Bloomberg: The Taxicab Bubble Couldn’t Last Forever

by

Joe Nocera

Bloomberg News on Monday posted an article about something that has become a pretty big deal in New York City: Taxi drivers are committing suicide.

Since November, six drivers, beset with financial difficulties, have taken their own lives, most recently last Friday. After every death, there are calls from the Taxi Workers Alliance, which represents the drivers — and plenty of others — for the city to start restricting the number of Uber and Lyft cars on the road. Taxi drivers view Uber Technologies Inc. and Lyft Inc. as not so much disrupting their industry as destroying it.

I suppose you can't really blame them for portraying Uber and Lyft as the enemy. In 2011, before Uber entered the New York market, there were 13,587 yellow cabs in the city of 8.5 million people.

The number of cabs in New York has been capped since 1937, after a Depression-era glut made it impossible to make a living as a taxi driver. The mechanism the city used to restrict cabs was a medallion that one had to buy to own a cab. Because there were so few cabs for so many people, the law of supply and demand kicked in, driving up the price of medallions. According to the New York Times, the value of a medallion topped out at $1.3 million in 2014.

Today, according to Bloomberg, there are an astonishing 80,000 "app-based transportation vehicles," driving around New York City. If 13,587 cabs were too few, then it's fair to say that the current 100,000-plus cars-for-hire are too many. The price of a medallion has dropped as low as $130,000.

Taxicab operators who thought their medallion would finance their retirement are now drowning in debt. Cabbies — many of whom lease their cabs from medallion owners — can no longer make their lease payments because their business has dwindled. And there is one other downside: All those app-based cars have slowed down traffic in New York by 23 percent since 2010, costing the city an estimated $34 billion a year.

On the other hand, is it really fair to blame everything on Uber and Lyft? I would argue that before throwing rocks at the competition, the New York taxi industry would do well to take a long, hard look in the mirror. Like internet stocks in the late 1990s, and real estate in 2005 and 2006, medallions were a bubble that was bound to burst. Uber and Lyft mainly provided the pins that popped it.

As was the case in many cities, yellow cabs in New York held a monopoly on cars-for-hire — and as is often the case with government-mandated monopolies, the result was an industry that put its own needs before that of its customers. As my colleague Barry Ritholtz pointed out recently, the taxi industry changed shifts between 5 p.m. and 6 p.m. — the exact moment when the largest number of people were trying to hail cabs. It was impossible to get a cab when it rained, or if there was a subway breakdown. Cars were often grimy.

Did the taxi industry care? No. So long as cabs remained scarce, the value of their medallions kept going up — and that's all that really mattered. As the price rose, people wanting to buy medallions had to take out loans that were as big, or bigger, than their mortgages. But that was OK too. They made the same assumption that homebuyers made in 2006: that the price could only keep rising.

There are any number of things the industry could have done to minimize the impact of Uber and Lyft. The most obvious was to have increased the number of cabs over the years, something that could have been sensibly calibrated so that cabbies could still make a good living while riders had an easier time finding a taxi. It could have embraced technology so that people could hail a cab via an app instead of having to stand at a corner and hope for the best. 1  And it could have replaced medallions with renewable licenses, which would have ended the bubble before it got out of hand.

But the taxi lobby was powerful, and so was the industry's view that medallions were a sure-fire way to get rich. The situation was untenable, however; if Uber hadn't come along to burst the bubble, something else would have. Because the taxi industry had treated riders so shabbily, people embraced the new cars-for-hire even though they were usually more expensive than a taxi ride.

What is astonishing to me is that the industry still doesn't seem to realize that it sowed the seeds of its own destruction. For instance, in a case decided late last year, two medallions owners sued the city's Taxi & Limousine Commission for failing to maintain the "financial stability" of the medallions — as if that were somehow a government responsibility. But, wrote the judge, the plaintiffs "have pointed to no statute or regulation that compels the Taxi & Limousine Commission to artificially inflate the value of medallions." The suit was tossed.

In another case, medallion owners and their lenders sued the city and the commission for, as Reuters put it, "jeopardizing their survival by imposing burdensome regulations and letting the Uber ride-sharing service take passengers away." That suit got tossed as well.

