Yves here. Michael Hudson regularly calls for debt jubilees as a way of keeping rentiers from eating the entire economy. Even rational lenders recognize that extending credit ever and always results in some losses; even the most capable borrowers and shrewd financial players still run into “shit happens” train wrecks through no fault of their own. In the stone ages of finance, it was routine for banks to restructure loans if the borrower still had some capacity to make payments. But the brave new world of securitization created rigid contracts and created bad incentives, resulting in a lot fewer quiet workouts at the retail level (the end of credit training programs at big banks also resulted in the end of branch managers who were authorized to and capable of making/overseeing consumer workouts).
Here we have a rare example of a rare success in winning significant debt relief: salvaging New York City medallion owners, some of whom even inherited hefty taxi debts from a parent.
And I hope this development is also a harbinger of a turn in fortune for taxi drivers, who have seen their incomes gutted by investor-funded predatory pricing by Uber and Lyft. They’ve now been jacking up prices to the degree that I am hearing complaints in my gym (and Birmingham is not a taxi town; this is experiences while on the road). It looks like Uber, now facing difficulties in many markets with its gig model and having to pay more for drivers-as-at-least-sort-of-employees, is now raising prices significantly, way above what cabs would charge. If this persists, you’ll see some reversion to taxis.
By Samantha Maldonado, smaldonado@thecity.nyc. Originally published at THE CITY on November 3, 2021
Taxi workers celebrate ending their hunger strike after making a deal with the city. Ben Fractenberg/THE CITY
It was a day they hungered for, but feared would never come.
Cab drivers on Wednesday broke their hunger strike after reaching an agreement with the city to restructure the crushing debt that’s devastated many taxi medallion owners.
The cabbies danced outside of City Hall, with chants of “No more suicides” ringing through the brisk air. Some cried from their seats nearby, snuggling beneath blankets. Others savored the taste of avocado, the first food they’d eaten in over two weeks.
For 46 straight days and nights, cab drivers and their allies have protested outside City Hall — escalating to a hunger strike for the past 15 days as they called on the city to step in and help ease their overwhelming financial burden.
“I couldn’t be happier right now,” said one of the hunger strikers, Augustine Tang, 37, a driver from Brooklyn. “I’m so relieved. We didn’t ever think it would get to this point. What people don’t really see is that we have been here for years. We’ve been protesting for so many years.”
Under the agreement, Marblegate Asset Management — the private equity firm that is the largest holder of medallion loans — will restructure loans to a maximum of $200,000, which then decreases to $170,000 with a grant from the city of $30,000.
The interest rate will be capped at 5% over a 20-year term, which will amount to monthly payments of $1,122. That’s a far cry from the hundreds of thousands in loans some drivers long carried as medallion value plummeted amid competition from app-based rideshare services.
Tang’s father, originally from Hong Kong, drove a yellow taxi. When he died in 2015, Tang inherited the medallion and the associated $530,000 in debt. He carries on his father’s legacy through driving — and fighting for a win.
“I hope he’s proud,” Tang said, tearing up. “I’m sure he didn’t want me to go through what I went through throughout this journey, but us winning has to be something.”
‘We Relax Now’
The deal will work in tandem with the city’s federally funded $65 million Medallion Relief Program, which had provided $21.4 million in debt relief for 173 medallion owners as of Oct. 30.
“Taxi workers have worked tirelessly to make New York City the most vibrant city in the world, and we refuse to leave them behind,” Mayor Bill de Blasio said in a statement.
The city’s number is somewhat higher than the $145,000 maximum loan the New York Taxi Worker Alliance, which represents 25,000 taxi and app-based drivers, had sought. But crucially, the city agreed to guarantee the principal of the loans in case of default.
“The guarantee was the biggest thing we needed,” Jaslin Kaur, a former candidate for City Council from Glen Oaks, Queens. “Without the guarantee, we knew drivers would default on their loans and, without having a protection plan in place, that lenders would be able to abuse many drivers, too.”
Jaslin Kaur celebrates the end of the hunger strike with her father, Partap Singh. Ben Fractenberg/THE CITY
Kaur’s father, Partap Singh, 62, has been a taxi driver for three decades. Burdened with debt from the medallion market’s crash, the family had relied on food stamps and Kaur was forced to drop out of New York University. The experience drove her to run for office.
