A New York City taxi medallion relief plan touted by Mayor Bill de Blasio does not provide enough help to taxi drivers laden with loans, many of which were made by credit unions, key New York Democratic members of Congress said last week.
De Blasio announced Saturday that 90 loan restructuring deals have been approved for taxi drivers under the city’s $65 million Medallion Relief Program.
However, the members of Congress, including Senate Majority Leader Charles Schumer, D-N.Y., said the program lacks a crucial feature. “The city must add a guarantee to the existing grant program to transform it into meaningful debt relief and ensure that drivers have sustainable monthly mortgage payments that allow them to take home a living wage,” the lawmakers wrote, in a letter to the mayor.
The New York Democrats include Rep. Richie Torres, Carolyn Maloney, Alexandria Ocasio-Cortez and House Democratic Caucus Chairman Hakeem Jeffries.
The Democrats endorsed a plan proposed by the New York Taxi Workers Alliance. Under that plan, the city would guarantee the loans if they went into default.
The bailout plan is the latest twist in the long-standing taxi medallion loan crisis. Many drivers took out loans from credit unions and banks, using their taxi medallions as collateral. As ride-sharing services grew in popularity, many of those drivers have been unable to repay their loans and simultaneously their medallions dropped in value. The coronavirus crisis exacerbated the problem since many people who normally work and travel in the city worked from home.
The medallion crisis led to the failure of at least two credit unions—Melrose Credit Union and LOMTO Federal Credit Union. That left the National Credit Union Administration holding taxi loans from those institutions. Several city officials attempted to cobble together a private-public partnership to purchase the loans. However, before that group was formed, the NCUA sold the loans to Marblegate Asset Management, a private equity fund.
The city has established a $65 million program intended to help drivers by making $20,000 down payments to restructure loan principals and set lower monthly payments, as well as up to $9,000 for monthly debt relief payments.
“As the Medallion Relief Program continues to build momentum, more and more medallion owners are finally getting the fair deal and fresh start they deserve,” de Blasio said Saturday. “This program is delivering economic justice for the hardworking New Yorkers who need it most, and I look forward to celebrating even more successes in the weeks and months to come.”
However, the members of Congress said that the loan guarantee is needed to provide substantial assistance to drivers. “With this guarantee in place, your proposed Medallion Relief Program would then provide drivers the needed resources to restructure their medallion loans and resume their lives without the fear of being personally liable in case of a future downturn in the taxi industry,” they wrote.