At a rally outside city hall Monday, the Taxi Worker Alliance once again pointed to Uber and Lyft — "Wall Street companies," an alliance official called them — as the reason for the cabbies' struggles. She called on the city to both regulate them and reduce their number.

I have some sympathy with the latter request. A cabbie — or an Uber driver — ought to be able to make a living driving a car-for-hire, and that doesn't appear to be possible now. 2  But any reduction should involve every kind of car-for-hire, not just Uber. There is no law that says the number of Uber cars must shrink so that all 13,587 taxis can be saved.

Medallions are a different story. When the internet bubble burst, nobody bailed out tech investors. And when the subprime loan bubble burst, the federal government took the position that it had to let foreclosures run their course, no matter how much pain they inflicted on homeowners. Why should medallion owners be treated any differently?

Medallion owners had a sweet deal for a long time. Now that sweet deal is going away. It's painful, yes, but it's not the job of government to protect a monopoly. Once medallions are no longer prized for their ability to make people rich, everyone in New York — taxi drivers included — will be better off.

1. It uses such technology now, but it's a day late and a dollar short.
   
2. I've spoken to many Uber drivers over the years. I've yet to meet one who said he could make a living driving full time for the company.
   

Copytight 2018 Bloomberg L.P.  All rights reserved.

New York Times: Taxi Drivers in New York Are Struggling. So Are Uber Drivers.

By Emma G. Fitzsimmons

After a growing furor among Uber drivers in New York City in 2016 over plunging incomes, Uber relented and made a rare concession: It agreed to recognize a local driver group.

The group, the Independent Drivers Guild, was not quite a union, but it would meet regularly with Uber management and advocate for drivers. Still, there was lingering suspicion that the guild was a pawn for Uber since it accepts money from the powerful company.

But two years later, the guild is taking an increasingly confrontational stance toward Uber as it pushes for higher pay and a cap on new drivers.

Backed by veterans from the Barack Obama and Bernie Sanders presidential campaigns, the guild is drawing attention to the plight of Uber drivers struggling to make a living — just like taxi drivers.

After a taxi driver killed himself last month — one of six driver suicides since December — the Independent Drivers Guild called for new regulations in stark terms, saying city leaders had ignored “widespread exploitation.” While Uber as a corporate behemoth has eviscerated the yellow cab industry, front-line workers in both worlds share a common bond over their economic desperation.

“How many more of our families must be shattered before the city will act?” said Sohail Rana, an Uber driver and guild member.

Yet some continue to doubt the guild’s independence. Leaders will not say how much Uber pays the guild as part of its agreement to represent drivers or how many dues-paying members it has. But officials at Uber are hardly pleased by the group’s decision to go after its bottom line.

The guild’s campaign comes as New York City is considering stricter rules for Uber and other ride-hailing services that have flooded the streets with vehicles. Mayor Bill de Blasio and the City Council are under pressure to address several issues: setting fair wages for drivers, reducing street congestion and stabilizing the crashing values of taxi medallions.

Last Monday, Uber’s chief executive, Dara Khosrowshahi, visited City Hall as part of a global charm offensive to repair the company’s image. Mr. Khosrowshahi met with Corey Johnson, the City Council speaker, who said recently that it had been a mistake not to rein in Uber’s growth in 2015, when Mr. de Blasio tried unsuccessfully to institute a cap.

Uber has become hugely popular in New York, and its trips outpaced yellow taxis for the first time last year. There are about 65,000 vehicles affiliated with Uber in the city, which provide more than 400,000 trips per day, according to the Taxi and Limousine Commission. Lyft, its main rival, tallies about 112,000 trips per day. City law caps the number of yellow taxis at about 13,500; they typically make about 300,000 trips each day.

New Yorkers get cheap rides in nice vehicles — and a respite from the failing subway — while Uber is moving toward an initial public offering next year at a value of $48 billion. But many of the drivers who New Yorkers and Uber executives rely on are feeling hopeless.

Drivers are trapped in predatory car loans. The money they make from each trip is relatively paltry after fees, like sales tax, are deducted and after Uber takes its cut of more than 20 percent.

Pedro Acosta began driving for Uber shortly after the service arrived in New York in 2011. At first, he made a good living. Uber enticed drivers, promising they would make $5,000 during their first month. But then the app started reducing its rates.

