Saying that he believes that predatory lenders took New York City taxi drivers “for a ride and left families in a wreckage of financial distress and despair,” New York City Comptroller Scott Stinger Thursday endorsed a driver bailout plan proposed by the New York Taxi Workers Alliance.
“We have a fiscal and moral obligation to make this right—and embracing this plan is a start,” said Stringer, who is a candidate for New York City mayor.
Stringer said that he has reviewed the plan and has concluded that it offers a comprehensive risk management approach that could reduce future liability and costs for taxpayers.
Stringer did not name the lenders he considered to be predatory, but two credit unions—Melrose Credit Union and LOMTO Federal Credit Union—made a large number of taxi loans. As rider-sharing services became more popular, many drivers could not afford to repay their loans, leading to the failure of those credit unions.
The National Credit Union Administration was left holding those loans and the agency sold many of them to Marblegate Asset Management, a Connecticut private equity fund. A New York City city council task force had asked the agency to delay the sale of the loans so city officials could form a private-public partnership to purchase them. The agency sold the loans before city officials could act.
The taxi workers alliance plan has emerged as a fallback position.
The alliance has said that drivers cannot afford to make the large payments on their loans. The union’s plan calls on lenders to write down outstanding loans to a maximum of $125,000. The interest rate would be set at 4% and maximum monthly loan payments would be under $800. The city would serve as the guarantor of those loans.
Under the plan, the city would take possession of taxi medallions of drivers with loans that went into default. The city then could auction off the medallions.
“The taxi medallion crisis is a test of our commitment to fighting poverty and preserving pathways to the American Dream,” Stringer said, as he endorsed the plan.