NEW YORK: Ride-hailing apps such as Uber and Lyft have been so disruptive to New York City’s taxi industry, they are causing lenders to fail.
Just three years ago, cab owners and investors were paying as much as $1.3m for a medallion. Now they are worth less than half that, and some medallion owners owe more on their loans than the medallions are worth.
Lomto Federal Credit Union, which was founded by taxi drivers in 1936 for mutual assistance, was placed into conservatorship by the National Credit Union Administration on June 26 ‘because of unsafe and unsound practices’. While some medallions are held by large owners with fleets, owning a single medallion was long seen as a ticket to the middle class and immigrants.
Many of them now owe more on their medallion loans than they originally paid for the medallions because they used their equity for a home, a child’s education, etc.
Critics say the federal agency is playing hardball with medallion owners who have been making their payments, by demanding that they pay off their loans in full or face foreclosure. “They’re approaching it with this cookie-cutter idea,” said David Beier, head of the Committee for Taxi Safety.
Published in Dawn, July 16th, 2017