‘I Don’t See No Future’: Hundreds of Taxi Drivers Left in Debt as Lenders Balk at Loan Deal

A historic debt relief deal was meant to rescue cabbies from a medallion value crash. But some lenders are insisting drivers pay off loans in full, even if they can’t afford to.

Elias Schisgall · September 3, 2024

Between 250 and 400 drivers remain left out of the city's medallion debt deal. | Taton Moïse

Staying Focused

Standing on the steps of City Hall in September 2022, David Do, the chair of New York City’s Taxi and Limousine Commission (TLC), looked positively ecstatic.

Grinning widely, Do pumped his fist to the crowd of cab drivers assembled behind him to celebrate a milestone in a new debt relief deal for the city’s beleaguered taxi industry. “Good afternoon, everyone,” he began. “We are at the finish line!”

Standing alongside the TLC chair, US Senator Chuck Schumer shouted out drivers in the crowd who had participated in the protests that had led to the deal, including Dorothy LeConte, a Haitian immigrant who had been driving a taxi for more than 35 years. “Their hunger strike,” Schumer said, “just lit that fire, and said, ‘New York is not gonna turn our back on you.’”

But LeConte, along with hundreds of other drivers, has yet to see the benefits of the debt relief program, known as Medallion Relief Program Plus (MRP+).

Over the past couple of decades, more than 2,000 taxi drivers have racked up hundreds of millions of dollars in debt to purchase medallions, the small metal plates that serve as licenses for New York City’s yellow cabs. When Uber, Lyft, and then the Covid-19 pandemic arrived on the scene, the value of those medallions plummeted, leaving drivers suffocated by debt.

MRP+ was supposed to fix that problem. Under the program — negotiated between the city, the formidable New York Taxi Workers Alliance representing taxi and rideshare drivers, and Marblegate, an investment bank that held the greatest share of medallion loans — the city has restructured medallion loans for nearly 2,000 drivers, using about $100 million in public funds to convince lenders to wipe away nearly $400 million in debt.

Meet The New York City Taxi Drivers Protesting Outside City Hall

Daniel Efram

But thanks to lenders who are refusing to go along with the plan, between 250 and 400 drivers remain left out of the medallion debt deal, according to a NYTWA estimate, stuck with hundreds of thousands of dollars apiece in loans they cannot repay. One of them is LeConte, whose lender — a Manhattan-based company called S & R Medallion Corp. — refused to sign on. S & R offered to give her the medallion for $130,000 in cash, she said; if not, her debt would remain at more than $200,000 with steep monthly installments.

Lorenzo Ponce is in a similar fix. He started driving a taxi in 2004, purchased a medallion — then worth $550,000 — in 2009 with a $100,000 down payment, and still owes more than $400,000. He said has “no idea” why his lender, OSK, declined to join MRP+.

“They only care about money,” he said. “That’s it.”

To many low-income New Yorkers — especially those who had immigrated to the city — becoming a taxi driver long felt like a path to prosperity. The loans were easy to get, the work was flexible and self-supervised, and it didn’t seem like business would ever go away. New York would always need taxis, right?

More and more, drivers began to refinance their medallions to obtain cash for home purchases or their kids’ educations, many taking out three- or five-year loans ending in large balloon payments. The value of a medallion kept rising: from $200,000 in 2002 to more than $1 million in 2014. You could always refinance to avoid the balloon payment and, at worst, could always sell your medallion.

But this dream was, in fact, too good to be true. A New York Times investigation found that some lenders had artificially inflated the value of medallions by financing purchases at above-market prices, leaving taxi drivers with overly risky loans. Industry veterans and experts said even if rideshare companies like Uber and Lyft hadn’t arrived on the scene, the bubble was already destined to pop.

Faced with newly devalued assets, crushing debt, and falling revenues, drivers found themselves deep in the hole. A string of taxi driver suicides in 2018 served as a sobering indicator of their plight. Then the Covid-19 pandemic further cratered the industry, leaving drivers unsure if they could continue meeting their loan payments, which could amount to thousands of dollars a month.

Something had to give.

In 2021, then-Mayor Bill de Blasio put forward a $65 million plan — the original Medallion Relief Program — to rescue the industry and its workers. The city would give qualifying drivers a $20,000 down payment to help restructure their loans, as well as up to $9,000 total per driver for assistance toward monthly payments. De Blasio appointed the New York Legal Assistance Group to act as pro bono intermediaries for drivers seeking relief from their banks.

But NYTWA blasted the plan, insisting that the maximum $29,000 per driver would be insufficient to convince lenders to adjust their loan terms. By the time Adams took office, NYTWA was staging protests and a hunger strike, enlisting Schumer, US Representative Alexandria Ocasio-Cortez, and other elected officials to push the Adams administration for expanded debt relief.