“They dropped the price so much,” Mr. Acosta said at his apartment in East New York, Brooklyn, the day after he worked an 11-hour shift. “We have to work so many hours.”

Mr. Acosta made 4,457 trips for Uber last year, or more than 85 rides each week. He made about $30,000 after expenses, according to his tax returns, an amount that he said was difficult to live off in an increasingly expensive city. He has six children, and his wife works giving massages and facials.

His expenses add up quickly — a $750 monthly car payment, insurance, gas, oil changes, professional clothing. To buy his 2016 Mitsubishi Outlander SUV, Mr. Acosta took out a loan with an interest rate of 17.7 percent. He makes a point of wearing a tie in hopes of improving his rating as a driver and making his children proud.

A survey by the Independent Drivers Guild found that one-fifth of drivers had household incomes of less than $30,000 per year. A survey by a competing group, the New York Taxi Workers Alliance, which represents taxi and ride-hailing service drivers, found that about 44 percent of drivers made incomes between $20,000 and $39,000.

Mr. Acosta, a guild member, pays $18 in dues each month. The group has given him a voice, he said, like when it fought to allow passengers to tip from within the app — an idea Uber embraced last year. 

Most riders still do not tip, though. “They got used to not paying a tip,” he said.

The guild is now calling for change. It wants a minimum pay rate for app drivers, similar to the metered fare taxi drivers earn; a limit on Uber’s commission; and a halt to licensing additional drivers.

The City Council is considering a series of bills, including one that would restrict the number of for-hire vehicles. At the same time, the city’s taxi commission is studying driver pay and is planning to propose new rules this summer to address the problem.

Meera Joshi, the city’s taxi commissioner, said an influx of vehicles has made it much harder for drivers to find trips.

“The pay, from what we can see, has been declining, in part because of the competition among apps to offer the lowest passenger price,” Ms. Joshi said.

Alix Anfang, a spokeswoman for Uber, said the driver pay study was a good idea.

“We believe that all full-time drivers in N.Y.C. — taxi, limousine and Uber alike — should be able to make a living wage and support their families,” Ms. Anfang said.

The drivers who have taken their lives were from across the industry — men who drove taxis and for livery and black car services. The latest suicide was Abdul Saleh, a yellow taxi driver who leased his cab and died last week, according to the Taxi Workers Alliance.

In light of the taxi driver suicides, Mr. Khosrowshahi said he would support a fee on Uber trips to pay for a “hardship fund” to support taxi medallion owners who are struggling. Medallions once sold for more than $1 million and now go for as low as $175,000.

Bhairavi Desai, executive director of the New York Taxi Workers Alliance, slammed the “hardship fund” as a public relations stunt and an attempt to avoid new regulations. Ms. Desai is a frequent critic of the Independent Drivers Guild, arguing that its leaders cannot be trusted because they receive money from Uber. Ms. Desai says the guild’s attacks on Uber are meant to give the impression that it is not cooperating with the company.

“They have to create tension to have some level of credibility,” Ms. Desai said.

The taxi workers alliance, which was founded in 1998 and has about 4,000 dues-paying members, has also pressed for new rules, including a vehicle cap and minimum fare rate.

But the Independent Drivers Guild’s message is more polished. The guild, which is affiliated with a regional branch of the International Association of Machinists and Aerospace Workers, hired Revolution Messaging, the company behind Mr. Sanders’s digital campaign in 2016. It was founded by staffers from Mr. Obama’s 2008 campaign.

Last week, the guild’s executive director, Ryan Price, criticized Mr. Khosrowshahi’s “hardship fund” as another fee that would hit workers.

“Uber’s C.E.O. needs to address the widespread hardship faced by drivers for his own company before considering taking another cut from our sub-minimum wage pay,” Mr. Price said.

Facing low wages and long hours, some Uber drivers have quit. But Mr. Acosta keeps working for the company because he needs a job with flexibility. One of his sons has spina bifida and uses a wheelchair. He has to take him to many appointments.

“I don’t have any other choice,” Mr. Acosta said.

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

CBS News: Uber CEO backs surcharge to aid struggling NYC taxi owners

NEW YORK -- The CEO of Uber says New York City should impose a fee on app-hailed rides to help taxi medallion owners who are struggling with debt.

