ADVERTISEMENT

NYC’s De Blasio Rejects a Rescue for Cabbies Facing Bankruptcy

New York Mayor Blasio said he opposes a bailout for cabbies struggling with expensive loans they took out to buy taxi medallions.

NYC’s De Blasio Rejects a Rescue for Cabbies Facing Bankruptcy
Bill de Blasio, mayor of New York City and 2020 presidential candidate. (Photographer: Sergio Flores/Bloomberg)

(Bloomberg) -- New York Mayor Bill de Blasio says he opposes a bailout for cabbies struggling with expensive loans they took out to buy taxi medallions that have since tumbled in value because of competition with Uber Technologies Inc. and other app-based ride hailing services.

“I have to be honest,” de Blasio said at a news conference Monday, when asked about a potential rescue. “We just went through a budget process where for the first time we asked agencies to find savings and efficiencies at a high level.”

NYC’s De Blasio Rejects a Rescue for Cabbies Facing Bankruptcy

The city can’t afford to “add a substantial expenditure to our budget,” he said, while promising his administration would “help in a lot of other ways.”

The value of taxi-cab operating licenses crashed with the advent of tens of thousands of competing drivers for app-based services since 2014. At least nine drivers have committed suicide in the past two years as the financial pressure on the industry worsened, including one who shot himself outside City Hall’s front gate last year.

More than half of the city’s taxi drivers surveyed say they’re struggling to pay monthly bills and 26% are considering bankruptcy, according to a report released by de Blasio Monday. While the administration found numerous instances of predatory lending and other abuses, it placed blame on the industry for its problems, not on city officials who promoted medallion sales for years. Some city council members have said New York has an obligation to help, given its role in marketing the licenses.

The mayor’s report found that brokers failed to provide written agreements explaining the terms of their relationships with buyers or sellers of medallions in more than half the instances reviewed.

De Blasio, who is running for the Democratic presidential nomination, said the city would start compelling companies that finance the purchase of taxi medallions to prepare written documents for all transactions and disclose conflicts of interests when brokers also act as lenders. It also called for establishing a “driver’s assistance center” offering financial advice and mental health counseling. Investigations into predatory medallion lending practices will continue, the mayor’s office said.

Those actions aren’t enough, advocates for drivers of taxis and electronically hailed for-hire vehicles said.

“The mayor’s report and recommendations on the medallion predatory lending scandal fall short,” Bhairavi Desai, executive director of the New York Taxi Workers Alliance. “What we need right now is more than a report on what city rules have been violated -- we need an immediate end to the financial devastation that drivers are facing.”

Desai said the mayor’s office “grossly miscalculates” the cost of refinancing loans and forgiving medallion debt by placing it at about $13 billion. Her organization estimates it at no more than $2.7 billion. The city’s budget for the 2020 fiscal year totals almost $93 billion.

To contact the reporter on this story: Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, William Selway, Michael B. Marois

©2019 Bloomberg L.P.