Devastating Stories of Taxi-Medallion Loan Victims Continue to be Reported

NEW YORK–This city’s taxi medallion credit unions may now all be defunct, but the stories of personal devastation, including suicides, continue to be told.

The most recent victim of the loans that left so many borrowers underwater there is no way to possibly work off the debt to be profiled is Kenny Chow, an  immigrant from Myanmar whose story was profiled here Kenny’s older brother, Richard, found his brother’s taxi abandoned outside Carl Schurz Park in Manhattan.

“For months, he had watched his brother and fellow cabdriver, Kenny, struggle under enormous debt. Kenny had grown distant and despondent,” the publication stated. “Now he had disappeared.”

The Times, which has reported extensively on the lead up to the failure of the taxi medallion CUs (which eventually cost the National CU Share Insurance Fund three-quarters-of-a-billion dollars), noted an economic crisis has “swept over New York City’s taxi industry, spreading financial ruin and personal despair, especially for owners of medallions, the permits that let people operate cabs. More than 4,000 drivers used their life savings to buy medallions. Richard and Kenny were among them.”

‘Exploitative Loans’

The Times noted taxi industry leaders and lenders had artificially inflated medallion prices and pushed borrowers into “exploitative loans,” all of which crashed when the bubble burst in 2014.

Thousands of owners, almost all born outside the United States, have lost all of their savings. More than 950 have filed for bankruptcy. And several have died by suicide,” the Times stated.  

In 2005, Richard Chow was first to buy a taxi medallion, initially intending to bid $360,000, “until he met with Pearland Brokerage, run by Neil Greenbaum, an influential industry leader.” Richard ended up bidding $410,000, including a $358,200 loan from Pearland. “The deal required him to repay within four years. He did not have a lawyer, records show,” the Times reported.

Kenny Chow followed by purchasing a medallion several years later at a time prices were “skyrocketing,” and after taxes and fees, $750,000.

“As medallion prices soared, Richard did as many others did — he used the value to refinance and take out more money,” the Times reported. “After his loan hit the four-year mark, when he was supposed to repay everything, the nonprofit Melrose Credit Union called and offered to extend his loan and lend him an additional $150,000. He agreed. He said he used the money to repay the family who had covered his down payment. Melrose issued the check in less than an hour.”

Seven Days a Week Not Enough

According to the report, the  brothers worked seven days a week, and they made only a little more than they needed for their monthly loan payments. Richard’s was $3,500; Kenny’s was more than $4,000. As ride-hailing services ate at market share, revenue decreased, and the two brothers “asked for leniency on their loan payments and were rebuffed. Instead, records show, Melrose moved to tighten its grip on the Chows.

“Kenny’s original loans listed him as the sole borrower, and his medallion as the only collateral. But in 2016, Melrose added Kenny’s wife as a co-debtor and expanded the collateral to include everything they owned or would ever own,” the Times report continued. Kenny signed, although it is unclear if he understood the change. He did not have a lawyer. Melrose, under pressure from its regulator, the National Credit Union Administration, also threatened to sue many medallion owners in 2017. “

According to the Times, Melrose was “one of the industry’s least forgiving lenders.”

NCUA declined comment to the Times.

A Desperate Move

The Times said Kenny Chow eventually refinanced his medallion loan to make his loan payments, even though it was a “desperate move that buried him further in debt.”

Kenny was told by two lawyers if he filed for bankruptcy he would lose his home.

Kenny also called two bankruptcy lawyers. They offered to help, but both warned he would lose his home if he filed for bankruptcy.