CEO Dara Khosrowshahi told the New York Post on Monday the city should put the surcharge into a fund to help taxi owners who bought their medallions at sky-high prices. He didn't say how much the fee should be.

"In circumstances where medallion owner-operators are having a hard time, where technology has changed and demand patterns has changed their environment, we would support some kind of fee or pool to be formed, a hardship fund, call it," Khosrowshahi said.

Because taxi drivers in New York City are required to own them, medallions were once extremely valuable and highly coveted because the demand for cabs was stable. But in the years since Uber and similar companies disrupted the industry, a medallion's value has fallen from as much as $1 million to $200,000.

Drivers working for Uber and other app-based companies don't need medallions, and now many taxi owners who thought their medallions would continue to grow in value say they're hundreds of thousands of dollars in debt.

Advocates have blamed five apparent suicides of drivers since last November on the taxi industry's woes.

In the most recent case, yellow cab owner-driver Yu Mein Chow was found floating in the East River last month. The city medical examiner hasn't determined a cause of death, but Chow's family members believe he jumped to his death.

A livery cab driver shot himself to death outside City Hall in February after writing a Facebook post blaming politicians for the taxi industry's decline.

Groups that represent drivers blasted Khosrowshahi's proposal.

"Dara Khosrowshahi's proposals are a slap in the face to struggling drivers and an attempt to get out of being regulated," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance.
The Independent Drivers Guild, which represents Uber drivers, said Khosrowshahi "needs to address the widespread hardship faced by drivers for his own company before considering taking another cut from our sub-minimum-wage pay."

© 2018 CBS Interactive Inc. All Rights Reserved.

Forbes: Can Student Loans Now Be Discharged In Bankruptcy?

By Zack Friedman

It's one of the most intensely-debated student loan questions: Can you discharge your student loans in bankruptcy?

The short answer: normally, student loans are not dischargeable. However, that may change.

Here's what you need to know - and why.

Student Loans & Bankruptcy: Overview

First, a quick overview. As many borrowers struggle to repay ballooning student loan debt, bankruptcy is one option that gets floated.

According to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. The average student in the Class of 2016 has $37,172 in student loan debt.


Student loans are now the second highest consumer debt category - behind mortgages, but ahead of credit card debt.

Unlike other consumer debt such as credit card and mortgage debt, however, student loans traditionally cannot be discharged in bankruptcy.

Why? Some can't explain the rationale for the student loan "no bankruptcy" exception, but others say it grew from a concern that student loan borrowers could take advantage of bankruptcy laws, borrow a bunch of debt, earn a degree and then file for bankruptcy.

There are exceptions, however, namely if certain conditions regarding financial hardship are met.

The Brunner Test: Financial Hardship
Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.

In plain English, the Brunner standard says:

1. the borrower has extenuating circumstances creating a hardship;
2. those circumstances are likely to continue for a term of the loan; and
3. the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments - such as try to find a workable payment plan.)

There are variances across federal districts, but that’s the basic framework.

How Do You Discharge Student Loans In Bankruptcy?

In order to have a student loan discharged through bankruptcy, an Adversary Proceeding (a lawsuit within bankruptcy court) must be filed, where a debtor claims that paying the student loan would create an undue hardship for the debtor.

Were Student Loans Ever Dischargeable In Bankruptcy?

Yes. Prior to 1976, you could discharge your student loans in bankruptcy.

Congress then changed the law: student loans were dischargeable if they had been in repayment for five years. Subsequently, that period was extended to seven years.

In 1998, Congress removed dischargeablility except if a debtor could show that paying back the student loans would create an undue hardship. In 2005, Congress extended this protection to private student loans.

So, What's Changed Now?

According to the Wall Street Journal, which spoke to more than 50 current and past bankruptcy judges appointed during both Democratic and Republican administrations, some judges may be more open to helping debtors.

Does that mean the floodgates are now open and student loans can be discharged in bankruptcy?

No.

