Wednesday, August 29, 2018

Are New York City Bars and Restaurants About to Close or Go Bankrupt? Is the NYC Hospitality Trade About to Get a Serving of Trouble?

Here at Shenwick & Associates, we were one of the first law firms to foresee the taxi medallion valuation crisis.  And now, we see the potential for disruption to another integral aspect of life in New York City–the hospitality industry, including restaurants and bars.

In our opinion, the combination of the minimum wage increase with New York City’s already stratospheric commercial rent and operating expenses will have a severe impact on New York City’s restaurants and bars, especially smaller, independent and family–owned establishments resulting in the closure or bankruptcy of these businesses!

We’ve already been contacted by several restaurateurs, who have expressed the following concerns:
1. Their restaurant or bar is breaking even or losing money, and with the coming increase in the minimum wage, should they close their business or file for bankruptcy?
2. Is the principal personally liable under either a guaranty (which makes the principal liable for rent and additional rent for the full term of the lease),  a “good guy” guaranty (which makes the principal liable until the business surrenders the premises to the landlord), for money owed to vendors, for sales tax or FICA/FUTA taxes as a “responsible person” or for unpaid wages to employees?
3. Should the entity that owns and operates the restaurant or bar close (“go dark”) or file for bankruptcy or negotiate with their landlord or vendors?
Strategic considerations include:
1. Does the business file for bankruptcy?  If so, does it file under chapter 7 (liquidation) or chapter 11 (reorganization)?
2. Should the business simply wind up operations and close (“go dark”) or negotiate with their landlord and vendors?
3. As mentioned above, if there is a good guy guaranty, has the guarantor minimized his or her exposure under the good guy guaranty?
4. If there are three or more years left on the lease, has the principal thought about selling the business or subleasing the space?
5. Should the principal engage in asset protection planning, negotiate with creditors or consider filing for bankruptcy?

At Shenwick & Associates we have a strong background in short sales, workouts, personal and business bankruptcy, asset protection planning and commercial leasing, as well as an LLM in Taxation from NYU Law School, providing a diverse set of possible strategies and solutions that we can help a restaurant or bar and their principal create or implement.
Our analysis begins with an examination of the businesses’ books and records, including the balance sheet, income statement, lease and tax returns.  We also review the principal’s assets, liabilities and after-tax monthly budget. If you or your business need help, please call or email Jim Shenwick at (212) 541-6224 or

Tuesday, August 28, 2018

NBC: Here's what happens when you miss your credit card payments

by Herb Weisbaum

Credit card delinquencies on the rise. Despite a strong economy and low unemployment, Americans are falling behind in paying off their credit card debt.

The delinquency rate on all U.S. credit card loans is 2.47 percent — up from 2.42 percent at the beginning of 2017 and 2.12 percent in the second quarter of 2015, according to the Federal Reserve Bank of St. Louis.

That means more than $23 billion in credit card debt is currently delinquent — 30 or more days overdue — according to a new report from the personal finance website NerdWallet.

While lack of money is the most common reason for missing a payment, forgetting to pay the bill is often the case. For its 2018 Consumer Credit Card Report, NerdWallet surveyed 2,019 U.S. adults and found that:
  • 35 percent simply forgot to make the payment.
  • 33 percent needed the money to pay for essentials.
  • 32 percent needed the money for an unexpected expense.
Kim Palmer, NerdWallet’s credit card expert, finds it “troubling” that so many people — 65 percent of those surveyed — did not pay their bill on time because they didn’t have the money. According to NerdWallet’s most-recent Household Credit Card Debt Study, income growth isn’t keeping up with some of people’s biggest expenses. 

Reasons for credit card delinquencies

“People's budgets are really stretched because the cost of certain essentials, like healthcare, food and housing, continue to go up and really put pressure on people's budgets,” Palmer said. “And so, people are turning to credit cards as a way to bridge the gap when they can't afford their monthly bills and then they’re unable to make the payments at the end of the month.”

Nerdwallet’s report found that 25 percent of those who’ve been delinquent on a credit card payment said it was because they prioritized paying off other debt.

People's budgets are really stretched because the cost of certain essentials, like healthcare, food and housing, continue to go up and really put pressure on people's budgets.

Research by the Federal Reserve in 2017 found that when there’s not enough money to cover all monthly bills, credit card bills are more likely than other debt payments — rent or mortgage, car payment, or student loan — to go unpaid or partially unpaid.

The high cost of paying late

More than one in five cardholders in the survey (21 percent) said they made a delinquent credit card payment sometime in their life. NerdWallet did the math: Using a late payment fee of $27, that’s more than $1.4 billion in penalty payments on a nationwide basis. And that’s on top of the interest charged for carrying a balance.

Adding insult to injury, falling more than 60 days behind can trigger what’s called the “penalty APR” which can be as high as 29.99 percent with some cards. That penalty APR, which makes it more expensive to carry that balance, can last for up to six months before the credit card company reviews your account to see if the rate should be lowered.

