Probes Of NYC Taxi Industry Launched After Exposé

NEW YORK — New York City and state officials have launched probes into predatory lending practices in the taxi industry following an exposé in The New York Times.

In a 10-month investigation, the Times found industry inflated the prices of taxi medallions — which allow for the ownership of yellow cabs — and gave cabbies "reckless" loans to buy them. The practices left many drivers saddled with debt, more than 950 owners of medallions have filed for bankruptcy, the report says.

A day after the investigation was published, state Attorney General Letitia James and Mayor Bill de Blasio announced inquiries Monday into the business practices that the Times exposed.

De Blasio said he ordered a 45-day review of "predatory practices" by taxi industry brokers that will identify and punish those who have misled the city and exploited buyers. The inquiry will involve the Department of Consumer Affairs, the Department of Finance and the Taxi and Limousine Commission, which regulates the city's taxi industry.

"The review will set down strict new rules that prevent broker practices that hurt drivers," de Blasio, a Democrat, said in a statement. "It's unacceptable to prey on hardworking New Yorkers trying to support their families and we'll do all that we can to put an end to it."

James, also a Democrat, said her office is looking into the "disturbing" reports of business and lending practices that she said may have caused the city's medallion crisis.

"These allegations are serious and must be thoroughly scrutinized," James said in a Twitter post.

City Comptroller Scott Stringer also reportedly pushed for city action to address the crisis. In a letter to de Blasio, he recommended getting lenders together and urging them to forgive loans partially, the Times reported Monday.

While they're taking action now, the Times found that city and state officials ignored warnings that a dangerous bubble was forming in the taxi medallion market. The TLC passed the buck to "bank examiners," while the state's Department of Financial Services said federal authorities were often responsible for keeping an eye on banks in the industry.

"Nobody wanted to upset the industry," David Klahr, a former TLC staffer, told the Times. "Nobody wanted to kill the golden goose."

The Times's reporting came after a massive spike in foreclosure-related medallion sales. There were 381 such sales in 2018 — more than 10 times the 37 seen in 2017, records showed.