That said, some judges are looking at ways to help alleviate the burden. Examples, per the Wall Street Journal, may include:

• encouraging bankruptcy attorneys to represent debtors at no cost
• potentially eliminating future tax bills that be linked to student loan debt relief or debt cancellation after 25 years through federal student loan repayment programs
• cancelling private student loan debt from unaccredited schools
• allowing student loan borrowers to make full payments during the Chapter 13 debt repayment period (which can last five years)

While these tactics may be welcomed by some student loan borrowers, critics may question whether judges should actively try to circumvent the existing law (suggesting that Congress, and not judges, should make the law).

Since the vast majority of student loan debt outstanding is comprised of federal student loans, any cancellation of federal student loan debt would be at the federal government's (and taxpayer) expense.

What Else Can You Do If Your Struggling To Make Student Loan Payments?

Here are two strategies:

1. Income-Driven Repayment: For federal student loans, consider an income-driven repayment plan such as IBR, PAYE or REPAYE. Your payment is based on your income, family size and other factors, and is typically lower than the standard repayment plan.

After a certain period of time (such as 20 or 25 years, for example), your federal student loans (not private student loans) can be forgiven. However, you likely will owe income taxes on the amount of your student loans that are forgiven.

2. Pay Off Other Consumer Debt: If you have other high interest debt such as credit card debt, consider paying off this debt first (particularly if the interest rate is higher than your student loan interest rate). This can free up cash that can be applied to student loan debt reduction.

You can also consider a personal loan to pay off your credit card debt. Credit card consolidation is the process of paying off your existing credit card debt with a single personal loan at a lower interest rate.

If you can borrow a personal loan at a lower interest rate than your credit card debt, you can save in interest costs and also potentially improve your credit score.

© 2018 Forbes Media LLC. All Rights Reserved.

May 2018 TLC medallion sales

The May 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are James Shenwick’s comments about those sales results.

1. The volume of transfers rose from April. In May, there were 37 taxi medallion sales (excluding stock transfers).

2. 21 of the 37 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).  Four additional transfers were family or estate transactions for minimal or no consideration, which we have also excluded from our analysis.

3. The amount of foreclosure sales indicates, in our opinion, that medallion values will continue to decline.

4. The twelve regular sales ranged from a low of $150,000 (one medallion), to two medallions at $155,000, to two medallions at $160,000, to two medallions at $175,000, to two medallions at $190,000, to one medallion at $200,000 and two medallions at $287,500.

5. The sales volume rose from April’s eight regular sales. At this stage of the market, not many parties are involved in selling or buying medallions, possibly due to the fear that medallion prices may further decrease.

6. The median of May’s sales was $175,000, a $2,500 (1.4 %) decrease from April’s median sales of $177,500.

7. Based on this data and market conditions, we do not believe that taxi medallion values have bottomed out.

Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at jshenwick@gmail.com.

Wall Street Journal: Judges Wouldn't Consider Forgiving Crippling Student Loans-Until Now

In interviews with the Wall Street Journal, more than 50 current and former bankruptcy judges, frustrated at seeing borrowers leave federal courtrooms with six-figure debts, say they or their colleagues are more open to chipping away at the decades-old guidelines that determine how such debt is treated.
 
“If the law’s not going to be improved by Congress, we have to help these young people who are drowning in student loan debt,” said U.S. Bankruptcy Court Judge John Waites in South Carolina.
Outright cancellations remain rare, but judges said they have other tools at their disposal, including encouraging lawyers to represent borrowers for nothing. The lawsuits can cost $3,000 to $10,000 and take years.
 
Other judges are embracing debt-relief techniques that don’t fully erase student loans but make repayment more affordable by, for instance, canceling future related tax bills. The popularity of these relief strategies could get a boost from a panel of professors, judges and advocates who are studying failures in consumer bankruptcy law and plan to release a report next year.

Nearly 45 million people carry student debt in the U.S.—the total amount has more than doubled over the past decade to $1.4 trillion—most backed by the federal government. It has eclipsed credit cards as the largest source of consumer debt after mortgages. Almost every other type can be extinguished in bankruptcy, but legal standards made college debt largely untouchable. Borrowers typically must repay student loans over their lifetime, even those facing extreme financial hardship.In March, Federal Reserve chairman Jerome Powell said he would be “at a loss to explain” why student loans can’t be cancelled like other debt. The Trump administration is considering whether to fight cancellation requests less aggressively.