On Wednesday, the darker days were behind the father-daughter duo. Singh grinned from ear to ear as he hugged his daughter and fellow strikers.
“After 30 years, I never would have thought about it at this stage. It’s so amazing,” he said. “We have a lot of plans, but first of all, we relax now.”
‘We Made History’
Many cabbies shoulder debts as high as half a million dollars and more — loans they incurred after the pre-pandemic collapse of the taxi industry. The medallions that were once worth as much as $1 million dropped to a fraction of what they cost, due to the growth of app-based rideshare companies like Uber and Lyft.
The pandemic further decimated ridership, preventing the drivers from paying for costs like repairs and insurance.
Reporting by The New York Times brought the plight of the medallion owners to a wide audience, helping galvanize support for the struggling cabbies.
At least nine indebted drivers have died by suicide, including Kenny Chow, who took his lifein May 2018 at the age of 56. An immigrant from Myanmar, he’d bought a medallion for more than $750,000, worked seven days a week and couldn’t get out from under the weight of the debt, on top of paying for cancer treatment for his wife, who later died.
Kenny’s brother, Richard Chow, 63, also a cab driver, took part in the hunger strike for 15 days. He said his happiness at the deal with the city almost made him forget his hunger and dizziness.
“Finally, we made history, and I’m very proud,” said Chow, who lives in Staten Island and said he owes nearly $390,000 to his lender. “I’d like to see my brother alive. If it were three years ago, my brother … would be here for this celebration. But I miss my brother, I’ve broken my heart.”
Chow said if he had the opportunity, he’d tell his brother: “We’re going to save 6,000 medallion owners. No more suicides. No more bankruptcy.”
‘This Means Everything’
Several elected officials and candidates participated in the hunger strike, including Assemblymembers Yuh-Line Niou (D-Manhattan) and Zohran Mamdani (D-Queens) and City Council Member-elect Shahana Hanif (D-Brooklyn).
We just broke our hunger strike. And let me tell you. The dates and avocado are…the best I’ve ever had. pic.twitter.com/GfBCT86oLs
— Yuh-Line Niou (@yuhline) November 3, 2021
They organized with groups, including the Democratic Socialists of America, the Street Vendors Project and City Workers for Justice to seal their deal.
“This means everything. It’s rare that everything you fight for you win,” Mamdani said. “It’s not a half victory, it’s not an almost victory, it’s a complete victory. These drivers have won what they deserve.”
Hanif, who participated in 10 days of the hunger strike, told THE CITY that Senate Majority Leader Chuck Schumer called her before her election night victory party in Gowanus Tuesday to say he was anticipating good news.
“He’s a constituent of mine, so it feels good to have him as a champion in our corner… Schumer and his staff have been making daily phone calls,” she said Tuesday night. “What we’re doing is working.”
Looking Ahead
As the cabbies celebrated with cheers and music, a brighter future loomed before them.
Tang said the newly “sustainable mortgage” for his medallion means he and his wife can make plans for the rest of their lives.
“I can have a family now,” Tang said.
He pointed to the dozens of older drivers around him who could now embrace the possibilities for their lives, too, beyond paying off a mountain of debt.
Mamdani, although rejoicing in the victory, said the fight is far from over.
“The city has a huge responsibility that it has reckoned with at this moment, but we can never forget Uber and Lyft,” he said. “In terms of what the future holds, it continues to be accountability for this crisis and to hold those actors accountable.”
This story was originally published by THE CITY, an independent, nonprofit news organization dedicated to hard-hitting reporting that serves the people of New York.
29 comments
Comments are closed.
This is one of the best wins this voting week for these people, and for NYC. That and getting rid of de Blasio. I do hope to see the death of uber and its ilk soon and the return of thousands of taxis running up 1st Ave everyday. So Schumer thinks debt relief for bankers and taxi owners is great. Well, he’ll kick soon and we can get a senator who cares about debt relief for the rest of the citizenry too.
So glad to hear this!!!!!!!!
Was up in Toronto recently and taxi drivers there are in same boat. Hope they find relief as well. (Finding a taxi in Toronto was near impossible)
Yes that’s true, I follow a group of Canadian Taxi drivers on Twitter and so far it is a disaster. They lost their money for retirement.
This New York event is the best thing that happened for 5 years at least for me.
The medallion holdings would not be in their predicament if the City simply enforced jitney laws.
Can’t believe nearly no one in “progressive ” media is calling this out.
