How We Investigated the New York Taxi Medallion Bubble - The New York Times
▻https://www.nytimes.com/2019/05/22/reader-center/taxi-medallion-investigation.html
It took a year, 450 interviews and a database built from scratch to answer a simple question: Why had anyone ever agreed to pay $1 million for the right to drive a yellow cab?
By Brian M. Rosenthal
May 22, 2019
Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.
The story started, like a lot of stories seem to, with President Trump’s former lawyer, Michael D. Cohen.
On April 9, 2018, the F.B.I. raided Mr. Cohen’s office, thrusting him into the national spotlight. The next day, the top editors at The New York Times asked five reporters to start working on a profile. I was one of them.
The other reporters researched Mr. Cohen’s family, his legal career, his real estate interests and, of course, his work for the president. I took on the last piece of his business empire: his ownership of 30 New York taxi medallions, the coveted permits needed to own a yellow cab.
After a few weeks of reporting, the team learned enough to publish our story on Mr. Cohen. And I discovered enough to know what I wanted to investigate next.
At that time, the taxi industry was becoming a big story. Mr. Cohen had owned his medallions as an investment, counting on them rising in value because of the city’s decision to issue only about 13,000 permits. But thousands of the medallions were owned by drivers themselves, and two driver-owners had just died by suicide. Public officials were talking about how the price of a medallion had plummeted from over $1 million to under $150,000. Most were blaming ride-hailing companies such as Uber and Lyft.
I had a different question: Why had anybody ever paid $1 million for the right to the grueling job of being a cabby?
When I pursue an investigation, I identify the single most important question that I am trying to answer, and orient all of my reporting around it. (For example, why did it cost more to build subway track in New York than anywhere else in the world? Or why did Texas have the lowest special education rate in the country?) In this case, I ended up interviewing about 450 people, and I asked almost all the same question: Why did the price reach $1 million? It became my North Star.
I heard plenty of theories, but I began to get somewhere only when I had an epiphany: No driver-owner had ever really paid close to $1 million for a medallion. On paper, thousands of low-income immigrants had. But while they had poured their life savings into their purchase, virtually all had signed loans for most of the cost — and never really had a chance to repay.
I needed to examine as many loans as possible, to see if they were as unusual and reckless — and predatory — as some of my sources said they were. But how?
I got a lead from an unexpected source: the lenders themselves.
After prices had started crashing, the lenders in the industry had tried to squeeze money out of borrowers. Many of them had filed lawsuits against borrowers — lawsuits which had to include copies of the loans.
I ultimately reviewed 500 of these loans, and I saw disturbing patterns: Almost none of them included a large down payment. Almost all of them required the borrower to repay everything within three years, which was impossible. There were a lot of interest-only loans, and a wide variety of fees, including charges for paying loans off too early. Many of the loans required borrowers to sign away their legal rights.
Armed with the loan documents, I started calling dozens of current and former industry bankers, brokers, lawyers and investors. Some pointed me to disclosures that lenders had filed with the government, which were enormously helpful. Others shared internal records, which were even better.
New York City did not have reliable digital data on medallion sales, so I used paper records to build a database of all the 10,888 sales between 1995 and 2018. The city taxi commission had never analyzed the financial records submitted by medallion buyers, so I did. Nobody knew how many medallion owners had gone bankrupt because of the crisis, so I convinced my boss to pay a technology company, Epiq, to create a program that sped through court records and spat out a tentative list — and then two news assistants helped me verify every result.
As I dug into the data and the documents, I sought out driver-owners. I wanted to understand what they had been through. To find them, I went to Kennedy International Airport.
The fare from taking someone from the airport into Manhattan can make a cabby’s day, and so drivers wait in line for hours. And over several visits during a couple of months, I waited with them, striking up conversations outside a food stand run by a Greek family and next to pay phones that had stopped working years ago. After talking briefly, I asked if I could visit their homes and meet their friends.
In all, I met 200 taxi drivers, including several I interviewed through translators because they did not speak English fluently. (Some of those men still had signed loans of up to $1 million.) One by one, they told me how they had come to New York seeking the American dream, worked hard and gotten trapped in loans they did not understand, which often made them give up almost all of their monthly income. Several said that after the medallion bubble burst, wiping out their savings and their futures, they had contemplated suicide. One said he had already attempted it.
The day after we began publishing our findings, city officials announced they were exploring ways to help these driver-owners, and the mayor and state attorney general said they were going to investigate the people who channeled them into the loans.
In the end, the three front-page stories that we published this week about the taxi industry barely mentioned Mr. Cohen at all.
But they did something much more important: They told the stories of Mohammed Hoque, of Jean Demosthenes and of Wael Ghobrayal.
Brian M. Rosenthal is an investigative reporter on the Metro Desk. Previously, he covered state government for the Houston Chronicle and for The Seattle Times. @brianmrosenthal
#USA #New_York #Taxi #Betrug #Ausbeutung