Following a 45-day review of the conditions that led to a financial crisis in the taxi industry, the de Blasio administration is calling for increased transparency and oversight for the purchase of medallions, including the requirement of agreements that would define a broker's obligations and disclose any conflict of interest.
However, the report, which was released on Monday and focused on the questionable practices of medallion brokers, notably stopped short of recommending a bailout for the thousands of drivers who are struggling to pay back large loans.
Medallions owners have begged the city to come up with a bailout plan to relieve debt-ridden drivers as well as put pressure on lenders to forgive portions of the outsized loans. According to the city, the average outstanding loan on a medallion is $500,000. (The Taxi Workers Alliance has put the figure as closer to $600,000.)
“We need to see owners drivers be made whole financially,” Bhairavi Desai, the founder of the Taxi Workers Alliance, told Gothamist last Thursday after the city announced that it had arrested one of the debt brokers accused of harassing and exploiting taxi drivers. “The financial suffering has been at the heart of the crisis.”
The mayor’s refusal to bail out the cabbies sets up a potential confrontation with the City Council, where several members have expressed support for a partial bailout. A yearlong investigation by the New York Times found that the City was culpable in helping create a bubble in the medallion market, ignoring repeated warning signs that the loans were risky and not sustainable for drivers.
“The City made considerable profit off the medallion bubble and now we owe a moral debt to the thousands of New Yorkers whose lives have been ruined by this scandal,” said Council Member Mark Levine, in a statement on Monday. “It is not enough to investigate what went wrong; we need to take dramatic steps to relieve owner-drivers from the burden of crushing loans."
At an unrelated press conference, Mayor Bill de Blasio pushed back against a bailout, saying his administration had succeeded in making key reforms to the taxi industry. Last month, the city announced that it would waive $10 million in fees for taxi medallion owners and also offer financial and mental health counseling.
“We do not control the lenders and that’s the heart of the problem - that’s State and federal regulation, and I think that’s where some of the biggest problems emerged and it was something we didn’t see nor could we reach,” he said. “In terms of the question of the bailout — the honest truth is, it’s something we can’t reach. We do not have the capacity as a city to provide that. I wish we did, but we don’t—that’s just the truth.”
A New York Times story on Monday reported that City Hall estimated that a bailout would cost the city as much as $13 billion. However, the Taxi Workers Alliance disputed that figure, saying it would cost between $1.8 billion and $2.7 billion.