(p. A4) The Treasury Department erred in giving a loan to a troubled trucking company as part of a 2020 Covid-19 rescue package and should refrain from similar sector-specific loan programs in the future, according to a new congressional report.
Yellow, a trucking company, received a $700 million loan from the Treasury Department as part of an aid program for private industries included in bipartisan legislation known as the Cares Act enacted early in the pandemic.
But Treasury had to skirt the program’s rules to make the loan, the report said. The agency designated Yellow—then known as YRC Worldwide—as critical to national security even though the company didn’t meet the standard for that designation, the report said.
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In exchange for the loan, Treasury received a roughly 30% stake in the company.
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At the time of the loan the company was rated noninvestment grade by Moody’s Investors Service and was at risk of bankruptcy, according to the report.
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In recent months, Yellow has again suffered from the broader freight slowdown.
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Teamsters President Sean O’Brien said the union is abiding by the terms of its contract with the company.
“After decades of gross mismanagement, Yellow blew through a $700 million bailout from the federal government, and now it wants workers to foot the bill,” O’Brien said in a statement.
For the full story, see:
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(Note: the online version of the story was updated June 27, 2023, and has the title “Treasury Shouldn’t Have Given Pandemic Aid to Trucking Company, Report Finds.”)