Help cabbies steer through this crisis - New York Daily News

June 3, 2020

The collapse of the New York City taxi medallion market will be remembered as one of the greatest government failures in Gotham’s history. The bankruptcies and foreclosures, the suffering and the suicides were not the consequences of market forces beyond the city’s control. Instead, this enduring crisis is the product of a deregulated, overpriced, over-leveraged market that the city not only failed to regulate, but also helped create through auctions, advertising and approvals of predatory transactions.

 As the city wrestles with how to uplift the hundreds of thousands of New Yorkers whose lives and livelihoods have been devastated by COVID-19, we must never forget that among those hit hardest are the more than 21,000 yellow and green taxi drivers who have been struggling to stay afloat well before the outbreak of coronavirus. Far from being an excuse for delay, COVID-19 is a call to action on behalf of all working people, and especially those taxi workers who were already underwater with crushing debt.

 To that end, I am calling for the city to immediately establish a Medallion Asset Relief Program (MARP) to reset medallion values to $250,000 for the 6,250 medallion owner-operators, or those who own and operate 20 medallions or fewer, through a government guarantee of every taxi medallion in NYC. A program such as this, modeled after the federal Home Affordable Refinance Program (HARP), would cost the city as little as $20 million to implement over the next five years — a small investment that would ultimately create nearly $1.4 billion in new equity for drivers that would help them for decades to come.

 While the average medallion loan currently holds a value of about $500,000, the actual value of those medallions averages less than $150,000. By resetting these values to $250,000, which is a much more accurate value for a working business, this would give owner-drivers the opportunity to restructure their loans at considerably more favorable rates, lowering their monthly payments to just over $1,000.

 Simply, MARP would rehabilitate the medallion as an asset, enable the affordable refinancing of medallion loans, lower monthly loan payments for owners and restore confidence in the medallion market. It is a win for all parties but the profiteers, who are deservedly denied a bailout.

 By creating a city-supported backstop to cover missed payments by drivers, the interest rates on these loans would immediately go down, substantially lowering payments for drivers to a value far more consistent with what their businesses earn, leading to a lower default rate.

 The status quo for New York’s taxi industry is immoral and untenable, as our city continues to abide a system that condemns over-leveraged medallion owners to debt slavery with no end in sight. Moreover, MARP is significantly more cost-effective than a bailout, a venture the city would have to spend hundreds of millions — if not billions — that we simply cannot afford.

As the city weighs various proposals to help the countless New Yorkers across every industry who are struggling, it is critical we remember that among those hit hardest by the current pandemic are the taxi drivers, who were already fighting to stay afloat for years before coronavirus took hold of our city and economy. They played by the rules set by the city and are now enduring extraordinary financial hardships made even worse by the pandemic. Both the financial and human toll brought on by the medallion debt crisis cannot be overstated.

 It is clear that the pandemic has exponentially exacerbated the financial problems that drivers faced before the outbreak, making this not just the perfect opportunity for the city to step up and take sweeping action to save the drivers and fix the industry, but the only viable option for saving the jobs and businesses these drivers have poured their lives into.

MARP is an elegant solution to a long-standing crisis that has been compounded by COVID-19.