Taxi and Limousine Commission chair David Do speaks at a rally to mark taxi drivers’ new debt relief bill in September 2022. | Screengrab from City Hall video

Under intense pressure, Adams and the TLC landed on MRP+. In exchange for lenders restructuring each loan to a flat $200,000, the program dangled two attractive carrots. First, the city would provide a $30,000 down payment per medallion — an expense that would total nearly $62 million by this May — with drivers paying the remaining $170,000 over 25 years at an interest rate of just over 7 percent. In addition, the city would guarantee to cover defaults by dipping into an additional fund of roughly $46 million.

The restructuring would turn out to be a boon for drivers who were able to participate. As of this May, almost 1,800 drivers had benefited from MRP+, dismissing a total of nearly $400 million in debt, according to the TLC.

But that still left hundreds of other drivers waiting for their loan companies to join in. Having Marblegate on board right out of the gate, the TLC hoped, would send a strong signal to other lenders in the industry. Restructuring “is almost like getting the biggest lender to agree, so then everybody else will tag along,” said Dawood Mian, who runs the industry blog AutoMarketplace.

A Marblegate spokesperson wrote in an email that the company had hoped MRP+ would incentivize other lenders to follow its lead. They declined to speculate on why other lenders would not agree to participate.

“For a driver, the MRP+ program offers an affordable monthly payment at a set rate, creating a pathway towards building equity in the medallion, and eventually owning it outright,” the spokesperson wrote. “For lenders, it offers a sustainable payment and improved loan performance, and a stabilizing market for medallions.”

Some lenders, such as PenFed Credit Union, another large institutional investor, readily signed on. But others continue to hold out. These include smaller financial firms, like BGW Holdings and OSK (formally O’Brien-Staley Partners/OSP), that had purchased medallion loans at a discount in recent years. Others, including S & R and Medallion Financial Corp., had provided the original loans when medallion values were wildly inflated, before the rise of Uber and Lyft.

According to Rose Marie Cantanno, an attorney at the New York Legal Assistance Group who has sat in meetings between OSK and the TLC, OSK would rather hold on to short-term loans in the hopes that drivers will make their balloon payments.

“OSP might be saying, ‘Listen, we bought this for 70 cents on the dollar, or 50 cents on the dollar, 10 cents on the dollar, and we wanna flip it, and we don’t care about this industry,’” agreed Mian. “We wanna get in and we wanna get out.”

Alex Korenkov, the manager of S & R, said the company restructured at least 20 loans under the original de Blasio program and four more under MRP+. But he said he would not do so for any more drivers, because under the new plan lenders have to wait to receive their full payout: “We’re not going to tie ourselves down for 25 years with no way out.”

(OSK, BGW Holdings, and Medallion Financial Corp. declined to respond to questions about MRP+.)

OSK, which after its loan-buying spree now holds the debt for 10 percent of New York’s active taxi medallions, had always conceded that medallions would never regain their original value. Jerry O’Brien, OSK’s CEO, warned in a February 2020 speech at Rice University that the original medallion loans were agreed to in a “different collateral universe” and that drivers could never be expected to pay off their full value. “So, you know, set your expectations to a discount payoff.”

Still, OSK was reluctant to join the revised restructuring plan. “There are banks that came on board that I didn’t originally think would come on board,” Catanno said. “Every time I talked to OSK, they said, ‘No, we’re not doing that.’”

Instead, according to NYTWA, OSK began dispatching repo men to seize medallions from delinquent drivers while Marblegate was already preparing to restructure others’ loans. (An OSK representative repeatedly declined to make any company officials available for an interview or respond to questions.)

“We’re not going to tie ourselves down for 25 years with no way out.”

—Alex Korenkov, manager of S & R Medallion Corp.

In response, nearly 70 New York elected officials, including Schumer and Ocasio-Cortez, penned an open letter urging OSK to join MRP+ and accusing the firm of harassing drivers. Schumer called OSK a “renegade” and a “bully.” And NYTWA hit the road, launching a motorcade of yellow taxis to OSK’s headquarters in Minneapolis.

After some behind-the-scenes string-pulling by Schumer, OSK suddenly announced that it would, in fact, join MRP+. In a March 29, 2022, press release, the firm announced that it “plans to participate in the enhanced program when it becomes operational.”

Just two months later, OSK’s tune had changed. It filed a lawsuit against NYTWA alleging that the group had used “nonstop militant action” to strong-arm OSK into joining MRP+ and insisted that it could not join a program that was not yet operational. (The details of MRP+ would be finalized later that year.)

