The Real Conning
of the Medallion Owners: Regulatory Malfeasance and the Rise of Uber
Protz and Sergio Cabrera
There is a new narrative about the decline of the iconic taxi that is looking
to take hold. In this new perspective, the entry of Uber and Lyft into the
NYC taxi market did not act as a catalyst for the decline of taxi medallion values.
It was the medallion lending industry that tanked the value of this unique taxi investment.
N.Y.Times 5/19/19-Article 1
N.Y.Times 5/19/19-Article 2
The real scandal, however, is not just that regulators turned a blind eye to
predatory lending, but how the Taxi and Limousine Commission, as well as elected
officials, played an active and pivotal role in taxis demise that goes way beyond the
oversight of lending practices. Suffice it to say: It was no accident.
In 2010, the TLC had an internal report in hand that predicted the collapse of the
lending market because loans were unsustainable. But the TLC, even though it knew how
fragile the situation was,went ahead and ignored its own rules, flooded the streets with
additional vehicles, and streamlined the processing of new drivers, cars and bases.
In essence, the City lit a match to a
combustible situation, and that’s a big missing part of this big bad lenders
story. It was the malfeasance of the regulators that allowed the Ubers to come
in with little or no financial barrier to entry-making a mockery and
exacerbating at the same time the very loans that are now being excoriated.
The creation of the TLC in 1971 came with a mandate to ensure the well-being of the iconic
yellow taxi. TLC rule 52-04(a)(4) states: “Establish and enforce standards to ensure all
Licensees are and remain financially stable. The mandate was consciously ignored.
TLC Chair Meera Joshi publicly now says she was, “worried about medallion costs and lending
practices but was pushed to prioritize other responsibilities. Like what? Adding an additional 85,000
vehicles? Joshi ignored, bent, changed and broke many of her own rules that, if respected, would have
prevented the destructive onslaught of excessive vehicles.
Joshi also failed to mention that it
is her agency-as former TLC Chair Chris Lynn tells us- that has the final say
over all medallion transactions, and she was general counsel at the TLC when
the 2014 medallion offset price of $850,000 was established.
Some examples stand out.
In April, 2017, the TLC held a hearing
on industry economics that went on for 6 hours with medallion owners
begging the TLC Commissioners to shoot them because their lives had become so horrific.
Yet the only thing that came out of that hearing was an option for tipping of app drivers.
Tech Crunch 07/13//17
The following year, as owner and driver suicides had already begun, the willfully blind TLC
commissioned a study of driver income, and the academics who were tasked with the study were
explicitly told to exclude the yellow industry from their considerations and also to not consider
a cap on for hire vehicles? As a result of the study, the city established a minimum wage for drivers
of for hire vehicles. Are we seeing a trend yet?
An Earnings Standard for New York City’s App-based Drivers:
Perhaps the most egregious display of malfeasant favoritism is how the mayor
and the city council mishandled Uber and Lyft resistance to any attempt to
comply with the same accessibility requirements that are mandated for taxis. When push
came to shove, the city caved and allowed the company sponsored plan with no vehicle
mandate to go into effect.
The tragic bankruptcies and foreclosures that are being highlighted today, were unknown
prior to the influx of the Ubers. Their catalytic role, and the subsequent shameful enabling
of the City, is unmistakable.
In 1971, taxis were making 500,000 daily trips, today they are doing 250,000 while the FHV invaders
are doing 769,000! Uber itself has lost billions of dollars undercutting competitors through predatory
pricing and capturing market share. These facts and the circumstances surrounding them cannot be airbrushed
out of the picture.
WALL STREET JOURNAL 5/19/19
The public sector needs to be held to account for the part is has played in the threatened
demise of taxis, and the wanton harm done to thousands of defrauded immigrants who came to this
country in search of a better life.
medallion owners and members of Taxi Medallion Owner Driver Association)