Ocasio-Cortez Calls for Bailout for Taxi Drivers

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Representative Alexandria Ocasio-Cortez is calling for a government bailout for New York taxi drivers, emerging as the most prominent voice to back a financial rescue plan for thousands of drivers who were channeled into exploitative loans.

Ms. Ocasio-Cortez, a Democrat who said her district in the Bronx and Queens is home to many cabdrivers, jumped into a debate over how to help drivers who were urged to take out loans with high fees, interest-only payments and other one-sided terms. They borrowed the money to buy taxi medallions, the city permit that allowed them to operate their own cabs.

“This is manufactured financial indentured servitude,” she said during a congressional hearing on lending on Thursday. “And it is wrong. We need to bail out these drivers.”

Two other Democrats from New York, Representatives Nydia Velázquez and Carolyn B. Maloney, also decried the loans in the meeting, the first congressional hearing to address the driver debt crisis since it was revealed by a New York Times series.

The Times reported this year that a handful of New York taxi industry leaders had made hundreds of millions of dollars by artificially inflating medallion prices and issuing reckless loans to thousands of immigrant drivers. As regulators stood by, medallion prices soared above $1 million before the bubble burst in late 2014, rocking the industry.

More than 950 New York cabdrivers have filed for bankruptcy, and thousands more are struggling to hang on, The Times found.

But a schism has emerged among some city officials over a government bailout of drivers. Some say the city bears partial responsibility for the crisis because regulators encouraged the buying frenzy. Others, including Mayor Bill de Blasio, say a bailout would be too expensive.

The mayor’s office has said a bailout could cost as much as $13 billion. Others put the cost as low as $300 million under a possible hybrid solution that would provide government assistance, but also require lenders to forgive some of the debt.

A spokeswoman for Mr. de Blasio did not immediately respond to a request for comment.

New York City’s congressional delegation, along with the City Council, has taken a leading role in pushing for at least a partial bailout. In July, Ms. Velázquez and nine other members of the delegation sent a letter calling for the task force to discuss a bailout. Last month, Ms. Ocasio-Cortez and 10 other members sent a letter asking several federal regulatory agencies to provide information on how they plan to protect cabdrivers.

At the hearing on Thursday, Ms. Maloney called for the federal agencies that now hold some of the loans to stop foreclosing on borrowers. “After years of predatory loans and inflated medallion prices, the yellow cabs of New York really turned into financial traps for thousands of mostly immigrant drivers,” she said. “It’s a New York City scandal, really.”

Ms. Velázquez said that in response to the Times series, she was preparing legislation to strengthen protections and disclosures in small business loans.

Bhairavi Desai, the head of the New York Taxi Workers Alliance, which represents both drivers who own medallions and those who work for fleets, attended the hearing in Washington with 15 drivers. She said she believed that a bailout was increasingly possible.

Ms. Desai, a member of the task force, also said she hoped that a bailout plan was among the recommendations set to be released early next year.

Several City Council members who have urged a bailout said they were encouraged by the support from Washington.

“There is growing momentum behind our push for the city to buy or guarantee these wildly inflated mortgages so that they can finally be refinanced on fair terms,” said Mark Levine, a city councilman in Manhattan. “A consensus is emerging that this would be far less costly than the ridiculous multibillion dollar estimates that have been thrown around. Having the congressional spotlight shine on this crisis is a huge boost to our efforts.”


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