NEW YORK CITY–A number of new bills have been introduced in this city aimed at helping to mitigate the debt crisis being faced by New York City taxi drivers who borrowed hundreds of thousands of dollars to pay for taxi medallions.
In addition to introducing the new legislation, New York City Council members grilled officials with the city’s Taxi and Limousine Commission (TLC), which regulates the taxi industry, over the debt crisis, which has ballooned as the value of medallions declined sharply from their one-time high.
As CUToday.info has reported, at least six New York City credit unions with high concentrations of taxi medallion loans have failed, with an overall cost to the NCUSIF of nearly $750 million.
“The city had no interest in reining in the market, and breaking up the party because there was money to be made,” said Bronx City Council member Ritchie Torres, who is the chair of the council’s oversight and investigations committee, according to a report by NYCurbed.com. “Drivers who were promised the American dream have been given a nightmare, and the city that sold them that American dream ultimately sold them out.”
Response to Media Investigation
The Council meeting included numerous references to a two-part New York Times investigation, of the taxi medallion lending industry, that uncovered a number of questionable practices, including by credit unions. Between 2001 to 2013, the Bloomberg administration auctioned 1,260 medallions with a maximum winning bid of $524,000; in 2014 the de Blasio administration auctioned off 200 medallions with the highest winning bid at $965,000, city data shows.
Some borrowers are more than a half-million dollars in debt on medallions now worth less than $100,000. According to the Times, at least a dozen taxi drivers with huge outstanding loans have committed suicide.
An Eerie Forecast
According to NYCurbed.com, at least one person predicted the taxi medallion crash even before the emergence of ride sharing services such as Uber and Lyft.
“The looming threat was predicted in a 2011 report compiled by Gary Roth, who was hired by the city in 2010 to analyze taxi policy, warning that if the city did not take action, the loans drivers were taking out to pay for medallions would become unsustainable and the market would fold,” NYCurbed.com reported. “Acting TLC commissioner Bill Heinzen, who has been with the agency since 2015, said the report only surfaced recently and that it was only made available to him last week. Council members requested a copy from TLC three weeks ago, but received the report three hours before Monday’s hearing, according to Torres.”
Credit Unions, Banks Blamed
After repeated questioning, Heinzen acknowledged that TLC has played a role in the crises but emphasized the responsibility of lenders—including predatory lenders and the National Credit Union (Administration)—and state and federal regulatory agencies, NYCurbed.com reported.
“Yes, I accept responsibility for what TLC has done for what I have done to make this crisis worse,” Heinzen said. “I have tried to explain today my belief, I know you don’t want to hear it, but that other people are also responsible. The main cause of this is the banks and credit unions.”
Legislation Introduced
According to the report, the new bills drafted by Torres would create a department within TLC to evaluate the taxi industry’s financial stability. Another bill brought forward by Council member Ydanis Rodriguez, the chair of the transportation committee, would require TLC to “evaluate the character and integrity of taxicab brokers, agents, and taxicab licensees.” A third bill, introduced by Council member Adrienne Adams, would require the agency to review annual financial disclosures from those who are interested in a taxi license. Lastly, Council member Francisco Moya is sponsoring a bill that would restrict the sale or transfer of a taxi license unless TLC reviews the funds that are being used, NYCurbed.com reported.