By Elisha Pierre
Years after the financial malfeasance and predatory lending practices within the yellow cab industry came to light, the New York City Council passed a bill, signed by Mayor de Blasio, to create the Taxicab Medallion Sale Prices Task Force. Its purpose: to study the state of the City’s taxi medallion industry. After six months of finger pointing, the Task Force released its report, and what it lacks in actionable recommendations is only matched by the glaring omission of the main reason why the taxicab industry is facing a financial crisis in the first place: a predatory lending system for taxicab medallions aided and abetted by City Hall.
New York’s Attorney General seems to agree. Letitia James is now accusing the City of fraud – claiming it artificially inflated the value of yellow taxi medallions. And that accusation comes with a hefty price tag: James wants $810 million from the City. That money will go to taxicab drivers who have been faced with enormous debt ever since prices exploded early last decade and the average medallion jumped to more than $1 million, a 500% increase. An investigation by James’ office shows the City’s Taxi and Limousine Commission profited from the sale of thousands of the overvalued medallions at auction, often at exorbitant prices. Now, she says the City must offer the taxi medallion owners financial relief within 30 days. If not, she will sue for fraud.
It’s welcome relief to drivers, who have been operating under this inflated system for years. They’ve watched the cost of their loans for the medallions grow to the point where the medallion is essentially worthless and they’re paying far more for the loan than they ever paid for the medallion. They’re under water, unable to make their monthly payments, mirroring what homeowners went through in the housing crisis that led to the Great Recession. And just like in that situation, lenders, who knew the medallions were wildly overvalued, engaged in behavior similar to how mortgage lenders acted right before the housing crisis. American dream? More like American nightmare.
Now, back to the Task Force’s report. Does it address the underlying predatory lending schemes perpetrated by City Hall and the financial lending industry? No. In fact, the term “predatory” does not appear once in the 76-page report. What the report does offer is a series of unclear recommendations for further study. The one thing we do agree is its idea of a “modification program for distressed medallion owners.” What the City left out of this recommendation is exactly who would pay for such a program. While it’s unclear how the money James is demanding from the City would affect these plans, it’s certainly a step in the right direction.
Thousands of taxicab drivers, many of them of Haitian and Caribbean origin, have suffered for the last several years due to these predatory practices, and they need real help. Not in the form of vague calls from a City Hall taskforce for upgrading taxicab smartphone apps or a “public safety awareness campaign to help curb illegal street hail activity.” If City Hall wants to right the wrongs of the past for thousands of taxicab drivers, it should begin by looking to the very people responsible for their financial ruin in the first place – the banks, the lenders and the politicians who enabled them.
Elisha Pierre is the Operations Director of the Haitian American Caucus-US, Inc, which is a global community development nonprofit organization whose mission is to provide Haitian communities around the world with access to information and resources that will foster self-development and success.