New York City Representatives Calling for Taxi Bailout
New York City’s yellow cabs are some of the city’s most iconic symbols. The exploding popularity of Uber and Lyft have made a dent in how much traditional cab drivers earn, and it’s sending many of them into bankruptcy and failure. This month, the issue climbed the steps of the U.S. Capitol for a hearing in front of the U.S. House Committee on Financial Services.
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To operate a traditional cab in NYC, you have to use a taxi medallion. It’s a type of city permit, and there are a finite number of them. When the government decides to expand the number of cabs allowed on NYC streets, or an owner decides to get out of the cab business, the medallions go to auction. Before Uber and Lyft came to the city, medallions routinely fetched more than a million dollars. Lenders were more than ready to make huge loans to let drivers make the investment. Now prices have plummeted, leaving drivers with huge loans they can’t escape by selling the medallion to someone else. It’s a similar situation that homeowners were in after the housing bubble burst in the Great Recession.
The New York Times reports that more than 950 taxi drivers have declared bankruptcy, and NYC is investigating the lenders that made these loans in the first place. City leadership is torn on what to do, with Mayor Bill de Blasio saying a local bailout would be too expensive, costing up to $13 billion. Federal representatives, tired with inaction, brought the search for a solution to Washington, D.C.
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Representatives Alexandria Ocasio-Cortez, Nydia Velázquez, and Carolyn B. Maloney, all Democrats from New York, spoke out against the loans taxi drivers are trapped in during a special congressional hearing this Thursday. Each representative took a different approach to help the Big Apple’s taxi drivers: Ocasio-Cortez advocated for an all-out bailout to cancel debt from these sub-prime loans, Maloney pushed for a halt in foreclosures on taxi drivers, and Velázquez wants new legislation to stop predatory lending and add disclosures on small business loans.
No matter what, New York City’s taxi drivers need help. We’ll see if that assistance comes from local or national leadership.
News Source: The New York Times