Let’s say you carry a balance of $3,000 on a card with a 15 percent interest rate and it takes you 18 months to pay off that balance. The Credit Card Payoff Calculator at shows total interest will be $368. With a default rate of 29.99 percent, that jumps to $761, more than double the carrying cost.
Missing a payment can also decimate your credit score, because card issuers report delinquent accounts to the credit bureaus.

“The longer your account goes unpaid, the more damage you can do to your credit score and the more effort it will take to bring the account current,” said Bruce McClary, vice president for communications at the National Foundation for Credit Counseling (NFCC). “Once reported, a late payment could cause your credit score to drop more than 100 points in some situations.”

A poor credit score will make the cost of borrowing money more expensive and could result in being rejected for a mortgage or car loan. In some case, it could make it difficult or impossible to rent an apartment.

What you can do

All of these financial repercussions can be avoided with a more proactive approach, including:
  • Use automatic bill pay
  • Set up email and text reminders of upcoming due dates
  • At least make the minimum payment to keep the account from going delinquent
  • If your statement comes at the wrong time of month for you, contact the credit card company to see if the statement date can be changed.
When a late payment is unavoidable due to financial hardship, contact the credit card company before the due date to see if they can help you manage the situation. This would also be the time to get some expert guidance from a nonprofit credit counselor. You can find one near you on the NFCC website.
“Silence will only lead to setbacks,” McClary told NBC News BETTER. “Keeping your credit card balances under control and spending within your budget will go a long way toward protecting your credit health and your bottom line.”

Copyright 2018 NBC Universal.  All rights reserved.

Monday, August 27, 2018

New York Times: The Student Debt Problem is Worse Than We Imagined

By Ben Miller

Millions of students will arrive on college campuses soon, and they will share a similar burden: college debt. The typical student borrower will take out $6,600 in a single year, averaging $22,000 in debt by graduation, according to the National Center for Education Statistics. 

There are two ways to measure whether borrowers can repay those loans: There’s what the federal government looks at to judge colleges, and then there’s the real story. The latter is coming to light, and it’s not pretty. 

Consider the official statistics: Of borrowers who started repaying in 2012, just over 10 percent had defaulted three years later. That’s not too bad — but it’s not the whole story. Federal data never before released shows that the default rate continued climbing to 16 percent over the next two years, after official tracking ended, meaning more than 841,000 borrowers were in default. Nearly as many were severely delinquent or not repaying their loans (for reasons besides going back to school or being in the military). The share of students facing serious struggles rose to 30 percent over all. 

Collectively, these borrowers owed over $23 billion, including more than $9 billion in default.

Nationally, those are crisis-level results, and they reveal how colleges are benefiting from billions in financial aid while students are left with debt they cannot repay. The Department of Education recently provided this new data on over 5,000 schools across the country in response to my Freedom of Information Act request.

The new data makes clear that the federal government overlooks early warning signs by focusing solely on default rates over the first three years of repayment. That’s the time period Congress requires the Department of Education to use when calculating default rates.

At that time, about one-quarter of the cohort — or nearly 1.3 million borrowers — were not in default, but were either severely delinquent or not paying their loans. Two years later, many of these borrowers were either still not paying or had defaulted. Nearly 280,000 borrowers defaulted between years three and five.

Federal laws attempting to keep schools accountable are not doing enough to stop loan problems. The law requires that all colleges participating in the student loan program keep their share of borrowers who default below 30 percent for three consecutive years or 40 percent in any single year. We can consider anything above 30 percent to be a “high” default rate. That’s a low bar.

Among the group who started repaying in 2012, just 93 of their colleges had high default rates after three years and 15 were at immediate risk of losing access to aid. Two years later, after the Department of Education stopped tracking results, 636 schools had high default rates.

 For-profit institutions have particularly awful results. Five years into repayment, 44 percent of borrowers at these schools faced some type of loan distress, including 25 percent who defaulted. Most students who defaulted between three and five years in repayment attended a for-profit college. 

The secret to avoiding accountability? Colleges are aggressively pushing borrowers to use repayment options known as deferments or forbearances that allow borrowers to stop their payments without going into delinquency or defaulting. Nearly 20 percent of borrowers at schools that had high default rates at year five but not at year three used one of these payment-pausing options.  

The federal government cannot keep turning a blind eye while almost one-third of student loan borrowers struggle. Fortunately, efforts to rewrite federal higher-education laws present an opportunity to address these shortcomings. This should include losing federal aid if borrowers are not repaying their loans — even if they do not default. Loan performance should also be tracked for at least five years instead of three. 

The federal government, states and institutions also need to make significant investments in college affordability to reduce the number of students who need a loan in the first place. Too many borrowers and defaulters are low-income students, the very people who would receive only grant aid under a rational system for college financing. Forcing these students to borrow has turned one of America’s best investments in socioeconomic mobility — college — into a debt trap for far too many.

Copyright 2018 The New York Times Company.  All rights reserved.

Thursday, August 23, 2018

CBS4 Denver: Bankruptcy Filer Takes Student Loan Servicer To Court

PARKER, Colo. (CBS4) – The Federal Reserve estimates that student loan debt is a $1.5 trillion problem in America. This debt is sinking many families into bankruptcy, but a new interpretation of the law may be offering some relief.

