NY mayor orders probe into taxi medallion brokers
NEW YORK (AP) — Mayor Bill de Blasio has ordered a joint investigation into predatory practices by taxi medallion brokers following a report that delved into the devastation caused by risky loans associated with the rise and collapse of taxi medallion prices.
The Democratic mayor and presidential hopeful said Monday that the 45-day review by the Taxi and Limousine Commission, Department of Finance and Department of Consumer Affairs “will identify and penalize brokers who have taken advantage of buyers and misled city authorities.”
“The review will set down strict new rules that prevent broker practices that hurt drivers,” de Blasio said. “It’s unacceptable to prey on hardworking New Yorkers trying to support their families and we’ll do all that we can to put an end to it.”
The state attorney general’s office on Monday also revealed that it was “beginning an inquiry into the disturbing reports regarding the lending and business practices that may have created the taxi medallion crisis in New York City.”
The probes come after The New York Times published a report on the financial struggles of medallion owners who were enticed into reckless loans just before the medallions market collapsed in late 2014.
Competition from ride-hailing apps such as Uber and Lyft have gotten the bulk of the blame, but the Times report found that “a handful of powerful industry leaders artificially drove up the prices of taxi medallions, creating a bubble that eventually burst.”
“Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed,” the Times reported.
By 2014, medallions were fetching more than $1 million. Now, a medallion can be obtained for less than $200,000.
New York City has the nation’s largest taxi industry, with more than 13,000 medallions. While some medallions are held by large owners with fleets, owning a single medallion was long seen as a ticket to the middle class for immigrants.
Many of them now owe more on their medallion loans than they originally paid for the medallions because they used their equity in the medallion for a home, a child’s education or other expenses.