Rep. Alexandria Ocasio-Cortez and New York City lawmakers are calling for tighter oversight of lending in the taxi medallion industry, following a series of reports from the New York Times highlighted lending practices that have saddled hundreds of low-income cab drivers with millions of dollars in debt.
In a new letter to several federal financial and banking regulators, the lawmakers have asked for information about entities involved in providing taxi medallion loans and whether the agencies have toughened up oversight of the industry and are cooperating with any law enforcement investigations into lending practices.
“Collectively, your agencies have the important responsibility to ensure that banks and credit unions are operating in a safe and sound manner, and are not engaging in, or otherwise aiding and abetting in, predatory schemes when making loans available to individuals, like these taxi drivers,” the lawmakers wrote.
A recent two-part investigation in the New York York Times revealed how leaders in the taxi industry - medallion brokers, credit unions bankers, and lawyers - artificially drove up medallion prices, and encouraged drivers to accept risky loans.
Their loosely-regulated practices, as much as the advent of ride-sharing apps like Uber and Lyft, helped contribute to the collapse of the medallion market, according to the Times, leaving drivers - including many immigrants who spent their life savings on medallions to help propel their families into the middle class - in crushing debt.
In one example, Mohammed Hoque, a Bangladeshi immigrant and taxi driver profiled by the Times and cited in lawmakers' letter, signed a $1 million contract for a loan to purchase a medallion that, with fees and interest, would later require him to repay $1.7 million. He only paid $50,000 up front for the loan, later learning that the payment was just for taxes.
Hoque, who lives in Queens, used his savings and money from friends and relatives, and maxed out credit cards for the loan. He struggled to make payments, and had his medallions seized five times, according to the Times.
Ocasio-Cortez, a member of the House Oversight and Financial Services committees who represents portions of the Bronx and Queens, and the other lawmakers have demanded answers by the end of the month.
"With more than 10,000 hardworking taxi drivers operating in New York City, these workers provide the foundation upon which the city’s economy depends and are a vital contributor to the transportation system,” they wrote. “These workers deserve better from their government.”