[engine turns over] MAN: <i>Six yellow cab drivers in the city</i> <i>had committed suicide in the past year.</i> WOMAN: <i>Many drivers are looking at financial ruin,</i> <i>taking their own lives in desperation.</i> BRIAN: <i>This is Muhammad Hossain.</i> <i>He drives his taxi seven days a week,</i> <i>sometimes 12 hours a day,</i> <i>and takes home $25,000 a year</i> <i>if he’s lucky.</i> <i>And for that privilege,</i> <i>he owes the bank 3/4 of a million dollars.</i> - I’d like to go to city hall. BRIAN: <i>And there are thousands like him.</i> - City hall. - Uh, good afternoon. Today the council is going to vote on a taxi medallion task force. BRIAN: <i>For the past year, I’ve been investigating</i> <i>New York City’s yellow cab industry.</i> - Brian? - As you know, there was another driver suicide. This crisis is ongoing. Should we expect more legislation on this? - Hi. Thank you for agreeing to do this. - So we’re gonna take the tunnel? - Yes, let’s take the tunnel. - Okay. BRIAN: <i>At the same time, my colleague Emma Fitzsimmons</i> <i>has been reporting on a series of suicides among drivers.</i> EMMA: March 16th. “Are you working today?” No answer. - His son lifted garage door and saw the way he hang himself. MAN: <i>Uber come in. They crash the business.</i> WOMAN: <i>Drivers say there is unfair competition</i> <i>from Uber and Lyft.</i> BRIAN: <i>It’s convenient to blame ride-hail apps</i> <i>like Uber and Lyft,</i> <i>but we found that’s only a small part of the story.</i> <i>The real reason for this crisis:</i> <i>a financial bubble, allowed to balloon over a decade,</i> <i>not just by bankers and investors</i> <i>but by the city itself.</i> <i>[dramatic music]</i> <i>♪ ♪</i> <i>[gentle music]</i> <i>There are many versions of the American Dream.</i> <i>One version has played out for generations</i> <i>on the streets of New York:</i> <i>you immigrate to America</i> <i>and get a job driving someone else’s cab.</i> You can just take me to “The New York Times” building, 8th and 40th. - Okay. BRIAN: <i>And if you drive long enough,</i> <i>you’ll have the savings to buy a coveted medallion,</i> <i>the piece of tin bolted to the hood of your car</i> <i>that allows you to operate your own taxi,</i> <i>to be your own boss.</i> There is no such thing as a smooth ride. [both chuckle] <i>The city issues the medallions.</i> <i>There are only 13,000 of them,</i> <i>and they can be quite expensive.</i> Here you go. - Thank you. BRIAN: Thank you very much. <i>So you need a broker to find one</i> <i>and a loan to pay for it, but the risk is worth it</i> <i>because the value always goes up,</i> <i>so when you want to retire,</i> <i>you can sell it and live happily ever after.</i> <i>That was the dream packaged and sold</i> <i>to drivers like Mohammad.</i> <i>♪ ♪</i> Because who has their own medallion, he drive his own taxi... BRIAN: <i>Mohammad began driving</i> <i>shortly after arriving from Bangladesh in the 1990s.</i> - I drive a long time there. - Then in 2014, there was an auction. - Right. - Right? <i>Where the city sold new medallions</i> <i>to the highest bidders.</i> - Then—then I say, okay, I will bid. - You’ll bid? - Yeah. - You were excited. - Yes. - Bid number 177, Mohammad Hossain, $853,786. BRIAN: <i>$853,786.</i> - So it’s a lot of money. I saved money... BRIAN: <i>He scraped together nearly $100,000</i> <i>to cover the down payment and fees,</i> <i>signed a loan for the rest,</i> <i>and had himself a shiny new medallion.</i> How did you feel when you found out that you won then? - I feel happy, yes. - You felt happy. Did you call your wife immediately? - My wife, my friend. But unfortunately, after I buy medallion, after few weeks, everything going down. My bank is zero. BRIAN: Um, what do we have here? We have— You created the company Samia Taxi. - This is my daughter name. - Yeah. Well, let’s look at this. <i>Mohammad’s monthly payment took up most of his income,</i> <i>and the loan required him to pay back everything</i> <i>after just three years.</i> ...only 36 payments. <i>It’s called a balloon loan.</i> They explained that to you? - This is balloon. - The balloon? - No, they don’t explain nothing. - How much did you make on an annual basis driving a taxi? - 22,000. - So you can’t pay back 700,000 in three years. <i>That means every three years,</i> <i>he’s forced to extend the loan,</i> <i>possibly at a higher rate, and with additional fees.