Paige McDaniel decided to go back to school to get a bachelors and masters degrees in business administration. She chose the online program at Lakeland University.

“I didn’t want a publicly traded school. I wanted a school that was an actual university, and had a focus on academics,” McDaniel told CBS4.

She took out federal student loans to cover the cost of her bachelors and masters degrees in business administration.

“You’re always raised, the more education you have the better off you’re going to be,” she explained.

In addition to the federal student loans, McDaniel signed up for about $120,000 in private student loans.

“Started getting direct mail from Sallie Mae, who had my federal loans at the time, offering additional loans to help with additional expenses, so I did take out some of those loans as well,” McDaniel said.

She didn’t realize the loans were different. Federal student loans have a fixed interest rate, and manageable repayment options. Private education loans have a variable interest rate, and no repayment help.

“That one mistake is…is the biggest regret of my life, and has hurt my family, to the point where it would have been better for me not to get the degrees,” McDaniel said.

She soon found herself in over her head. The loan servicing company was billing her $1500-a-month just on the private loans. She ended up declaring Chapter 13 bankruptcy, but even that didn’t help. She paid on the loans through the proceeding, but still came out owing more than she borrowed.

“We knew the federal loans could not be dismissed, but the private loans were supposed to be,” she explained.

Traditionally, in bankruptcy court, any loan with the word “student” associated with it has not been dismissed. New York lawyer, Austin Smith, has a different take on the law.

“These loans that we’re litigating, these are just like credit card debt. It’s the exact same thing as if a bank gave a student as credit card,” Smith explained.

He argues that private loans that are not used for education expenses, should be treated like any other personal debt, and be dismissed in bankruptcy.

“We have not lost on this issue yet,” Smith told CBS4.

Navient Solutions holds McDaniel’s loans, and is one of the largest student loan servicers in the country. It’s facing several lawsuits about it’s lending practices including those filed by Attorneys General in Illinois, Washington, Pennsylvania, and California. It’s called the allegations in those cases unfounded, and in a statement to CBS4 about McDaniel’s proceeding, it said:

“It went from this is the solution, not one we wanted, but this is the solution, to we’re in worse shape than we were before,” McDaniel said.

Her payments are on hold pending a court decision, but the balance keeps ticking up. It’s at more than $260-thousand now.

“I can’t breathe when I look at it. It’s a panic. There’s no way out of this,” she said.

Colorado Congressman Jared Polis has introduced a bill designed to keep student from getting into this situation. The Know Before You Owe bill would require Universities to counsel students on the difference between federal and private loans before they sign up for them.

©2018 CBS Broadcasting Inc. All Rights Reserved.

Washington Post: The silver bullet for student debt: Bankruptcy

American higher education badly needs reform. Over the past two decades, universities have regarded the availability of hundreds of millions of dollars in federal student loans as an excuse for staggering tuition increases. Now students graduate with intolerable levels of debt, in an economy where they often can’t find jobs to pay it back. And too many universities have become political-indoctrination factories or intellectual babysitters instead of providing useful educations and preparing students for the adult world.

But there’s a silver bullet that could cure all three ailments: bankruptcy.

In an entrepreneurial society, it’s essential to know that you can take risks and, if you fail, there is a path to try again. The ability to declare bankruptcy as a last resort and to start afresh has long been a vital element of American dynamism, yet it is denied to young people who borrow for their education.

That wasn’t always the case. Until the late 1970s, Americans unable to pay off education loans were permitted to dispose of them with a Chapter 7 bankruptcy petition. That changed in 1978 when U.S. bankruptcy rules were overhauled. Defaults on student loans weren’t a significant problem — tuition was much lower then, and jobs awaited most graduates — and legislators simply decided that it was a bit much to expect the government to guarantee loans and then absorb the cost of bankruptcy.

No one thought that we’d see anything like today’s student-debt levels or that bankruptcy rights for education loans would be desperately needed.

In assessing 20 years of tuition increases, U.S. News & World Report found last year that tuition at national universities (defined as those with a full range of undergraduate majors and master’s and doctoral programs) spiked 157 percent for private institutions. At public national universities, out-of-state tuition and fees rose 194 percent, while in-state tuition and fees swelled 237 percent. Inflation across that period was 53 percent.

As the cost of education mounted, so did the student debt load. Since 2006, the amount that Americans owe in education loans has tripled, to $1.53 trillion, according to the Federal Reserve. Once again, ill-advised government interventions played a role, including the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which barred private student loans from protection, and the Affordable Care Act, which in 2010 largely made the government directly responsible for student loans. About 80 percent of student loans are owed to the feds.

If many millennials have been radicalized, if they’ve given up on free markets, it’s hard to blame them. They’ve been slapped in the face by free markets in the form of the student-loan racket. What many young people need is relief from overwhelming debt burdens through bankruptcy.