Heck jitneys have been underground for decades (see the August Wilson play) but hey, guess Uber-Lyft made it respectable to City Hall.
“Ask for forgiveness, never ask for permission.” motto of our age
Crime pays.
Crime pays off politicians.
In the pay to play politics of neoliberalism, crime is a legitimate political business.
I drove taxi for 16 years in Minneapolis ending in 1993, licensing was quite strict and number of cabs limited.
I was amazed at how easy it was for Uber to barge in and destroy the taxi business, and kept waiting for the city fathers to come to their senses and outlaw the transgression.
They did nothing.
I still have friends who drive, and they tell me that their former PMC type customers are fond of standing at the head of the traditional taxi stands downtown while pulling out their phones and summoning an Uber driver.
It’s as if they want to rub it in, that somehow they have a grievance related to the traditional taxi service and this overt display of contempt, which it is, is going to send a message.
The message is this;
“I’m smart, and I know how to get a good deal, …and you had this coming to you, and besides, I don’t like you because you are occasionally rude to me when I behave as if I am superior to you.”
The real message is this;
“I have the same reluctance to pay the fair price of anything, and the same contempt for the working man as my boss does.”
I keep thinking of Uber and Lyft and PE are like the Grasshoppers in the Pixar movie “A Bug’s Life”.
x100!
While I feel for the taxi drivers, I do hold a certain amount of contempt from the pre-Uber days. I still remember the days of being stood up and/or having to order a ride hours before you actually needed them.
While Ubers practice’s were abhorrent I did appreciate taxi’s finally needing to get their [Family Blog] together once they no longer had a monopoly
On a private equity firm owning the medallion loans:
The fact that Youngkin spent decades as CEO at the predatory Carlyle Group did not come up in the VA governor race was because McAuliffe had stock there.
But I was reminded of the 2012 election between Romney and Obama. There was a lot of talk about how Bain Capital, Romney’s firm, preyed upon businesses. Reuters did a big piece on Bain’s method of operations.
What I don’t understand is why hasn’t Uber/Lyft been forced to pay. Their business was technically illegal and they damaged the value of the medallions.
Great news! Thanks for this post.
Why do governments regulate the NUMBER of taxis in the first place?
My understanding is to keep cars off the street. An unlimited number of cars circling the street waiting for a fair is a negative externality to everyone else, plus increased traffic if people find it easier/cheaper to take a taxi rather than public transportation
Probably to keep the streets from becoming glutted with taxis. You really only need so many taxis in any particular place. It wouldn’t make sense to give out unlimited medallions.
Without limits, you get so many taxis that owners cannot make a living, let alone maintain their vehicles.
You don’t want thousands of desperately poor taxi owners driving unsafe vehicles, and as would become common, letting just anybody drive those vehicles to make a little extra money.
It’s so hard to make a buck owning an Uber car that owners have been reported leasing their cars to known criminals in their off hours.
This is the sort of thing that results in real, licensed taxi owners having their licenses revoked, an possibly being prosecuted.
Uber and Lyft have demonstrated the down side of unregulated free markets as concerns car services.
An over-supply of drivers during the Depression led to mayhem among drivers competing for fares. The medallions were intended to limit the supply of fare-seeking cars on the streets and to regulate the industry.
Maybe read Hubert Horan series he explains the taxi business well.
Watt4Bob:
Someone got paid off, I would think. The taxi medallion was a rent (as in rentier) and the city fathers found it to their advantage to impose it, presumably to get payoffs or to make the payoff business good for their rich friends (the economic ancestors of whoever the present medallion owners owe hundreds of thousands of dollars to). I’d assume Uber and Lyft somehow outbid those who profited from the medallion business, possibly with funny money. There is a consideration of old-time million-dollar medallions here: https://www.reuters.com/article/idUS127464283420111021 which connects the price of the medallion in New York with interest rates. So if you drive a cab, own a cab, or pay for a ride in a cab, you’re once again paying rich people for being rich. No wonder it goes over well with the city fathers!
The way I understand it, Uber’s lawyers would tie the city up in endless litigation if they attempted to stop them.
Not a satisfying answer but if true I can understand.
It seems there was also legislation passed to enable TNCs, Transportation Network Companies.
From the timeline involved, I’d speculate the lawyers held the hounds of law enforcement at bay until lobbyists were successful at getting legislators to pass enabling legislation.