</i> Okay, do you know what this is? - No. - It says it’s an affidavit for judgment by confession. - What that mean? - It means that if there’s any sort of a problem, here it’s saying that the bank can enter a judgment against you and you can’t fight it ‘cause you’ve already confessed to it. You signed this. - That mean they can do what they want, right? - That gives them a lot of power, yes. <i>♪ ♪</i> A lot of the medallion owners that we’ve talked to have filed for bankruptcy. Have you thought about doing that? - Yeah. - What, um—why— what are you thinking about? Why haven’t you yet? - Who, me? - Yeah. - [voice breaking] I bought medallion from the city. I think city will help me, you know? I feel that... [sobs] BRIAN: You can’t give up for your family. - Yeah. [car engine turns over] WOMAN: <i>The suspected gunman is dead.</i> <i>Four people...</i> BRIAN: <i>On the same day that Mohammad bought his medallion,</i> <i>so did 150 other drivers.</i> <i>Since then, 40% of them have filed for bankruptcy.</i> <i>If you look at enough of their loan documents,</i> <i>you notice patterns.</i> <i>These drivers signed away their rights,</i> <i>paid huge fees,</i> <i>and never came close to settling their debt,</i> <i>while the people they trusted made all the money</i> <i>and shared none of the personal risk.</i> <i>There was the city, which sold the medallions,</i> <i>the brokers, who collected commissions,</i> <i>and the bankers, who wrote the loans</i> <i>and sold some of them for profit.</i> <i>Eventually, you realize that this wasn’t by accident.</i> <i>Many insiders knew that the whole thing</i> <i>was a house of cards.</i> <i>[pensive music]</i> BRIAN: How late are you going to be driving tonight, do you think? - Midnight. - Yeah. <i>So how does a taxi driver making $22,000 a year</i> <i>get a loan for almost a million dollars?</i> [horn blares] <i>As a reporter, I’ve investigated</i> <i>billion-dollar industries and corrupt politicians,</i> <i>and I’ve found that the old cliché is true.</i> <i>If you want to understand what’s really going on,</i> <i>you have to follow the money.</i> MAN: <i>Fleets of taxicabs...</i> BRIAN: <i>So let’s start at the beginning.</i> <i>New York City issued the first taxi medallions</i> <i>in 1937 for $10 apiece.</i> <i>For decades, their value slowly climbed.</i> <i>Then between 2002 and 2014,</i> <i>the price skyrocketed</i> <i>from $200,000 to $1.2 million.</i> <i>The medallion was seen as a safe investment.</i> MAN: <i>Outperforming the Dow, gold, NASDAQ, real estate.</i> <i>These are little cash cows</i> <i>running around the city spitting out money.</i> BRIAN: <i>But the truth is,</i> <i>many people who spread the myth of the medallion</i> <i>had an incentive for the prices to go up forever.</i> <i>Everyone was cashing in,</i> <i>except the drivers trying to pay off the massive debt.</i> WOMAN: <i>Drivers say there is growing despair.</i> WOMAN: <i>Taxi medallions no longer a safe investment...</i> BRIAN: <i>There are about 6,000</i> <i>individual medallion owners in New York.</i> <i>In the last three years, over 900 have declared bankruptcy.</i> <i>One man who has seen this crisis up close...</i> - Black coffee. BRIAN: <i>Is Richard Feinsilver, a bankruptcy lawyer.</i> - And over the last two years, I’ve been fortunate enough to meet with over 650 medallion owners in the city of New York. - 650? - Yes, sir. BRIAN: <i>That’s 10%</i> <i>of all independent medallion owners in the city.</i> - Most of them have been immigrants. In 99% of all taxi medallion transactions, there is no attorney or was no attorney representing the taxi medallion owner, and, in fact, the medallion owners have signed a waiver stating, “I’ve been advised I have the right to get counsel, and I’m waiving that right.” - And you’ve talked to these people. Did they understand? - Not—I don’t believe they understood anything. - And is the bank required to explain this to the borrower? - Technically not. - Right. - Morally, they should, but they never did. - Well, I’ve definitely talked to people who almost immediately could not make the payments. - Yeah, a taxi can only generate so much income, 24/7, seven days a week, and studies have proven that a taxi medallion cannot carry a loan more than $400,000. - Okay. Why were the medallions selling for over a million? - This is similar to the 2008 housing crisis. - How so? - No one looked to see if there was a maximum loan that could be given. Lenders have always had the ability to put brakes on, and they never did. These loans were set up to fail. - Each medallion has a minimum bid price of $650,000. BRIAN: <i>While the banks and brokers</i> <i>were happy to collect their profits...