Private lenders would object, naturally, as would people who’ve struggled to pay off some or all of their student debt. Problems like that arise whenever a country transitions to a more efficient regime, but it shouldn’t get in the way of urgently needed reform. The U.S. deficit would increase if direct government loans were made dischargeable. But it’s not as though everyone would stop paying off student loans: Declaring bankruptcy comes at the price of damaged credit ratings and years of being unable to obtain loans or credit cards, or doing so at much higher interest rates. Most people who have jobs and are able to continue paying their loans would want to avoid bankruptcy. But countless other young Americans would be liberated from debt and more likely to invigorate the economy, helping make up for government’s added costs.

What about the universities themselves? They’ve created the problem, and they should be part of the solution: Hold them financially accountable, in whole or part, when their graduates declare bankruptcy on student loans. Universities should be given time to clean up their acts — say, until 2020 — and after that they would have to agree to indemnify the federal government for student-loan bankruptcies. Schools would think twice before running up the tuition tab. They might even start bringing it down.

Universities might also rethink the kinds of courses they offer. If they bore some or most of the cost of bankruptcies, they no doubt would start paying close attention to whether their graduates can get jobs. Too many universities offer too many frivolous courses, and majors, that make employers run the other way from applicants. Such graduates aren’t good bets to repay their loans. If the university bore the financial risk, it would almost certainly change what it teaches.

Would all this be thoroughly disruptive? Most certainly. But U.S. higher education badly needs a measure of creative destruction.

© 1996-2018 The Washington Post.  All rights reserved.

Monday, August 20, 2018

In These Times: Meet the Militant Taxi Drivers Union That Just Defeated Uber and Lyft

By Chris Brooks

The New York Taxi Workers Alliance knows how to throw a punch.

On August 14, the scrappy but militant 21,000 member union representing taxi and for-hire vehicle drivers in New York City won a landmark legislative victory establishing the country’s first cap on ride-sharing company vehicles and essentially forcing them to pay their drivers a minimum wage.

This fight pitted the Taxi Workers Alliance against corporate giants Uber and Lyft, which together employ more lobbyists than Amazon, Walmart and Microsoft combined.

Uber alone spent $1 million between January and June of this year trying to put the brakes on the Taxi Workers Alliance’s efforts.

There is little wonder why. New York City is Uber’s largest U.S. market and the number of Uber and Lyft vehicles on the streets have exploded in recent years, from 25,000 in 2015 to 80,000 in 2018.

Since neither Uber nor Lyft considers their drivers to be employees—instead classifying them as “independent contractors”—both companies have avoided paying social security and payroll taxes while stripping their drivers of minimum wage and overtime protections as well as the right to organize a union and collectively bargain a contract. A city-commissioned study found that 85 percent of New York app-based drivers are earning below the minimum wage.

The companies have also made life miserable for many taxi drivers. As the number of Uber and Lyft vehicles has risen, the value of taxi medallions has plummetted. Once a prized asset for aspiring working-class families, medallions that once sold for $1 million are today selling for $200,000.

Driven to despair by unregulated corporate growth, six New York City drivers have taken their lives in recent months: Abdul Saleh, Yu Mein Kenny Chow, Nicano Ochisor, Danilo Corporan Castillo, Afredo Perez and Douglas Schifter.

I spoke with New York Taxi Workers Alliance Executive Director Bhairavi Desai directly following the City Council vote to discuss their victory and what this new legislation means for drivers.

New York City is the first to put a cap on for-hire vehicles, can you talk about what this legislation does and why it is so important?

This legislation places a cap on for-hire vehicles for up to a year. That means no new vehicle licenses will be issued for Uber and Lyft, putting an end to the unchecked growth of these companies in New York City. There will be a pretty intense study undertaken by the city over the course of the next year. At the end of the year, the Taxi and Limousine Commission (TLC) will be authorized to pass regulation.

What kind of permanent regulation would you hope come from this?

It's hard to say right now, but the TLC could place a permanent limit on the number of for-hire vehicles on the road. It’s going to be important that we settle on a permanent cap on for-hire vehicles that makes sense for everyone—one that lets everybody making a living, that stops the current race to the bottom, and that not only lifts standards for app drivers but all drivers across the industry.

It seems like part of what gave the city council a sense of urgency was the fact that six drivers committed suicide. Do you think that's fair and do you think this cap could save lives?

You can't look at Uber and Lyft in a vacuum. Part of what's happened over the past three years is that taxi drivers have been made to feel invisible. The six drivers who commited suicide were yellow cab, livery and black car drivers. Part of what drove them to despair was this feeling that the deteriation of their livelihoods was not visible to policy makers or the community.

One of the drivers who committed suicide, Douglas Schifter, has written one of the most important critiques of the gig economy. It was his suicide note. Doug killed himself in front of City Hall after writing a powerful note describing how the flood of for-hire cars left desperate drivers scrambling to make enough money to feed their families and keep a roof over their heads. His story humanized this struggle.

Over the past three years, Uber and Lyft have presented themselves as socially conscious corporations while they have been rendering drivers invisible. That’s obviously intentional, since they want automation in the long run. One of the most important progresses we made is putting the drivers back in front— as the visible face of their industry and in the organizing campaigns to regulate these companies.

