New York City Comptroller Scott Stringer has endorsed a proposal by the Taxi Workers Alliance that would bail out medallion drivers by writing down city backstop loans held by individual owners.
The alliance’s plan, in part to offset the economic hit from COVID-19, calls on lenders to write down outstanding loans to a maximum of $125,000, allowing medallion owners to repay loans on terms they can afford with current earnings.
Interest rates would be capped at 4%, with monthly payments at less than $800.
Stringer, a mayoral hopeful for 2021, said the plan offers a comprehensive risk-management approach that could reduce future liability and costs for taxpayers.
“We have a fiscal and moral obligation,” he told reporters Thursday. “Predatory lenders took drivers for a ride and left families in a wreckage of financial distress and despair.”
Stay-at-home orders and business closures since the coronavirus escalated in March have hit the taxi industry and other business. Even before the pandemic, medallion drivers were reeling due to competition from app-based services such as Uber and Lyft.
“Predatory lenders took drivers for a ride and left families in a wreckage of financial distress and despair,” said Stringer, referring to nine cabbie suicides over the past year.
“In the early 2000s, many taxi medallion owners took out loans to purchase medallions at inflated prices that were driven upward by predatory lenders,” Stringer said.
According to the comptroller, the alliance proposal recognizes that lenders are holding non-performing loans often not worth their face value.
The city backstop, he said, puts a floor under loan losses by guaranteeing purchase of any medallions on which borrowers default.
“With this approach, the city would take possession of the medallion and be able to sell it to recoup all or part of its cost,” Stringer said. “As a package, this proposal represents a sound risk-management alternative to the current status quo.”
A city backstop, he said, would benefit medallion owners, lenders and city taxpayers. City exposure would be limited, he said, and the threat of larger liability could be removed or reduced.