</i> - Bid number 83. BRIAN: <i>There was something else driving up</i> <i>the price of medallions.</i> - $910,013. BRIAN: <i>And it was happening</i> <i>right under the nose of the city...</i> - Yeah! BRIAN: <i>As it ran the auctions.</i> - Good luck. BRIAN: <i>Some fleet owners</i> <i>who already owned hundreds of medallions</i> <i>were purposefully overpaying for new ones,</i> <i>like Taxi King Evgeny Freidman.</i> <i>- I bid crazy prices.</i> <i>People were looking at me like crazy.</i> <i>I didn’t really care, because then it went back to prices.</i> <i>I said, “This is market value.”</i> - This is interesting. I hadn’t seen this. <i>Now that the medallions were worth more on paper,</i> <i>the fleet owners could use them as collateral</i> <i>to borrow more money from the bank,</i> <i>but it also meant that the price went up</i> <i>for everybody else,</i> <i>a totally legal way of inflating the bubble.</i> <i>As the medallion sales became more and more profitable,</i> <i>industry insiders made millions,</i> <i>like lender Andrew Murstein.</i> EMMA: So that’s Murstein. BRIAN: Yeah. MAN: <i>Andrew Murstein’s grandfather...</i> BRIAN: His grandfather started Medallion Financial in the 1970s. <i>Murstein’s company, Medallion Financial,</i> <i>specialized in taxi industry loans.</i> <i>During the ten-year bubble, he made $22 million,</i> <i>and when he saw the bubble was about to burst,</i> <i>he began to exit the business and invest profits elsewhere.</i> They bought a NASCAR car and made it look like a taxi, and he has money to pay for Nicki Minaj to come to his son’s bar mitzvah. It was reported how much it cost. I think it was about $500,000. That’s Murstein himself... - Oh. - Shaking hands with Nicki. - With Nicki. Hmm. BRIAN: <i>And some insiders found other ways</i> <i>of boosting their profits.</i> EMMA: Hmm. BRIAN: <i>Rather than being just lenders</i> <i>or just brokers, some decided to become both,</i> <i>making money on all sides of the deal.</i> Greenbaum, head of one of the biggest fleets in the city. He started lending the money himself. <i>And here’s Mohammad’s broker.</i> Savas Konstantinides. <i>He also lent Mohammad some of the money</i> <i>for his medallion.</i> What we’ve heard him doing over and over again is as soon as somebody misses a payment... - Mm-hmm. - Like misses one payment, he’ll take their car. And Alan Kaufman, he was tired of having to pay brokers. - My grandfather was... BRIAN: <i>So he became one.</i> Kept all the profits for himself. [train horn whistles] <i>Alan Kaufman ran Melrose Credit Union.</i> MAN: <i>Melrose Credit Union... </i>BRIAN: <i>A major taxi lender.</i> MAN: <i>Our mission then was the same as it is now.</i> BRIAN: <i>At the height of the bubble,</i> <i>they collected $80 million in interest and fees...</i> [doorbell chimes] <i>Every year.</i> - Hi. - Hey. - Come on in, Brian. Come into the dining room. - Thanks for doing this. BRIAN: <i>The chief loan officer at the time was Larry Fisher.</i> All right, so what was the process for getting a loan? - We ran the credit. We took tax returns to verify income. You know, we asked some questions about what expenses were. We ran a title search. It didn’t take that long. - Do you think they understood everything about what they were getting into? They understood the balloon? - Some didn’t, and some needed further explanation. - I’ve talked to a lot of borrowers who said they didn’t understand what was happening. - Well, a lot of people tend to blame others for their own misfortune. If they want to blame the lender for the medallion going down the tubes the way it has, I think they’re misplaced. Look, in 2008, we had a tremendous real estate implosion in this country. Were the borrowers all to blame? No. Were the lenders all to blame? No. Everybody was to blame. - Is there anything that you regret about what you did or what Melrose did? - Having financed any of the medallions that went for auction at the end of 2013. - Yeah. Yeah. - That’s—that’s a big regret. - Hmm. - Listen, I feel badly that so many people have been hurt. So many people have lost their wealth. So many people have gone bankrupt. So many people are being sued. So many financial institutions have gone under. I feel badly about it, but what has kept me sane is that I’m not the only one who was involved. <i>[upbeat music]</i> WOMAN: <i>Thank you for calling Omega Brokerage,</i> <i>one of the oldest—</i> WOMAN: <i>Sir? </i>- Yes. WOMAN: <i>Savas is not available right now.</i> BRIAN: Hi, I’m hoping to talk with Richard Shipman. WOMAN: <i>Uh, he’s not in the office right now.