them in the proverbial NY minute with civil and possibly criminal charges. Of course the buyers were adults and nobody held a gun to their head to go into debt, but fraudulent statements were made to them which they (maybe) reasonably relied on and beyond that, the City didn't do anything to control the pump and dump market of the private owners who controlled many licenses and steered the new bidders to expensive financing.
What about the fraud when NYC’s money was used to pay for Sweetheart projects upstate...
9
Thank you NYT and Ms. James. The TLC should be blown up and the entire system needs an overhaul. It’s corrupt and does not work in the best interest of the drivers.
12
Excellent work calling them to account. But, how is this going to unruin the lives of the victims?
5
This is yet another example of errors committed by the city during Mayor Bloomberg's tenure that should be discussed during the presidential primary debates. The gap between Bloomberg's ads and reality is glaring.
16
We are still left with one overwhelming problem. These drivers willfully took on the debt. Their greed in doing so (attaining 'the American dream' of wealth) should not be rewarded with bailouts. This is what bankruptcy exists for. That's part of the American Dream as well.
39
@Jimmy Clearly you are uninformed about the industry. None of the drivers purchased a medallion to become wealthy. They did it as a way to finance retirement since the medallion could be leased upon the owners retirement and also to escape the greed of the fleet owners who are constantly dipping their hands into the pockets of drivers. These drivers trusted the TLC who heavily promoted medallion ownership. They wanted nothing more than a tiny piece of the American Dream and there is nothing wrong with that.
51
@Anty I am not uninformed about the obligations of debt. To relieve their debt sets a bad precedent. Tax payers should not be held liable for these debts. Go after the previous owners who profited from this as would happen in any other instance (ala Bernie Madoff).
5
@Jimmy
The city clearly deserves a fair share of the blame.
It's only fair that they have to pay up too.
4
I look forward to these investigations debunking the myth that the invention of ride sharing apps precipitated this crisis and holding TLC leadership accountable. A medallion that might generate roughly $30k in income annually cannot be worth >$1 million, yet the TLC sold them for exactly that to some of NYC most vulnerable residents.
86
@Alexander - Taxi medallions work 24/7 365. It is the drivers that change shifts. The medallions generate several hundred thousand a year in revenue.
9
@Mkm That's true about most medallions which are leased to drivers by the companies that actually own them, but the victims the Times and AG's investigations have focused on driver owned medallions. These drivers spend their lives trying to pay off the debt on their medallion purchase all while trying to support their families. After expenses the margins for these drivers is incredibly narrow.
8
@Alexander - Sorry, but the owner driver rents out his medallion when he is not working, just like the big boys.
2
Seems like the taxi market could be made more stable somehow.
How about the other inequity of allowing Uber and Lyft free access to a market that cab drivers had to pay to enter with a medallion? I’m not against innovation, but I always felt those companies should have been forced to compensate cab drivers for freely poaching on their livelihoods. I was amazed the city didn’t act, or that they weren’t sued.
142
Exactly!
These taxi drivers bought medallions under the notion that they had exclusive rights for ride hailing fares.
Either Uber and Lyft need to pay similar fees or the city needs to refund the taxi drivers.
Sadly, rather than innovating the NY Taxi agency just promoted those annoying video ads in the back of cabs rather than rolling out a similar app or partnering with Lyft or Uber.
54
@Ken Kramer:
That too.
It was Bloomberg that let Lyft and Uber into the "market" in 2013. He was of course mayor in 2004, when this rip off taxi drivers scheme started. Seeing a pattern.
Not that De Blasio has done much about the Uber/Lyft mess.
24
@Ken Kramer NYC has always given Yellow Cabs exclusive rights to street hails. That remains the case. Uber/Lyft do prearranged pickups, something that had been done for years before apps made it easy. Dial 7, Carmel Limo, and similar companies were doing business long before e-hailing came around. You could call them and have a car come pick you up. An app bypasses the phone call and you can see your car on its way. Uber and Lyft in NYC have always been different than their quasi-legal operations in other jurisdictions.
9
Perhaps justified, but I don't like the smell of this for several reasons:
- There is no doubt that ride sharing services have negatively impacted the cab industry.
- James was a city councilperson during the period in question.
- It's no secret that Governor Cuomo and Mayor de Blasio are feuding.
- It would seem like, despite their differences, an alternative to suing in court would save city and state taxpayers a lot of money.
Last time I checked, NYC is an integral part of NYS, with common interests. Speak to each other for Pete's sake. We're on the same team!
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@Dave So you don't think that anyone in the highest levels of NYC government is in cahoots with the taxi industry? Because if you do, the only way to root out the corruption/ conspiracy is from without. I say bravo to Ms. James for taking on the perpetrators of the city's other financial crisis.
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AG performance thus far has been disappointing.
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But it’s definitely been a “performance”.
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"Taxi industry leaders have denied doing anything wrong, characterizing their actions as normal business practices."
Absolutely, Normal business practices, especially in New York, are usually criminal in nature.
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@george eliot Not just NY.
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