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State Sues City over Taxi Medallions





ASEEM SHUKLA, HOST: Buying a taxi medallion once seemed like a good investment for drivers. But the introduction of rideshares has transformed the transportation industry, and medallion values have taken a big hit. That's left many taxi drivers who took out loans to buy medallions with unmanageable debt. The city created a task force to find relief for the medallion owners. But yesterday, the Attorney General announced it is suing the city for 810 million dollars for defrauding borrowers. I spoke with Jonathan Peters, who teaches transportation finance at the College of Staten Island. He also served on the city's medallion Task Force. He feels that the city does bear some responsibility for misleading cab drivers.


JONATHAN PETERS: You have to be careful when you promote something as an investment. Just like your your standard investment advisor, you know, when they promote a particular stock or a particular security investment, you've got to be very careful about what you say and what you promise. And that in this case, this may not be the case, that the owners really weren't very knowledgeable about how much they were concentrating their investment and how much risk they were taking on. I get that they did that. But to what purpose, to what degree is the people of the state of New York or the people in the city of New York, responsible to pay back on money that you took out of the asset?


SHUKLA: Does the fate of the cab drivers who are in this hole and how we address that-- is that going to affect consumers from either a supplier or a cost perspective?


PETERS: I was asked to serve on behalf of the City Council and the people of the city of New York and the first thing I came into the room thinking about: the broader people of the city of New York. And while I understand the strife of the medallion owners, I also think about, what are we trying to achieve in the end game. So that's why I think about a soft landing. And again, whether or not the report fully reflects that... you know, there were differences of opinion between the members of the committee did this.


The other two concept I would throw out to the listeners would be the idea of a self medicating problem, which is that there's winners in this game, and let's just call them Uber and Lyft, who are making a big business in New York City and making quite a bit of money. And we thank them and think that's great. And we also are going to ask you to contribute to keeping the marketplace open. Now, this is not a bad deal for Uber and Lyft. They're going to cry. But the fact is, is that those people have a benefit of having a market now that's worth about four and a half to $5 billion a year, versus what the old market with the yellow cab is about $2 billion a year market. So there's a lot more money being generated for the people providing the service and providing a tax to them and saying, okay, you're going to close down the medallion system, you're going to buy out the medallion owners. And that would be the benefit to the owner. You know, obviously the people would benefit because they still maintain the services they have. The city wouldn't have an excessive boundary. And the yellow medallion owners wouldn't be left out in the wind, that That to me is a more graceful solution.


SHUKLA: Great. Well, thank you so much for joining us. That was really instructive. And hope you have a great day.


PETERS: Thanks so much. It's pleasure talking with you. Thank you.

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