</i> BRIAN: Hi, I’m hoping to talk with Roman Sapino. WOMAN: <i>Uh, he’s actually busy right now.</i> - Oh. <i>[“Taxi” theme song plays]</i> <i>[line trilling] </i>WOMAN: <i>The person at exten—</i> - Hi, I’m hoping to talk with Neil Greenbaum. WOMAN: <i>I’ll transfer you now. </i>- Thanks. NEIL: <i>Hi. Who is this? Leave a message.</i> [Brian chuckles] WOMAN: <i>Mailbox is full.</i> <i>[line trilling] </i>BASIL: <i>Hello.</i> - Uh, hi. Um, is— who am I speaking with? BASIL: <i>This is Basil.</i> - Oh, hi. How’s it going? I’m working on an article... <i>I’ve contacted every major bank and brokerage</i> <i>in the industry.</i> <i>Many wouldn’t return my call,</i> <i>but those who did denied any wrongdoing.</i> BASIL: <i>So as long as it was not my money...</i> - Right. BASIL: <i>And the bank would</i> <i>approve the transaction, I mean, why I wouldn’t do it?</i> BRIAN: I’ve talked to a good number of these driver/owners. You know, a lot of them don’t speak English particularly well. Do you think they understood what they were getting into? BASIL: <i>Of course they did. This is capitalism, right?</i> - Right. Right. BASIL: <i>Buy now, pay later.</i> BRIAN: <i>Calling it capitalism is small comfort</i> <i>to the lines of cabbies often found here at JFK Airport,</i> <i>one of the few places where big fares are guaranteed.</i> - The line gets in, and this line gets out. EMMA: How long does it typically take you to get a fare when you come here? - About hour, 40 minute. EMMA: Can I ask you, what was your reaction when you started hearing about the drivers who killed themselves? - When we heard that, our children, they ask us, “Are you okay?” EMMA: Mm-hmm. - They are worried about us. We are thinking of transferring our debt to our next generation. - And how much do you owe on your medallion? - 600,000. EMMA: Mm-hmm. - And its value went down 100%. - TLC is not helping. - That’s my retirement money, and I lost it. I’m 70 year old, and I had to work 14-hour day to feed my kid. - Why you sold the medallion to us for millions of dollars? - Better I die. Too much depression. - TLC is the butcher! - TLC fuck us up. - TLC crooks. EMMA: You don’t trust them? - I don’t trust TLC. BRIAN: <i>The TLC, or the Taxi and Limousine Commission,</i> <i>is the city agency that regulates taxis.</i> <i>It’s supposed to be the watchdog</i> <i>that ensures the stability of the industry,</i> <i>but it also makes money off medallions:</i> <i>100% of revenue from auction sales</i> <i>and 5% on all other sales.</i> - Hi, I’m Commissioner Matthew Daus. BRIAN: <i>And in the 2000s,</i> <i>it became so focused on revenue...</i> - Visit us online for more information on this once-in-a-lifetime opportunity. BRIAN: <i>That it started promoting</i> <i>the industry it was regulating.</i> - Best decision I ever made. - This is an investment that has outperformed practically every other type of investment that exists. <i>When we did our medallion sales,</i> <i>we raised over $200 million for the city of New York.</i> BRIAN: <i>When you add up all the revenue</i> <i>from 2004 to 2014,</i> <i>the city made more than $850 million off medallions.</i> [elevator dings] <i>While prices were ballooning out of control,</i> <i>the city official who could have intervened,</i> <i>who was in charge of setting the rules</i> <i>for medallion purchases, was this man,</i> <i>the former TLC Commissioner who’s now a lawyer</i> <i>for some of the banks issuing the loans.</i> I want to talk about how the value of the medallions went from $200,000 in 2004 up to a million dollars in 2014. Did you view it as your job as the chairman to ensure that the value was appropriate or not? - No, not at all. - Did you view it as your job as the TLC chairman to increase the value of the medallion? - No. - People like Gene Freidman, who would go to the auction and purposefully bid higher than the medallion was worth, were you aware that that was going on when the auctions were happening? - Well, were we aware that they were bidding up the prices? Yes, I mean, the goal was to try to get the highest price. - I was looking at a video of a speech you gave in 2010. You said, “When we did our medallion sales “in New York City, at the time, some of these folks were offering zero percent down.” - You tell me, what bank, you know, walks around asking for zero percent down on a loan? - As the TLC chairman, did that not raise a red flag for you that banks were doing that? - Um... it was unusual, okay. Is there anything we could have done about it? Absolutely not. I mean, we don’t control interest