[ihsw]

The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions. Such investments would destroy their financial prospects for the near future if not in the long term due to the exorbitant cost associated with holding medallions.

Taking the moral highroad is not an option here. It's easy to advocate the free market from afar, but not everybody is prepared to even begin participating in the free market due to being financially shackled.

I was going to suggest that Uber operate a program of financial assistance to taxi drivers looking to flee the credit-subsidized catastrophe bearing down on them in exchange for multi-year employment contracts, but the collective value of these medallions is estimated at $10 Billion. Yes, ten billion USD.

How would such a program work? Could it work?

[bcoates]

The drivers don't generally personally own the medallions. The medallions are owned by companies who mortgage them to banks. The medallion collapse means these companies almost certainly have negative value, and if the owner isn't making enough money from it they'll just walk away. The bank will then have to legally recognize what is already obvious (that the loan on the medallion will not be paid as agreed, and the collateral is worthless). The bank may have to call in insurance and some bank customers may take some losses. $10 billion isn't going to break the bank insurance industry.

What about the drivers? They've already been fired, that's why the cabs are sitting idle. There's no need to help the financial speculators.

[ruddct]

NYC-specific comment:

Taxi drivers don't typically own their medallions. Medallions are typically owned by medallion holding companies, which lease out their cars to drivers.

Very low interest rates fueled medallion companies to push the price of medallions higher and higher. Everyone was bidding for what they saw as a good with fixed-supply. Then Uber came along. Turns out they were wrong.

So who suffers? Banks that made bad loans and a small number of stagnant companies whose business models are now obsolete. Business as usual. The world keeps turning. Drivers will just shift to Uber or one of their myriad competitors.

Having Uber or the city bail out these banks/holding co's would be a little ridiculous. Let the businesses that made bad decisions deal with the consequences.

[aikah]

> The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions.

A medallion buy-back is the only fair solution (for individuals, not for taxi companies). So there should be some kind of compensation so we can all get out of that system, system the local legislator created. But it shouldn't be up to Uber to pay, no matter how I dislike Uber, they didn't create the problem. The whole "free but paid because of scarcity" medallion fiasco is the real cost of corruption, and tax payers always foot the bill sooner or later in these case.