The New York Attorney General’s office and New York Mayor Bill de Blasio have both ordered investigations into the practices of the taxi industry that has resulted in drivers saddled with crushing debt after being steered into costly loans.
According to a report in The New York Times, the Mayor of New York is investigating the brokers who helped arrange loans that skyrocketed in price over a period of years so taxi drivers could purchase medallions. While officials have long blamed Uber and Lyft, the ride-hailing startups, for New York City taxi drivers’ woes, a New York Times report over the weekend revealed that it was the inflated prices of the medallions and expensive loans used to purchase the medallions that are crippling drivers.
The moves on the part of the NY AG’s office and Mayor de Blasio are the first steps in addressing the problems that have hurt the yellow cab industry in New York City. According to the New York Times report, a handful of leaders in the taxi industry artificially boosted the price of the medallion — which is necessary in the city to own and operate a taxi — and then made hundreds of millions of dollars by giving low-income buyers loans they couldn’t pay back. The paper likened it to the real estate bubble that led to the financial crisis in 2008 and 2009. The paper noted the government was part of the problem by selling medallions and saying in ads purchasing one is better than investing in stocks.
“Our office is beginning an inquiry into the disturbing reports regarding the lending and business practices that may have created the taxi medallion crisis,” an office spokeswoman for New York Attorney General Letitia James told The New York Times. “These allegations are serious and must be thoroughly scrutinized.” Meanwhile, Gov. Andrew M. Cuomo said through a spokesman that he supported the inquiry. “If any of these businesses or lenders did something wrong, they deserve to be held fully accountable,” the spokesman said in a statement. As for Mayor de Blasio’s investigation, the paper said the city will go after the loan brokers who arranged the loans and in some cases lent their own money. There will be a 45-day review to identify and penalize brokers that misled city officials or took advantage of medallion buyers. The review will also result in new rules that prevent brokers from preying on taxi drivers.
Bhairavi Desai, the founder of the Taxi Workers Alliance, which represents drivers and independent owners, told The New York Times that the city was complicit in many of the problems and as a result shouldn’t be able to investigate the allegations.