rates. We don’t control the terms of a deal. - I want to read you a quote from a broker that I was talking to the other day. He said, “Very simply, let’s put it this way: “if the governing body doesn’t care, then it’s a free for all,” and he was talking about the TLC. I mean, do you regret not being more proactive, though, that you didn’t ask for more responsibility, that you didn’t try to do something? - There was nothing to do. Everybody was making money and doing well. There was no issue. I have zero regrets. If Uber did not enter this market, these people would still have a much more valuable asset. It is the only reason why we’re sitting here talking about this crisis. Uber is the cause of the problem, and the government failed to regulate them appropriately. That is the beginning and the end of it, and there’s nothing more about it. BRIAN: <i>But there is more about it.</i> <i>I reviewed thousands of documents</i> <i>and interviewed hundreds of people,</i> <i>and I found that the taxi industry</i> <i>would have imploded even if Uber had not been invented</i> <i>because, for years, while medallion prices soared,</i> <i>drivers’ incomes did not.</i> <i>So eventually, they couldn’t afford to pay</i> <i>even just the interest on their loans.</i> <i>I spoke with 30 people who worked at the TLC</i> <i>under Matthew Daus.</i> <i>Many told me on the record that they knew even then</i> <i>that prices were dangerously inflated.</i> <i>The evidence was there. They could have stopped it.</i> <i>They didn’t even sound an alarm.</i> WOMAN: <i>We’re here today to give support</i> to the friends and the family of Brother Roy Kim. He’s the eighth driver to take his own life. MAN: And I hope that we all have the conscience to say enough is enough. - Please help. We need lots of help. Rest in peace in heaven, my friend. BRIAN: <i>You can never know why someone chooses</i> <i>to take their own life,</i> <i>but many family members said these men</i> <i>were worried about their finances.</i> WOMAN: <i>All rise for the Pledge of Allegiance.</i> BRIAN: <i>On the same day</i> <i>that this latest suicide became public,</i> <i>the city council finally decided to address the crisis.</i> MAN: Speaker Johnson. - I’m here. - Finally, we’re gonna vote on a series of bills related to the for-hire vehicle industry. BRIAN: <i>In the end, the city council</i> <i>only proposed bills to analyze the problem...</i> - They will come back to us with recommendation... BRIAN: <i>Through study groups.</i> - Cabrera. - Aye. - Chin. - I vote aye on all. - I vote aye on all. MAN: Aye on all. MAN: Aye on all. - I vote aye. WOMAN: I vote aye. MAN: I vote aye. - Aye on all. - I vote aye on all. BOTH: Thank you. BRIAN: <i>Lawmakers say they’re tackling this crisis head on,</i> <i>but so far, they’ve done nothing</i> <i>to acknowledge the city’s role in causing it</i> <i>and nothing concrete to help struggling taxi owners.</i> <i>They haven’t offered to buy back medallions.</i> <i>They haven’t forced the banks to soften loan terms.</i> <i>They haven’t demanded an end</i> <i>to the most predatory lending practices.</i> <i>And more than six months after this vote,</i> <i>they had not appointed anyone to those study groups.</i> <i>♪ ♪</i> <i>The bankers and brokers who created the bubble</i> <i>in New York didn’t stop there.</i> <i>They exported their business model</i> <i>to other cities, with similar results:</i> <i>Boston, Chicago,</i> <i>San Francisco, and Philadelphia.</i> <i>♪ ♪</i> <i>Today, taxi owners across the country are underwater.</i> <i>♪ ♪</i> - Hi, good morning. - You’re gonna go to lane five, sir, okay? - Lane five. - Lane five. - Okay, thank you. - Have a good day. - You can step out and just take all your personal belongings. - Okay. <i>Good luck for a pass.</i> <i>[tense music]</i> <i>♪ ♪</i> BRIAN: <i>The people running the taxi industry</i> <i>sold the idea that the medallion</i> <i>was a bulletproof financial asset</i> <i>on which drivers could build their future.</i> [chuckles] It’s pass. BRIAN: <i>We want to believe that in America</i> <i>if you work hard, you’ll succeed.</i> - Thank you, sir. - Have a good day. BRIAN: <i>But if the government fails</i> <i>in its responsibilities to the people,</i> <i>the American Dream can become just that: a dream.</i> - I’m going airport. BRIAN: <i>To Mohammad,</i> <i>the medallion that was supposed to secure his future</i> <i>has instead become a never-ending nightmare.</i> <i>He and other taxi drivers remain prisoners</i> <i>to the deals they signed.</i> <i>All they can do now is drive.</i>