Where is the line between payday lending and predatory lending by Medallion Financial (TAXI) and the other eleven Big Taxi lenders who together hold $5.7 billion in medallion loans?
Is continuing to force owner operators and small medallion owners to pay lenders for worthless medallions predatory lending?
Whether you are a supporter or opponent, Uber has destroyed the value of taxi medallions in New York, Chicago and Boston.
When financially distressed small medallion owners can’t pay, Big Taxi lenders just keep adding the missed payments of interest and principal to the balance due. Publicly held lenders can then claim they have minimal non-performing loans. They can cite a handful of suspicious medallion transfers to levitate the value of the loan portfolios on their balance sheets at a face value of $5.7 billion.
All of the Big Taxi Twelve lenders are guilty of this charade.
At what point in 2015 did these practices cross over into securities fraud?
Banks could kick the can down the road for years after the 2008 bursting of the real estate bubble. Real estate is a tangible asset that always has minimum market clearing values above zero. Real estate can drop in price precipitously to astoundingly low values and languish there for years. However the value of real estate DID recover after several years.
On the other hand, Uber’s introduction of endless supply of for-hire vehicles has destroyed the value of taxi medallions PERMANENTLY.
Taxi medallions, as we’ve known them, are worthless in New York, Chicago and Boston and always will be.
Loans using taxi medallions as collateral are worthless.
There won’t be any recovery of value.
Extend and pretend must end.
Larry Meyers has promoted the stock of Medallion Financial during the past two years. However, his core business is operating in and advocating for the payday lending industry.
Here’s a profile that describes Larry’s professional goals.
By Tod Robberson
Dallas Morning News
April 11, 2013
Today’s Viewpoints page has a piece by Lawrence Meyers, president of PDL Capital, offering an unsurprising industry insider’s defense of the payday loan industry. This piece is so full of misleading and outright wrong information, I don’t know where to begin. But I guess I should start with the credit line that explains who Lawrence Meyers is.
The credit line on his column lists PDL Capital as a company that “brokers secure high-yield investments to the general public and private equity.” Gosh, you would think it’s some kind of high-fallutin’ Wall Street investment firm or something. It is a company that provides start-up money so payday lenders can expand operations. It essentially provides high-interest payday loans to storefront payday lenders, title-loan companies and online payday lenders.
PDL stands for PayDay Loan, as the company’s website makes very clear. So why would Meyers write this gobbledygook to describe what he does, instead of just saying outright: a company devoted to financing the expansion of payday loan operations around the country?
Because from the very start, his job is to sugarcoat the true nature of his industry and paint it in the best-possible light. In order to accomplish his mission, he uses deception and seeks to minimize the very real, harmful effects of the business he promotes.
It’s harmful because payday loans are structured in ways that virtually ensure the borrower cannot repay the expensive, high-interest loan within the first period established in the loan agreement. Failure to meet the repayment schedule leads to the addition of fees and interest that reaches into triple-digit ranges.
This is the profit center of the payday lending industry.
When unwitting, uneducated borrowers get trapped in this cycle, many see their only option as refinancing through the very payday lender that is charging usurious rates from the outset.
Meyers scoffs at this. He says: “Data from the Office of Consumer Credit Commissioner shows it [refinancing] occurs only 20 percent of the time.”
Repeat: “Only.” But connect the dots. Two paragraphs later, Meyers states that his industry made 100 million loan transactions in 2012. By his own calculation, then, “only” 20 million payday loan customers were compelled to refinance their loans…
Here’s the latest news about the Fed crackdown on predatory lending by payday lenders.
U.S. Payday Lending Crackdown Brings Race Car Driver’s Arrest
By Nate Raymond
February 10, 2016
NEW YORK Feb 10 (Reuters) – U.S. authorities on Wednesday launched a broad offensive against abusive online pay lenders, arresting three people tied to the industry, including a race car driver, for allegedly exploiting more than 5 million cash-strapped consumers.
Prosecutors said Scott Tucker, who competes on U.S. and European racing circuits, ran a $2 billion enterprise that used sham relationships with Native American tribes to claim immunity from state enforcement actions over its lending practices.
An indictment filed in federal court in Manhattan said Tucker earned hundreds of millions of dollars in profits, spending the money on luxury homes, cars, jewelry, a private plane and his professional racing team, Level 5 Motorsports.
The charges came amid U.S. efforts to crackdown on abusive practices by payday lenders, which provide small extensions of credit that borrowers agree to repay in a short time, such as when they next receive a paycheck.
The companies say they help struggling consumers, but critics say borrowers end up with large debt loads due to high interest rates, fees and loan rollovers. Fourteen states and the District of Columbia prohibit payday loans.
Along with Tucker, the indictment also charged Timothy Muir, a lawyer who worked with Tucker’s Overland Park, Kansas-based company, AMG Services Inc, which had 600 employees.
Prosecutors said Tucker’s enterprise from 1997 to 2013 exploited 4.5 million people while doing business as Ameriloan and One Click Cash.
After several states sued, prosecutors said Tucker entered into sham relationships with Native American tribes including the Miami Tribe of Oklahoma to claim sovereign immunity.
Two corporations the Miami Tribe controlled have agreed to forfeit $48 million in a non-prosecution deal, Manhattan U.S. Attorney Preet Bharara said.
Another indictment charged Richard Moseley for running a fraudulent $161 million online payday lending enterprise from Kansas City, Missouri, through offshore companies.
All three men were accused of racketeering violations for scheming to collect unlawful debts through loans with 700 percent or more interest rates.
Federal Bureau of Investigation agents arrested Tucker, 53, and Muir, 44, in Kansas, and Moseley, 68, in Missouri. Each was released on bail later on Wednesday.
Lawyers for Tucker and Muir did not respond to requests for comment. Marilyn Keller, Moseley’s lawyer, said Moseley would plead not guilty.
The Federal Trade Commission sued Tucker in 2012 and is seeking $1.32 billion from him and his deceased brother’s estate. It has obtained $25.5 million in settlements with entities including AMG Services.
The cases in U.S. District Court, Southern District of New York, at U.S. v. Tucker et al, No. 16-cr-091, and U.S. v. Moseley, No. 16-cr-079.