We've also been putting together a mental health program. When drivers see our flyers, they see that the Taxi Workers Alliance is fighting for change in the industry and that they’re not alone. But we also provide information on bankruptcy and a suicide hotline on every flyer. No union should have to organize under those conditions. This has been such a spiritually enlightening campaign.

What do you mean by that?

Watching families who lost their loved ones to suicide, it's such a personal grief and given that suicide is something that most people are socialized to keep private, these families have taken their darkest hour, shared it publicly, and stood strong the entire time.

I grew up poor so I don't take for granted the economic struggles that we as a movement wage to keep food on the table. But when you’re on a campaign that is literally about creating hope so members stay alive, then failure is never going to be an option.

The Taxi Workers Alliance was also responsible for passing the first legislation to establish regulation of minimum rate of payment to App drivers, right?

That’s right. We not only placed a cap on app-based for-hire vehicles, but we established the first minimum pay requirement for those App drivers.  That means, the companies can’t keep lowering the rates by which they pay drivers and in establishing those rates through rulemaking, the Taxi and Limousine Commission will consider drivers’ expenses and their right to earn a livable income post-expenses.

The original version of the bill locked in App drivers at the state’s minimum wage and that floor was the ceiling, so we fought for broader language so drivers could earn more as the companies rake in more revenue from passenger fares. Our long-term goal is to win a regulated commission system where drivers could earn, for example, 80 percent of the fare.

The same bill also authorizes the TLC to regulate the App passenger fare at the end of the 12-month study.  As long as the passenger fare remains unregulated, the companies can keep dropping the rates, locking out drivers in the competitor sectors from getting a raise, as taxi and livery drivers would be too afraid that Uber and Lyft would just lower rates if their rates ever went up. We fought for all drivers to get a raise and won legislation to make that possible.

The City Council has also introduced a bill to require a study on the issue of debt and bankruptcies facing medallion owner-drivers, and to make recommendations for council action, including ways to finance a fund or lower interest rates. All of these economic demands were in our platform.

On top of the enormous legislative victories in the New York City Council, the Taxi Workers Alliance also just won an important victory at the New York State Unemployment Insurance Appeal Board, which ruled that Uber drivers are employees, not independent contractors. Can you talk about this ruling?

We’ve beat Uber and Lyft in labor court and we’ve beat them at City Hall. These are some of the highest valued companies in the world. They get obscene amounts of money from Wall Street. So many in the labor world said you can't organize these workers and you can’t beat back these companies, but here we are, a motley crew, a grassroots, worker-led movement and we defeated them because we never gave up. We refuse to make compromises.

The unemployment decision is so significant because, up to now, these companies could oversaturate the streets with drivers and face no consequences. Since Uber claimed that drivers were “independent contractors,” the company didn’t have to pay into unemployment insurance and drivers weren’t presumed to be eligible for it.

If Uber and Lyft had to contribute to unemployment insurance and all the drivers that couldn’t make ends meet were receiving unemployment, then that would have been a major disincentive for the profit strategy that both companies have pursued. It's easy for them to glut the market with drivers because they aren't employees of Uber. Otherwise they'd have to pay taxes for them, and they'd be on the hook for them.

Misclassification, oversaturation and deregulation of the fares are at the heart of Uber and Lyft’s business model and are the main causes of the impoverishment of drivers.

What has been the response from the Independent Drivers Guild (IDG), which is funded by Uber and would be an illegal company-dominated union if Uber drivers were ruled to be employees?

They have been team Uber. When they saw we were going to win on the cap, they turned around and said “we support that.” But meanwhile, they've been saying they want the city council momentum to end. Until a couple weeks ago, they were saying all that should be done is a minimum wage requirement set by the TLC.

So they were initially opposing the cap?

They were opposing the cap. They had their great John Kerry moment. They were against it before they were in favor of it. Well, I guess he was the flip of that.

Uber has responded to the Taxi Workers Alliance’s efforts by launching a seven-figure public relations campaign highlighting many of the legitimate grievances felt in Black communities about driver bias and being denied rides. Uber also had the support of prominent leaders of color, like Al Sharpton and Spike Lee, who stumped for them against the cap. How do you respond to these criticisms and what is the plan for addressing them?

This time around, people really saw the opportunistic way in which Uber was trying to advance their corporate agenda by dividing a workforce mostly of immigrants of color from the African-American community and creating this narrative that civil rights and economic justice for workers are somehow not interrelated.

We were able to break through Uber’s ploy because we had many council members of color who we had several conversations with over the course of many months and we put together a nine-point civil rights initiative where point nine was, we didn't call it an office of inclusion, but an office at the TLC that would oversee this program that included training, continuing licensing requirements, a renewal course, community service as well as development of the technology for electronic hailing of yellow cabs.