Consumer bankruptcy lawyers are starting to notice that judges are being more flexible. One Las Vegas law firm recently filed the first cancellation request in its 14-year history after hearing a judge at a conference voice concern over student loans. Other lawyers said growing sympathy among judges is making lenders more willing to reach resolutions out of court.

“I’m getting really good results with settlements these days,” said Chicago lawyer David Leibowitz. “I’m not the only one.”

Rules governing how student debt is handled in bankruptcy are made by Congress and by judges who issue influential rulings. Several bills in Congress that would erase student-loan debt in bankruptcy have stalled in recent years.

Last year in Philadelphia, U.S. Bankruptcy Court Judge Eric Frank cancelled a single mother’s $30,000 in student loans. Opposing lawyers from the U.S. Department of Education said the borrower needed to prove her hardship would persist 25 years, the length of some repayment plans. Judge Frank ruled that the relevant window was five years.

An appeals court overturned his ruling, but his decision inspired Judge Mary Jo Heston in Tacoma, Wash., in December to cancel a portion of another borrower’s loans.

Such rulings are rare because few troubled borrowers attempt to cancel their student loans, because of the historically slim chances of victory. Last year, only 473 people of the millions repaying student loans sought relief using bankruptcy, according to a Wall Street Journal analysis.

No one tracks outcomes of student-loan cancellation cases, and only a handful advance to the point where a judge rules. In one examination of cases in 2017, judges ruled on student-loan debt 16 times, according to lawyer Austin Smith who analyzed WestLaw’s database of key decisions.

In those decisions, judges preserved student-loan debt in 12 cases, and canceled it in three. One borrower got partial relief.

Some bankruptcy judges criticize their colleagues for re-interpreting well-settled law on student loans. “My view is, if the law is clear, follow it,” said retired California judge Peter Bowie.

The push to rethink the legal standard on student-loan debt is bipartisan. Judges interviewed by the Wall Street Journal were appointed during both Republican and Democratic administrations, though bankruptcy judges are appointed by appeals court judges, not the president.

Disagreements among judges on student-loan debt expose philosophical differences, said Cornell Law School professor Jeffrey Rachlinski. Some judges want to maintain predictability by sticking to past law. Others see their roles as fixing flaws in the legal system, he said. “There are people who like to change the institution in which they work.”

Before 1976, laws allowed borrowers to do away with student-loan debt in bankruptcy. Congress, out of concern that new graduates would take too much advantage of that option, made a new rule: Borrowers could cancel student loan debt after only five years of payments. Judges could grant exceptions if borrowers showed that repaying would cause “undue hardship.”

Congress didn’t define “undue hardship” so the task of doing so fell to federal judges. When Marie Brunner, a 1982 graduate of a master’s program in social work, tried to cancel her loans in bankruptcy, a New York judge in 1985 said she had to show three things: she struggled financially, her struggles would continue and that she had made a good faith effort to repay. She lost.

That list still serves as a baseline for hardship in circuit courts that control the rules in most states.

Some appeals courts set even higher benchmarks, with one, for instance, saying borrowers must face a “certainty of hopelessness.”

In 1998 Congress said any borrower trying to cancel any federal student loans must prove “undue hardship,” like Ms. Brunner. Congress gave private student loans the same protection in 2005.

Some of the country’s bankruptcy judges are starting to argue that the prevailing legal standard is unintentionally harsh and wasn’t meant for adults still on the hook for student-loan debt years after college.

Judge Frank Bailey in Boston made that argument in an April ruling wiping out $50,000 in student loans for a 39-year-old man whose health ailments prevent him from working.

Frustrated judges are more likely to “look for wiggle room and try to find solutions that will allow them to sleep at night, ”said Terry Maroney, a Vanderbilt Law School professor who studies judicial decision-making.

Some judges, including U.S. Bankruptcy Court Judge Michael Kaplan in Trenton, N.J., said they are looking for ways to be more forgiving after seeing their own adult children borrow heavily for their education. Other judges grew concerned after talking to their law clerks. The typical law-school student takes out $119,000 in loans, according to the legal-education watchdog group Law School Transparency.

Two judges said they regret their rulings against borrowers more than a decade ago. One Florida judge said that if the case was filed today, the borrower would win.

