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

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.

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.

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.)

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.