An emphasis on civil rights was evident in both the coalition behind the legislation passed in New York City and the legislation itself. The Taxis for All coalition, which includes numerous disability rights groups, was out in force at rallies. And the legislative cap on for-hire vehicles specifically exempts vehicles with wheelchair accessibility. So it could be argued that this is not really a cap, but a regulation that is forcing the industry to become more accessible.  

The Taxis for All Campaign, they're amazing. We've been in partnership with them for over ten years. We worked with them to bring a mandate that 50 percent of yellow cabs be wheelchair accessible by the year 2020. So they’ve been supporting this campaign all along and they are remarkable people.

We are one of the few global cities that doesn’t have the level of accessible service that it should. Uber and Lyft fight accessibility passionately across the country, not just wheelchair accessibility, but signage requirements, because taxis have to meet a braille signage requirement.

I don't want to overstate their commitment to it, but I do think that accessibility is something that the City Council has acknowledged to be a standard that App companies should be required to meet. Of course, the App companies have fought that standard and they used the IDG do it. The IDG said they were against the TLC’s accessibility mandate because that would make costs go up for drivers. But why not fight your employer so that they have to absorb some of those expenses? Why is it a given that the IDG assumes all expenses have to fall on drivers?

In the taxi industry, drivers were found to be independent contractors and so we’ve focused on TLC-level regulation. Since 1997, we've won caps on all the different expenses that drivers have to pay. In 2012, we won caps on the financing expenses that drivers pay on vehicles. We didn’t just assume that drivers have to eat these costs.

These victories are made possible because we believe in worker organizing across our industry. We don’t let employers define the limits of what is possible. We organize to make new gains possible.

Since day one, we have refused to believe that Uber and Lyft couldn't be brought under control because we were able to change an entrenched medallion industry. If we were able to make changes there, why wouldn't we be able to do it with these companies?

It’s still stunning to think that a 21,000 member union has taken on a $70 billion corporation in New York City. 

Since November, we've had over 20 actions. We didn't even send our first letter to City Council until April. They saw our fight and on our demonstration posters, they saw our platform. The 11-point council package comes directly out of our demands list, including first-time regulations against predatory lending in the for-hire industry, similar to protections we won in the taxi industry, and a health and benefits fund for all drivers across the industry.  We've been hitting the streets because we knew this was going to be a public fight.

These men and women, when they take time off work, they lose income. When you're a yellow cab driver, you're paying a lot of expenses. When you’re an App driver, you’re paying a lot of expenses. And time you aren’t working is time you are losing income. Yet our members turned out to action after action with their families. We won because of our commitment.

Copyright ©2016 In These Times and The Institute For Public Affairs. All Rights Reserved.

New York Post: City’s ride-share cap boosts new for-hire car registrations

By Danielle Furfaro and Max Jaeger

The city’s first-of-its-kind one-year cap on Uber and Lyft cars has actually turbocharged their numbers in the short term, The Post has learned.

The Taxi and Limousine Commission took in four months worth of applications for new for-hire vehicles in just the last two weeks, as drivers scrambled to register their rides before the freeze began Tuesday night.

Since Aug. 1, the TLC has fielded 10,020 requests to permit new cars to drive for Uber and the like — nearly one-third as many as it accepted for all of last year, when 33,700 people applied.

“This is so crazy and irresponsible,” said Carolyn Protz of the Taxi Medallion Owner Driver ­Association.

But “the big picture of the bill isn’t just the cap,” said Councilman-sponsor Steve Levin. “The big picture is allowing for some of this unprecedented growth to be paused while the TLC comes up with a framework to regulate this.”

© 2018 NYP Holdings, Inc. All Rights Reserved.

Wednesday, August 15, 2018

Business Insider: Uber is going on the offensive and plotting clever ways to grow despite NYC's cap on ride-hailing cars

Brian Pascus

Uber plans to use creative measures to remain competitive in New York City following the passage of bills that put a cap on and freeze the number of vehicles that may operate within the city for the next year.

On Wednesday, in a 39-6 vote, the New York City Council passed multiple bills that will pause the granting of new licenses for Uber, Lyft, and other ride-share companies for one year while a study is conducted by the Taxi and Limousine Commission (TLC) to determine the effects these companies are having on the city's transportation industry. The legislation passed by the city also grants a new minimum pay-rate for drivers.

Prior to the vote, City Council Speaker Corey Johnsons said, "We are pausing the issuance of new licenses in an industry that has been allowed to proliferate without any appropriate check or regulation," before adding that he does not expect the existing service for ride-sharing customers to diminish.

Mayor Bill de Blasio is expected to sign the legislation on Tuesday, which will take effect immediately.

With new regulations in place, ride-sharing companies like Uber will now need to work within the limits of the law to continue to remain competitive.

In a statement to Business Insider, Uber spokesperson Danielle Filson said, "We take the Speaker at his word that the pause is not intended to reduce service for New Yorkers and we trust that he will hold the TLC accountable, ensuring that no New Yorker is left stranded. In the meantime, Uber will do whatever it takes to keep up with growing demand and we will not stop working with city and state leaders, including Speaker Johnson, to pass real solutions like comprehensive congestion pricing."

