NEW YORK–While the credit union industry would like to put the taxi medallion loan debacle behind it, that isn’t the case for many drivers, including a group that has been on a hunger strike for more than 11 days over the debts they owe on their loans.
According to National Public Radio (NPR), the drivers say they are being crushed by debts they took to purchase the medallions, which once were worth more than a million dollars each but which now are worth about a tenth of that.
Taxi medallion prices hit a peak just as ridesharing apps like Uber and Lyft began to gain in popularity. The COVID-19 pandemic further dented an already hurting industry, leaving drivers with big payments due on collateral on which they are significantly underwater. As CUToday.info has also reported, some drivers have committed suicide as they fell further into debt.
The drivers on the hunger strike are subsisting on water and coconut water hoping to force the city of New York’s hand to provide debt relief, according to NPR.
‘Pushed to the Edge’
Joining them in their protest is Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, an organization that says it represents some 21,000 drivers in New York City, NPR reported.
“It’s dangerous and it's drastic,” Desai told NPR. “And I tell you, we've been pushed to that edge. We have been trying for over two years to have the city listen to us and sit down with us. This campaign…really started for us about six years ago, where we first started to meet with the banks and the credit unions. The average debt is over $550,000. And I do want to state that the reason we're in this crisis is essentially the fault of the city of New York. The city is the one that issued the medallions in the first place….The city inflated the value of the medallion. They engaged in direct mailings and ad campaigns to an almost exclusively immigrant driver workforce, mostly people of color, to sell them the American dream through this medallion.”
Desai said the city has provided relief to some medallion owners, but it has done little to help with the total debt held by many drivers.
NCUA Sells Portfolio
After the National Credit Union Share Insurance Fund lost approximately $750 million related to the failure of a half-dozen CUs that specialized in making taxi medallion loans, in early 2020 the agency sold the portfolio of taxi medallions it came to own due to conservatorships for $350 million to Connecticut-based Marblegate Asset Management.