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The Medallion Problem - Taxi Owners' dreams shattered

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RMaddox
109 Rider
 Posted 4 years, 1 month ago

An excerpt from a recent CNBC article on the medallion problem.  It's a worth a read...while they still exist. Check out the bit on how immigrants took out huge loans to purchase a medallion as part of fulfilling their American dream.  I highlighted Uber's comments too.

Uwazie said he knows several Chicago drivers who died of heart attacks or strokes after struggling financially.

“The drivers are underwater and if they can’t refinance, they are giving up their medallions,” said Uwazie, who had hoped to one day buy his own medallion but is now glad he didn't. “Those medallions were supposed to be their 401(k)s, but everything has been flushed down the drain."

In a measure of how shaken drivers in Chicago are by what happened in New York, The Chicago Dispatcher, a monthly newspaper for cab and livery drivers, placed an ad for a suicide prevention hotline on page 3 of the April edition.

Taxi medallions are permits that cities issue to cap the number of cabs on the road. Until the past several years, the value of the medallions seemed to keep rising as large taxi companies, individual operators and other investors bought them up.

Many immigrants saw securing a taxi medallion as the fulfillment of their American Dream, and they financed them as they would a mortgage, assuming they would only grow in value over time.

In 2014, the price of a New York City medallion topped $1 million. That year, they went for $700,000 in Boston, $400,000 in Philadelphia, and $300,0000 in Chicago.

But with the advent of outfits like Uber and Lyft, which cracked the cab monopoly by enabling consumers to hail rides from any registered driver using smartphones, loan…

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An excerpt from a recent CNBC article on the medallion problem.  It's a worth a read...while they still exist. Check out the bit on how immigrants took out huge loans to purchase a medallion as part of fulfilling their American dream.  I highlighted Uber's comments too.

Uwazie said he knows several Chicago drivers who died of heart attacks or strokes after struggling financially.

“The drivers are underwater and if they can’t refinance, they are giving up their medallions,” said Uwazie, who had hoped to one day buy his own medallion but is now glad he didn't. “Those medallions were supposed to be their 401(k)s, but everything has been flushed down the drain."

In a measure of how shaken drivers in Chicago are by what happened in New York, The Chicago Dispatcher, a monthly newspaper for cab and livery drivers, placed an ad for a suicide prevention hotline on page 3 of the April edition.

Taxi medallions are permits that cities issue to cap the number of cabs on the road. Until the past several years, the value of the medallions seemed to keep rising as large taxi companies, individual operators and other investors bought them up.

Many immigrants saw securing a taxi medallion as the fulfillment of their American Dream, and they financed them as they would a mortgage, assuming they would only grow in value over time.

In 2014, the price of a New York City medallion topped $1 million. That year, they went for $700,000 in Boston, $400,000 in Philadelphia, and $300,0000 in Chicago.

But with the advent of outfits like Uber and Lyft, which cracked the cab monopoly by enabling consumers to hail rides from any registered driver using smartphones, loans for medallions dried up as the prices plummeted. Last year, more people used Uber than yellow cabs in New York City, according to the city’s Taxi & Limousine Commission, or TLC.

Meanwhile, cabbies and cab company operators have been unloading their medallions, the chief reason being bankruptcy. At a recent auction, the bidding for five New York City taxi medallions put up by the Aspire Federal Credit Union started at $150,000, and none sold for more than $200,000, Crain’s New York reported.

The situation in Chicago is no better. Three years after the city allowed Uber and Lyft to operate, hundreds of cab drivers are frantically trying to unload their medallions, and hundreds more are in foreclosure, said Cab Drivers United, the local union.

“There isn’t any financing available anymore,” said Charles Goodbar, a Chicago lawyer who used to help secure loans for medallion buyers and owns 58 of them himself.

Goodbar recalled an immigrant cabbie, Joseph Slivo, who used every penny he had to make a down payment on a medallion and then found himself unable to keep up the loan payments because he wasn’t making enough on the road.

“He turned his medallion in and a week later he was dead" of a heart attack, Goodbar said. “It’s sad. This was a family man, a dedicated driver."

Yu Mein Chow, a New York City cabbie who was found drowned in the East River in May, had taken out a loan seven years ago to buy a $700,000 medallion and was also struggling, The New York Times reported. His family believes he killed himself.

Uber, in a statement, expressed condolences to the Chow family but said he was the victim of predatory lenders and economic change.

“Drivers who own individual medallions have been left behind by change and exploited by lenders, and we support action that eases their financial burden," the company said.

Uber also defended the company's practices in New York, saying Uber drivers are not poaching the main territory served by yellow cabs, which is Manhattan.

"Uber has worked hard to grow the transportation pie, ensuring that all New Yorkers can get a ride in minutes, particularly in neighborhoods outside of Manhattan that have been long ignored by yellow taxis and underserved by public transit,” the spokesperson said. “The majority of our trips are happening in the Bronx, Staten Island, Queens and Brooklyn."

Full article: https://www.nbcnews.com/news/us-news/shadow-uber-s-rise-taxi-driver-suicides-leave-cabbies-shaken-n879281

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Comments

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    ChatswickFan
    264
     4 years ago

    Powerful piece.  We all ignored this problem, and now it's too late.

    Many immigrants saw securing a taxi medallion as the fulfillment of their American Dream.