A key New York City official is renewing a push to convince the city to provide debt forgiveness for taxi drivers left drowning in debt after they took out huge loans from financial institutions, including two credit unions that later were liquidated.
The city’s cab drivers are “among the frontline workers who are going outside every day to make sure people can get around safely, they are also among those who are financially struggling during this pandemic,” Jumaane Williams, the city’s public advocate told the City Council’s Consumer Affairs and Business Licensing and Small Business committees.
The city’s public advocate is an elected position in the city; the advocate serves as an ombudsman in city government.
The testimony came at a hearing on a proposal to urge Congress and the state’s legislature to outlaw the use of confessions of judgement, which Williams said “once signed by the borrower of a monetary loan, relinquishes the borrower’s right to dispute legal claims made by the lender.”
Williams said many taxi drivers signed such confessions, making it more difficult for them to receive relief from their loans. “Lenders can use these agreements to accuse borrowers of defaulting on their loans and seize their assets without proof and prior notification,” Williams said.
The value of taxi medallions in New York City has plunged as a result of ride-sharing services. Many drivers took out large loans, using their medallions as collateral.
The debacle caused the failure of two major credit unions in the city, Melrose and LOMTO Federal Credit Union, causing a loss of almost $800 million in the NCUA’s Share Insurance Fund. The NCUA was left holding thousands of those loans and the agency has sold many of them to a private equity fund, Marblegate Asset Management.
A city council task force earlier this year recommended that a private-public partnership be formed to purchase the loans, allowing the drivers to make affordable payments. However, the taxi loands were sold before that partnership could be formed.
Williams told the city council committees that although much of the city’s funds will be used to address the coronavirus crisis, officials also should find way to help the taxi drivers.