Two weeks later, OSK withdrew its suit, with its CEO O’Brien telling The City that NYTWA had stopped its “tortious interference” with the firm’s loans. NYTWA executive director Bhairavi Desai, who described the legal action as a “SLAPP suit,” said she is still baffled by the reversal. But by that point, the bad blood between OSK and NYTWA ran too deep, and the accord they had reached with the city had fallen apart.

In June, Ponce, still $400,000 in debt to OSK, took three days off work to go in for a kidney biopsy. His doctors told him there was a chance of cancer.

But taking time off is a challenge for Ponce, who works long hours seven days a week to meet his monthly debt payments. If were to lose his kidney, he said in June, it could keep him off the road for weeks.

“I’m in trouble,” Ponce said. “I don’t know how long I’m going to keep holding this medallion. Sometimes I just want to file for bankruptcy, because I cannot do it anymore.”

Ponce’s experience mirrors that of other drivers in debt to holdout lenders.

Wilfrid Extanus, a 64-year-old immigrant from Haiti, said he was one of the drivers who contemplated suicide during the pandemic. OSK has repossessed his medallion three times, he said, each time demanding large sums to get it back. Extanus joined the picket line with NYTWA and shared in their victory when the city announced MRP+.

Now, he feels left in the dust. “So far, I don’t see no future,” Extanus said.

Instead of MRP+, many lenders have offered debt restructuring or a settlement under the original, de Blasio-era MRP program, Catanno said. But for a low-income driver struggling to meet monthly expenses, a $200,000 cash settlement can be prohibitively costly. “Not a lot of people can do that,” Catanno said.

Other lenders, like BGW Holdings, are simply looking to cash out however possible, demanding balloon payments in full from drivers and refusing to do any further restructuring, Catanno said: “They won’t work anything out with us, they won’t do extensions, they’re just like, ‘No, this is it.’”

If drivers cannot reach an agreement with their lender or continue to make their payments, they may have to declare bankruptcy or risk foreclosure on their medallions. According to NYTWA, holdout lenders have repossessed medallions, and at least one, BGW Holdings, sued its borrowers for more than $300,000 over defaulted payments.

“Sometimes I just want to file for bankruptcy, because I cannot do it anymore.”

—taxi driver Lorenzo Ponce

Both NYTWA and the TLC have tried to persuade the holdouts that MRP+ would be financially beneficial while providing sorely needed stability for drivers, but their efforts have been unsuccessful. And the TLC lacks any power to compel the lenders to participate in the deal.

In a statement, the TLC’s Do praised lenders who joined the program, adding that the agency “encourage[s] the few remaining lenders to participate so that every last medallion owner who qualified can benefit.” A TLC spokesperson would not comment on the record about the agency’s talks with OSK and other lenders.

The TLC’s deadline for new MRP+ applications closed in April, and it and NYTWA are at a loss as to how to secure relief for the remaining drivers.

MRP+ “gave us a lot of hope,” said driver Norman Buena Vista, whose loan is held by BGW Holdings. Now, he is staring down an impending balloon payment of close to $180,000 in September with no clear recourse, and he said MRP+ is beginning to feel like an empty promise.

“I don’t know what good is that going to do to me,” he said.

NYTWA is now approaching lenders with a new plan, Desai said: an estimated $60 million offer, by an undisclosed potential investor, to buy out the company’s loans.

“The campaign is still going on,” Desai told New York Focus. She said she is working first with one of the smaller lenders to reach an agreement. “If we get that deal done, then it gives us leverage to really focus on some of the bigger lenders like OSK.”

For Mian, the industry blogger, NYTWA’s new offer suggests that perhaps OSK has skillfully played its hand. “Is OSP actually being smart about this?” he said. “Are they actually saying, ‘These guys, let them raise the money, let them take us out at par, they’ll be happy, we’ll be happy, and we’ll call it a day?’”

But he said a funder’s willingness to join MRP+ also hinges on the performance of the loans themselves. If borrowers start defaulting en masse, it makes more sense to take the city deal. But if the loans are performing, he said, that changes the financial calculus: “They’ll be like, ‘Okay, if 200 guys are paying us $3,000 a month, why in the world would we take this deal?’”

This was O’Brien’s original bet on the medallion investment pre-pandemic. “This is our thesis,” he said at Rice. “If, after five years of being in daily competition with Uber and Lyft, you’re still driving your taxi and you’re still paying your loan, we think you’re a pretty good cabbie and a credit-conscientious borrower.”

But even drivers able to scrape together payments month by month say their situation is untenable.

“If it’s the way it is now, over $400,000, I will never pay,” Ponce said. “If it comes down to 170, maybe I will be able to pay it.”

Otherwise, Ponce said, “I’m going to lose it. I’m going to file for bankruptcy. Who’s going to pay me? I’m 60 years old.”