Massive plundering and then a huge crash
Friday, Oct 4, 2019 - Posted by Rich Miller
* The New York Times has a long, but very insightful story about how Chicago taxi drivers were fleeced by New Yorkers…
Over the next decade, New York taxi industry leaders — fleet owners, brokers and financiers — steadily seized control of Chicago’s medallion market and squeezed it for huge profits. Using tactics honed in New York, they made millions of dollars, but they ultimately helped to leave the industry in tatters and the lives of immigrant drivers on the edge of ruin.
New Yorkers used a similar playbook in several cities across the United States: They inflated medallion prices, provided high-risk loans to buyers and collected interest and fees before the bubbles burst and the markets collapsed. Medallion prices rose sevenfold in some places, soaring to $700,000 in Boston, $550,000 in Philadelphia, $400,000 in Miami and $250,000 in San Francisco.
But the most ambitious expansion targeted Chicago, home of the nation’s second-largest cab industry, a New York Times investigation found. New Yorkers eventually bought almost half the city’s medallions, records show.
There’s lots more, so go read the whole thing. There’s a Daley family nexus via a Patrick Daley meeting in Moscow, Gery Chico’s involvement, a big investment by Michael Cohen, and a city government far more interested in revenue than regulation…
Under Mr. Daley, the former mayor, the officials who regulated the Chicago taxi industry were focused on raising revenue through medallion sales, according to four former city employees. Officials sent memos praising the price increases, some of those employees said.
* Serious money was made and lost before Uber came along and tanked the market…
Records show that before the market collapsed in late 2013 and 2014, Mr. Levine’s companies sold most of the Chicago medallions they had bought a few years earlier. The companies paid $30 million to buy 543 medallions between 2006 and 2008. They sold 529 medallions between 2012 and 2014, for a total of $185 million. … Mr. Levine said he did not see a conflict in his lending company providing loans to drivers, which in turn helped him sell off medallions. […]
Only about 4,300 of the city’s 7,000 cabs are currently in operation, according to the city, and the ones on the road are generating at least 20 percent less than before there was ride-hailing, according to an analysis of city data by The Times.
* Meanwhile, speaking of Patrick Daley…
A venture capitalist who bankrolled City Hall deals that secretly benefited Patrick Daley while his father Richard M. Daley was mayor has agreed to a court settlement that will see him repay less than 10% of the $290,596 he owes the U.S. Small Business Administration. […]
Under a settlement approved by a federal judge in Chicago, McInerney agreed to repay $36,000 over the next three years, to cooperate in an ongoing investigation of Cardinal Growth and to give a sworn deposition if asked.
The SBA had accused McInerney of failing to put up all of the money he promised as a condition of Cardinal Growth obtaining more than $51 million in loans from the federal agency. […]
Patrick Daley got more than $1.2 million from Cardinal Growth between 2002 and 2009, the Chicago Sun-Times previously has reported. He got $708,999 after Cardinal Growth sold Concourse Communications, a company that got a contract from the Daley administration to install wireless Internet service at O’Hare Airport and Midway Airport.
- Steve - Friday, Oct 4, 19 @ 12:20 pm:
Can you believe that Bruce Rauner fellow is mentioned in the story concerning Patrick Daley?
- 32nd Ward Roscoe Village - Friday, Oct 4, 19 @ 12:27 pm:
I just finished reading the whole article. Very depressing.
- Steve - Friday, Oct 4, 19 @ 12:29 pm:
I will feel the earth is off its’ axis if OW doesn’t comment on this story.
- dying HDO - Friday, Oct 4, 19 @ 12:29 pm:
must be nice to bankrupt a city but make sure your family and friends make off like bandits.
when does the daley family “get outta jail free” card get revoked?
- Lucky Pierre - Friday, Oct 4, 19 @ 12:33 pm:
It was governments all over America who fleeced the taxi medallion owners by diluting their value when Uber and Lyft lobbyists convinced them to allow their entry into the market and price their services artificially low.
https://www.theregreview.org/2018/06/28/schriever-uber-lyft-lobby-deregulation-preemption/
- Oswego Willy - Friday, Oct 4, 19 @ 12:33 pm:
Reading and letting it “breathe”, like a good wine.
Uber crashing the party on the plundering?
- Oswego Willy - Friday, Oct 4, 19 @ 12:38 pm:
Yikes.
Then again, you could be known for worse I suppose;
===Mr. Garber, who declined to talk to The Times, has acknowledged befriending Mr. Daley. “Patrick is an excellent guy. Great drinker, knows how to hold his liquor,” he once told the Chicago Sun-Times.===
At 21-23, holding your liquor is a good thing, just sayin’.
- Steve - Friday, Oct 4, 19 @ 12:39 pm:
- dying HDO -
Cheer up. The rest of 2019 and 2020 may shatter the boldest of imaginations.