Kansas judge Dale Somers said he worked particularly hard to justify the reasoning in a December 2016 ruling that cancelled more than $230,000 in interest that built up on a couple’s student loans from the 1980s. They left bankruptcy owing the original amount: $78,000.

Alabama judge William Sawyer declared that student loans had become “a life sentence” in a 2015 decision cancelling a $112,000 student loan debt for high school science teacher Alexandra Conniff, a single mother of two teen boys whose yearly income is $59,400.

She took out loans for several degrees, including a Ph.D. in special education, a discipline she also taught. Repaying them over 15 years would cost $843 a month.

Ms. Conniff testified she has been unable to land higher-paying jobs and keeps costs down. Federally contracted lawyers argued she could cut retirement savings, life insurance payments and $100 in monthly landline-phone costs. The case is under appeal and was sent back to Judge Sawyer to re-rule.

Copyright ©2018 Dow Jones & Company, Inc. All Rights Reserved.

Crain's New York Business: The other Uber fight: Unions brawl to rep drivers

By Will Bredderman

Who speaks for Uber drivers?

As market saturation and driver suicides wrack the taxi and black-car industry, and the city gears up for another street fight with ride-hail apps, three powerhouse unions are in an equally heated drag race to represent car operators working under Uber, Lyft and their competitors. All call themselves the definitive voice of tens of thousands of drivers and claim the others are frauds.

One twist in this union fight is that Uber and Lyft drivers are independent contractors, not employees, and thus cannot bargain collectively. That has become one of the biggest disputes among the combatants: the Independent Drivers Guild (an offshoot of the International Association of Machinists), the New York Taxi Workers Alliance (aligned with and partly staffed by building workers union 32BJ SEIU) and the Amalgamated Transit Union.

As proof of its legitimacy, the Taxi Workers Alliance, a volunteer organization founded in 1998 to organize drivers of yellow cabs, cites its lawsuits to get app-dispatch drivers recognized as employees of the tech giants. One of those suits won unemployment benefits for some Uber drivers; another, accusing the company of misclassifying its entire workforce, found the company skimming its hacks' fares.

Battling Uber, 'opportunists'

The alliance contrasts itself from the IDG, which came into existence in 2016 after the Machinists reached an accord with Uber. In exchange for the company's recognizing the Guild as the representative of Uber drivers and helping fund the organization's internal operations, the Machinists agreed not to push for employee status.

"It's not defending workers' rights when you decide that workers who don't have the ability to set the price of their labor are contractors," said Eugenio Villasantes, a spokesman for Taxi Workers Alliance benefactor 32BJ.

"We not only had to fight the company that had become the highest valuated company on earth," said the alliance's executive director, Bharivai Desai, "we also had to fight opportunists in the labor movement that were trying to be the first to make a deal with Uber."

The IDG denied Desai's accusation that it is a "company union." Noting that Desai's husband is a taxi medallion owner, the Guild insinuates that her group's push for regulations on apps—notably Mayor Bill de Blasio's failed 2015 plan to cap their growth—are really attempts to drive the new tech companies out of the market.

IDG steward Sohail Rana defended his organization's acceptance of Uber funding, saying it has paid for legal assistance, classes and organizing space for drivers. He said IDG petitions had compelled Uber and Lyft to introduce in-app tipping, and the IDG is now lobbying the Taxi and Limousine Commission to mandate minimum pay for drivers.

"These other organizations, they were not there," said Rana. "IDG is the only union that really helps drivers in real time."

The ATU, which has long represented bus drivers, argues that it is the most natural fit for the industry and claims it has gotten 16,000 drivers to sign union cards since 2016. The ATU's competition dismissed this as a stunt because the drivers are classified as contractors and cannot join the union. 

But the ATU deemed it "an experiment" that could lead to something dramatic.

"All organizing is to prepare for a strike," Chris Townsend, director of field mobilization for ATU Local 1181, told Crain's. Townsend demurred on whether such an action was imminent and said his union focuses on getting legal assistance for aggrieved drivers.

De Blasio and the City Council recently reopened discussion of passing legislation to contain the sector's astronomical growth, though a consensus has yet to emerge on how. The Taxi Workers Alliance has revived its calls to limit the number of new vehicles the Taxi and Limousine Commission can approve; the IDG has demanded a cap on the number of new drivers. Uber and Lyft, meanwhile, appear to be revving their engines for another fight.