But Uber's options under the license freeze are limited in part because of the company will now be restricted to an existing pool of vehicles.

A company spokesperson told Business Insider that Uber is ready to use creative measures to get around the language of the bills. First, the spokesperson notes that this cap is not a limit on the number of drivers, but rather a pause on the number of new vehicles. This distinction is important, as the company is thinking of reaching out to Uber vehicle owners who may be off the app for two or three days a week and see if they will allow new Uber drivers to use their vehicle when it is idle. This way, the company can ensure it keeps a high number of cars on the road despite a limit on new licenses.

Another way Uber plans to work-around the new measures will be to recruit from within the existing field of livery drivers, which includes yellow taxis and black-cars.

While voicing his support for the legislation, Mayor Bill de Blasio told the New York Times, "More than 100,000 workers and their families will see an immediate benefit from this legislation."

Uber estimates the number of industry drivers in the area to be closer to 120,000, and an Uber spokesperson told Business Insider that the company believes there are at least 35,000 existing licensed vehicles not being utilized by their app system. In short, Uber plans to recruit black-car drivers into their network.

And while the newly passed bills plan on creating a new minimum pay-rate for drivers, Uber does not plan to oppose those changes to their business model.

An Uber spokesperson told Business Insider the company is "supportive" of a minimum wage or wage floor for their drivers.

The mayor's office told Business Insider that he plans to sign the legislation on Tuesday, August 14, 2018.

Copyright © 2018 Insider Inc. All rights reserved.

Tuesday, August 14, 2018

The Uber ridesharing cap

The New York Times reported that on August 8th, the New York City Council voted to issue a cap on licenses available for for–hire vehicles for one year, which went into effect on August 14th.  The City Council vote was 39 to 6 in favor of the cap. According to the article, New York City became the first major American city on Wednesday to halt new vehicle licenses for ride-hail services, dealing a significant setback to Uber in its largest market in the United States.

However, according to the article, the law allows the Taxi & Limousine Commission to add more licenses if there is a clear need for more vehicles in some neighborhoods.

The City Council also passed a separate law setting a minimum payments for for–hire vehicle drivers.

The article states that “the City continued to support its decision, saying it will not only help the dwindling taxicab industry, it will also aid in reducing traffic congestion and could potentially hike driver paychecks on both sides from a possible hike in fees for riders.”

Reuters reports that the number of for–hire vehicle drivers skyrocketed from 12,600 in 2015 to about 80,000 this year.

Mayor Bill de Blasio and City Council Speaker Corey Johnson said the laws will curtail the worsening traffic on the streets and improve low driver wages.  Speaker Johnson added that the rules would not diminish existing service for New Yorkers who rely on ride-hail apps.

Uber has warned its riders that the cap could produce higher prices and longer wait times for passengers. A yellow taxi driver was quoted as saying that she supports the cap and hopes it will improve business for taxis.

CNN Tech reported that Uber is already planning moves to sidestep New York’s cap, which applies to vehicle licenses, not drivers. With that in mind, Uber said it will ask current drivers to share their vehicles with new drivers. And it hopes to poach drivers from competing services, expanding its presence in the city.

For medallion owners, the interesting question is what impact will the for–hire vehicle license cap have on the value of taxi medallions.

  1. The cap is only for one year, so the impact on taxi medallion values will probably not be significant.

  2. The cap maintains and does not reduce the number of for–hire vehicles, which is another reason why the value of taxi medallions will not increase significantly. However, if the number of for–hire vehicles decreased significantly, then we could expect to see an increase in the value of taxi medallion licenses.

  3. As noted in the CNN Tech article, the cap applies to vehicle licenses not to drivers, so Uber and the other ridesharing services, being the aggressive entities that they are, will likely create strategies to maximize the use of their existing vehicle licenses.

  4. The riding public has voted with their dollars and apps, and they prefer the Uber, Via and Lyft model for transportation over that of yellow taxis; notwithstanding the new locals laws, those companies and their markets will continue to prosper.

  5. Three years ago, the value of a taxi medallion was $715,000, and based on last month's Taxi Limousine Commission data, the value of a medallion is approximately $165,000.

In Jim Shenwick’s opinion, the for–hire vehicle cap will have little to no impact on the value of taxi medallions. It is possible that the new laws may slow the decline in taxi medallion values, but its ability to increase values significantly seems to be unlikely.  It would be foolish for any medallion owner to believe that taxi medallions will return to the stratospheric valuations of 2015. The opinions expressed herein are solely the opinion of Jim Shenwick.

New York Times: Uber and Lyft Drivers Rush to Register Cars Ahead of City’s New Cap

By Mariana Alfaro

 In the pouring rain, hundreds of people lined up outside a building in Queens on Monday, clutching umbrellas and paperwork. The frenzy was not driven by a buzzy new restaurant or a new Apple store. Instead the line led to an Uber office and was prompted by the City Council’s recent decision to limit ride-hail apps by imposing a cap on new vehicle licenses.