- Oswego Willy - Friday, Oct 4, 19 @ 12:42 pm:
Taxis were the avenue, they had no meaning;
===“It was all about lending out as much money as possible, to increase the loan portfolios and bring in as much interest and fees as possible,” said Furqan Mohammed, a Chicago lawyer who has worked for both lenders and borrowers. “I think some of them didn’t really care whether the loan was repaid, frankly.”===
To the Post,
No different than buying Cutty Sark on credit, then selling it out the back at 100% profit. The money was never going to be repaid.
Preying in those with inflated costs, unworkable loans, and busting out the ones paying the freight… whew.
- Amalia - Friday, Oct 4, 19 @ 12:46 pm:
I’m interested in figuring out about McInerney. there’s a family of those guys who are very involved in law in Chicago
- Honeybear - Friday, Oct 4, 19 @ 12:51 pm:
I always use taxi’s in Chicago. The drivers are my AFSCME sisters and brothers.
- RNUG - Friday, Oct 4, 19 @ 1:00 pm:
I was familiar with this story. There is a lot more to it.
In NYC the Taxi and Limo Commission controls everything taxi related. Both NYC and Chicago used to tightly control the medallions, which artifically drove up the cost … and that was before the speculators moved in.
Chicago has always been monopolized by a few owners. In the 30’s through the late 50’s, one man had probably 80% of the market. At that time Morris Markin (founder of Checker Motors, manufacturer of the iconic Checker Cab) owned both Yellow Cab and Checker Cab in Chicago. He had to break it up after losing an anti-trust case. Morris was one of the founders of the concept of renting a medallion cab to a driver for an 8 hour shift, making them independent contractors. And, since the insurance companies wouldn’t insure the drivers, he started an insurance company to cover that market.
Lyft and Uber have totally disrupted the industry. But they just sped up the inevitable; in NYC black cars (limos for hire) were already equal to the number of yellow taxis on the street. Uber and Lyft just improved on the black car model. These days it is really hard to make a living driving a cab.
- Annonin' - Friday, Oct 4, 19 @ 1:01 pm:
Guessing Tribbies too busy doing…….to cover this beat
- Big Jer - Friday, Oct 4, 19 @ 1:13 pm:
===It was all about lending out as much money as possible, to increase the loan portfolios and bring in as much interest and fees as possible,” said Furqan Mohammed, a Chicago lawyer who has worked for both lenders and borrowers. “I think some of them didn’t really care whether the loan was repaid, frankly===
IMO that comment sums up the state of our finance industry driven, corporatized, and wealth and income inequality society.
- flea - Friday, Oct 4, 19 @ 1:16 pm:
one of trumps lawyers owned a bunch of these..right?
- Bertrum Cates - Friday, Oct 4, 19 @ 1:18 pm:
Ever since the Times did their story about Michael Cohen’s involvement in defrauding the medallion market in NYC, I have asked every driver I ride with about this. None of them blame medallion valuation for their struggles, but they have strong opinions of Uber and Lyft.
- Lucky Pierre - Friday, Oct 4, 19 @ 2:29 pm:
Who became Uber’s Senior Vice President for Policy and Strategy in 2014?
Barack Obama’s campaign manager- David Plouffe
“Yes we can” took on a whole new meaning
- Paddyrollingstone - Friday, Oct 4, 19 @ 2:39 pm:
LP - no doubt. The Dollop is a great podcast. Its an history podcast hosted by two comedians - Dave Anthony and Gareth Reynolds. Anthony will read a true story and the two comedians just absolutely go to town on the subject. The Donald Trump 2-parter is required listening as is the episode on Uber. Plouffe and Eric Holder don’t come off so well.
https://thedollop.libsyn.com/271-uber
- 32nd Ward Roscoe Village - Friday, Oct 4, 19 @ 3:24 pm:
Nice Goodfellas reference, OW. Just rewatched that the other night with my 18-year-old son, him for the first time. He got it.
- Oswego Willy - Friday, Oct 4, 19 @ 3:30 pm:
===He got it.===
Good on you, promoting a great film, good on him he knows the score and got it.
This bottoming out of the medallions and how Uber or Lyft and others handle their drivers, the only business model that appeared to work was soak the drivers in all these instances and ignore the effect of the services and workforce. The only thing that would make it more of a “cash cow” is if it were “cash only”
- Back to the Future - Friday, Oct 4, 19 @ 3:47 pm:
I always try to take cabs. I usually in cabs 4 to 10 times a week.
The drivers are always complaining about Uber getting breaks because Mayor Rham’s Brother was an investor.
Life has been difficult for Taxi Drivers since Uber came to town and lots of taxi drivers had their financial lives destroyed by the falling medallion prices.
- Last Bull Moose - Friday, Oct 4, 19 @ 4:23 pm:
Limiting the number of medallions is government creating an artificial monopoly. It is an old story.
Sorry for the people who bought medallions. Similar to the trucking companies that lost value when trucking was deregulated.