Meera Joshi, chairwoman of the TLC, told Crain's its 180,000 licensed drivers would continue to be a target for union organizing. But she warned that the labor groups' disunity and self-interest could hobble efforts to curb the tech giants. "Because there is this hostility of 'who's going to own this space?,' it could end up being counterproductive," she said. "There's a question of, will any regulation come out at all? Why don't you focus on that, instead of fighting each other?"

© 2018 Crain Communications Inc.  All rights reserved.

New York Post: 139 taxi medallions will be offered at bankruptcy auction

By John Aidan Byrne

New York City’s struggling yellow cabbies are facing the auction block.

A record 139 taxi medallions will be offered for sale in bankruptcy auction this month — the latest sign that a deluge of ride-sharing apps like Uber are squeezing cabbies out of business and deeper into debt, as well as pinching the incomes of for-hire drivers, according to analysts.

The medallions will be auctioned for a fraction of their original value — some likely having cost their owners as much as $1 million or more apiece.

A minimum of 20 will be sold, the auctioneers say. The collection is part of the 13,587 licensed medallions required to operate New York City’s fleet of iconic yellow cabs. Back in 2013, a medallion fetched a whopping $1.3 million.

Today, prices have plunged to between $160,000 to $250,000 each, as a wave of ride-sharing vehicles floods the market.

Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, snatched up by Connecticut-based MGPE, a hedge fund presumably seeking yield on a distressed asset.

For-hire vehicles on New York’s congested streets have surged from 50,000 in 2011, when Uber entered the New York market, to about 130,000 today.

Not surprisingly, earnings for yellow cabbies have fallen off the cliff — full-time average annual earnings, before taxes, are down from $45,000 as recently as 2013, to as low as $29,000 today, according to some estimates.

Uber drivers, who number about 60,000 on New York’s streets at any given time, are also taking a hit from increasing competition.

Their estimated average annual earnings, pre-tax, today hover between $30,000 and $34,000. Many individual for-hire drivers earn less than an hourly worker at McDonald’s.

“Uber has worked hard to grow the transportation pie, ensuring that all New Yorkers can get a ride in minutes, particularly in neighborhoods outside of Manhattan that have been long ignored by yellow taxis and underserved by public transit,” said Uber in a statement. “The majority of our trips are happening in the Bronx, Staten Island, Queens and Brooklyn.”

© 2018 NYP Holdings, Inc. All Rights Reserved.

PYMNTS.com: Record Number Of NYC Taxi Medallions Up For Auction

Call it the Uber effect: A record 139 New York City taxi medallions will be up for sale in bankruptcy auction this month as cab drivers continue to struggle to compete with ridesharing apps.

According to The New York Post, bidders will be able to snag some of the medallions for a fraction of their original value — some might have cost their owners as much as $1 million or more apiece. Back in 2013, a medallion went for $1.3 million.

Today, however, prices have dropped to between $160,000 to $250,000 each due to increasing competition from ridesharing apps such as Uber and Lyft.

Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, bought by Connecticut-based hedge fund MGPE. This month, a minimum of 20 will be sold.

Rideshare vehicles in New York have risen from 50,000 in 2011, when Uber first entered the New York market, to currently about 130,000.

As a result, earnings for yellow cabbies have dropped, with full-time average annual earnings, before taxes, down from $45,000 as recently as 2013, to as low as $29,000 today.

Earlier this year, a report revealed that Uber and Lyft have become more popular than yellow and green cabs in NYC.

Analysis of data from the Taxi and Limousine Commission from blogger Todd Schneider found that in February 2017, ride-hailing services made 65 percent more pickups than taxis did. And the two companies combined now make more pickups per month than taxis did in any month since the data began being analyzed in 2009.

“Over the past 4 years, ride-hailing apps have grown from 0 to 15 million trips per month, while taxi usage has only declined by around 5 million trips per month,” wrote Schneider.

The data also shows that ridesharing services have been utilized more than taxis in the outer boroughs since the beginning of 2016 — and that gap has dramatically widened in recent months. In fact, Uber and Lyft are ten times more popular than yellow and green taxis combined in the outer boroughs.

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