I’ve never understood the antipathy towards taxis as an industry. What I like about taxis is the accountability/security of having a licensed (to operate a taxi ) driver who’s undergone a criminal background check (something I usually don’t care about, but if I’m getting into a stranger’s car alone it’s a little different) and might even be a member of a union. I also like the smooth ride in the taxi itself, rather than whatever car an Uber or Lyft driver happen to be driving.
Not sure where your taxi experience has been, but, pre-uber, downtown Chicago cabs were often not smooth, unless your definition of smooth is wild aggressive driving on rough streets in an often smelly car with worn out seats, no seat belts, bad climate control and a bad suspension, possibly taking you for a financial “ride” by taking the “long” way (in pre-gps days).
I’m no fan of Uber, but if taxis were doing it right, Uber never would have found a foothold.
Well, let’s see.
Taxis:
1. Unreliable pickup.
2. Had to call phone number.
3. Expected to tip.
4. Unknown cost.
5. Had to pull out credit card to pay.
Uber:
Opposite of 1-5 above.
Just one question: how do you pay for Uber if not credit card? And surveillance does not bother you? (They know who you are, where you live, who you meet with for how long etc?)
I’ve lived in Philadelphia for 20 years. I much prefer actual licensed cabs over the apps. I try to pay them in cash because I know they get the money faster that way. And I have no problem tipping as an act of solidarity.
Refinement to last section after thinking about it a bit.
That’s why all those ancient civilisations collapsed.
They focussed on making money, not creating wealth.
All the money concentrated in a few hands and the economies collapsed.
Money is an instrument for carrying out transactions in the economy, and if a few people have got nearly all of it, the economy fails.
GDP actually measures what is purchased in the economy.
Things have to be produced and purchased to generate meaningful economic activity.
The Chinese discovered that building lots of empty cities doesn’t add to GDP, there were no buyers.
I hate to sound unsympathetic and cynical but…
Let me see. In the 1920s NYC issues “licences” to operate a taxi. The owners of these “Medalions” use pressure to limit the number of taxis. They all gravitate to Manhattan, where the big money is. The outer city gets angry and a second layer is set up to serve them- but only for trips originating or ending in Queens, Staten Island, etc., which protects the Medalian monopoly. Too few licences= Medalian price increase (and a rise in fares to cover the price increase). The little guys I knew (highly literate, ex-socialist Jews-without-formal-education) sell out to pay for the kids to go to Brandais. Medalian prices rise, the public gets more angry. The big guys see the writing on the wall and start selling the Medalions on time for a million-or-so with financing provided by some related insiders. Uber arrives, spots the practical flaw and legal loopholes in the sytem and begins to easily undercut the monopoly, an activity which is hard to police since the Uber cars aren’t painted orange. Midtown people love it; at last I can get a ride without using the bus and it costs less than the Yellow Cab which nevers stops for you in the rain.
Some big companies that were slow to sell, the people who gave the loans, and the latest bunch of hopeful “I really will work 12 hr/day to get equity and hope to become a millionaire like those guys in the 1950s and 60s” immigrants are left holding the bag. Unlike Fannie and Freddie there was no implicit government guarantee for these loans. “Implicit guarantee”? Who cares. The new game is to stick the public with the bill. The immigrant buyers don’t want to go bankrupt, loose the investment, and have to get a job in a sweatshop or resturant (is there a difference?).
So it is “pull the heartstings” time. Cue the violins. Poor, innocent victims (the would-be Medalian rentier who just wanted to get rich) go on a hunger strike to avoid the factory jobs. The violins play; the public pays… actually “gurantees” the restructured loans (which somehow don’t count as part of the city’s bonded indebtedness ration). If the loans don’t get paid… don’t worry, the city papers will not cover the defaults and city payouts; the lenders in the Ponzi scheme get their money; the immigrants hope Uber dies and the value of the Medalalians goes up.
Heads we win; heads or tails you lose. Isn’t Capitalism wonderful?
“Yellow cab never stops for you in the rain” it sounds like song lyrics. Cue the song : “taxi” Harry Chapin https://youtu.be/c5dwksSbD34
The London Black Cabs used to be reasonably priced , and well controlled. Now they appear expensive.
I do believe London would benefit from prohibition or private cars in favor of cabs and buses.
The tubes have become much more unpleasant as London grew. They are now hot and crowded for extended periods in the day.