For hours, drivers waited outside the building in Long Island City for Uber workers to let them in and to register their cars as for-hire vehicles before the legislation goes into effect. Mayor Bill de Blasio has said he is planning to sign the bill into law on Tuesday.

Mohammed Kabir, 47, a driver from Queens, said he spent four hours before emerging from Uber’s office with his paperwork in order. He said he had arrived at 7 a.m., hoping to beat the crowd, and despite the long wait he said he was content that he now had what he needed to beat the deadline.

Since the Council’s vote on the new regulations, which includes establishing a minimum pay rate, Uber had been encouraging existing drivers and others who wanted to become drivers for the tech giant to make sure they applied for the special license plates needed to register private cars as ride-hail vehicles. Once the legislation becomes law, no new licenses, with the exception of wheelchair accessible vehicles, will be granted for a year while the city studies the impact of the ride-hail industry.

Some drivers waited for almost two hours before being shepherded inside. Red Ferhani, 32, said he had been driving for Uber for almost three years by renting cars from other Uber drivers. Tired of losing part of his profit to rental fees, Mr. Ferhani said he wanted to register his own vehicle while he still could.

“I guess everybody’s doing this last minute,” said Mr. Ferhani as he approached the front of the line. Despite the hassle, Mr. Ferhani said he supported the cap.

“I think there’s enough Uber cars out there, it’s already enough,” he said.

Some drivers at Uber’s offices said they had not had enough time to get their documents and licensing fees in order. To register a car as a for-hire vehicle, owners must complete an online application with the city’s Taxi and Limousine Commission, have commercial insurance for their car and pay a $550 to $625 fee, depending on their car’s mileage.

Deniz Osor, 37, was in line only because his friend had warned him days before that the window to apply was closing. Mr. Osor scrambled to get his paperwork in order.

“They should’ve actually extended the time for at least another two weeks,” Mr. Osor said.

Alix Anfang, a spokeswoman for Uber, said the City Council and Mr. de Blasio had rushed the cap through “without stopping to think about the consequences for hard-working drivers who have been saving up to get out of a rental and into a car they own.”

Jose Reyes, an Uber driver from Brooklyn, said he knew people who bought cars in order to register them before the cap was passed.

Uber had prepared for the surge of drivers to its New York offices by shifting employees from New Jersey and Connecticut and opening their doors an hour early. Despite the extra hands, applicants said they were expecting the process to take two to three hours. The usual wait time in the Queens office, according to an Uber worker, is usually 20 minutes.

Frustrated with how slow the line was on Sunday, Syed Hassan, an Uber driver, left after an hour.

The line, he said, went around the building. “There were more than 1,000” drivers waiting, he estimated. Still, he returned on Monday with a friend to keep him company.

The crowd on Monday was smaller, but that did not make it any less hectic. Uber workers admonished drivers to stay in an orderly line. Once inside, drivers were directed to the second floor where they were given instructions, depending on the stage of their applications.

Some drivers, after seeing the long list of requirements, decided to wait until the cap is lifted before registering their car. Diakanke Bah, 28, was on her way out after being told that she would probably not meet the deadline since she still had to get a for-hire driver’s license.

“If I do get my license, I will have to probably rent out someone who has already registered with the T.L.C., but it won’t be with my car,” she said.

Copyright 2018 The New York Times Company.  All rights reserved.

Monday, August 13, 2018

New York Post: More Americans are defaulting on their credit cards: analyst

By Gregory Bresiger
Despite a booming economy, many Americans are having trouble paying credit card bills, industry observers warn.

An increasing number of auto borrowers are also asking for more time to pay.

These trends disturb card industry experts.

“It is a problem we should watch,” says Bill Hardekopf, founder of

“I would say that credit card defaults is definitely a cause for concern,” says Joe Resendiz, an analyst with ValuePenguin, which tracks the credit industry.

Resendiz noted the recent second-quarter net credit card default numbers rose for Bank of America and JPMorgan. In an otherwise rosy report, the amount of in-default charge card bills rose by 10 percent and 9 percent, respectively, compared with the same period in 2017.

But JPMorgan charge-off rates remain “low” on a historical basis, said spokeswoman Betty Riess.

The latest numbers also come at the same time that those with the poorest credit card records — subprime borrowers — saw their credit card debt increase by 26 percent, ValuePenguin said.

Another observer,, noted a $16.25 billion increase in revolving debt in May. “This was the biggest May jump since 1995,” it said. Revolving debt is the card debt that is carried from month to month, usually at high interest rates because a card, unlike a house, is an unsecured debt.

Revolving and non-revolving debt is currently at $3.86 trillion, LendingTree said. It predicts it will pass $4 trillion this year.

Some borrowers, credit industry analysts say, are forgetting the disasters of 2008. That’s when a sudden recession left many Americans without jobs and big banks with huge unpaid debts.

Resendiz said most big banks are seeing default rates rise. The credit card default rate rose in the latest Federal Reserve numbers to 3.65 percent.

This was the seventh straight quarterly increase, yet still far from the 2008 numbers, when default rates were above 10 percent.

© 2018 NYP Holdings, Inc. All Rights Reserved.