A Congressional Oversight Commission tasked with reviewing CARES Act loans made by the federal government sent up some warning flags this past week. The $700 million loan to Yellow Corp, then known as YRC Worldwide, has been called “a mistake.” Questions have been raised about Yellow’s sudden surge in lobbying money, and about how they received the designation as being “critical to maintaining national security.”
When the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed, it allocated $2.2 trillion worth of spending, tax breaks, loans, and other resources to be pumped into the U.S. economy. $17 billion of that was earmarked for loans to “businesses critical to maintaining national security.” Ultimately, only $736 million in these loans were approved. $700 million of which went to YRC Worldwide.
At the time, YRC was having a rough go. A few years earlier they had been sued by the Department of Defense. The DOD claimed that the company “systematically overcharged” the DOD for their services, accused them of fraud, and claimed that YRC executives had “made false statements to the government that hid their misconduct.”
YRC was also deeply in debt. They borrowed hundreds of millions of dollars in 2011, 2014, and 2019. All of that had saddled them with a total of $880 million in debt. Then, with $0 spent on lobbying efforts in 2019, they spent $570,000 on lobbying in 2020.
Whether the result of the lobbying effort or not, YRC’s fortunes seem to have brightened significantly almost immediately.
Then-Treasury Secretary Steve Mnuchin told commissioners during a hearing in December that there were “plenty” of “very senior people in Congress” who asked him to approve the loan to YRC. In fact, Kansas Senator Jerry Moran went so far as to ask Secretary Mnuchin about what the Treasury Department could do to help YRC in an open Senate hearing.
Arkansas Online lists the other lawmakers who wrote to Treasury, on behalf of YRC:
Rep. Sharice Davids, D-Kan., Rep. Peter A. DeFazio, D-Ore., and Rep. Sam Graves, R-Mo.; Sen. Ron Wyden, D-Ore., then-Sen. Pat Roberts, R-Kan., Rep. Albio Sires, D-N.J., Rep. Bill Pascrell Jr., D-N.J., and Rep. Donald M. Payne Jr., D-N.J.
The CEO of YRC was placed on the coronavirus revival task force. A former CEO/Chairman/President of YRC was placed on the board of governors of the United States Postal Service on June 19th, 2020.
On that day, YRC’s stock price closed at $1.78. Twelve days later, YRC’s $700 million loan was announced. Overnight, the stock shot up to $3.23. Since then it has kept climbing to a 52-week-high of $10.20.
But despite the climbing stock price, YRC – now rebranded to Yellow – was still losing money. Their $53 million net loss in 2020 wasn’t as bad as their $104 million net loss in 2019. But just this past week Yellow announced their first-quarter results for 2021. In just the first quarter, they are reporting a net loss of $63.3 million. That news and the Congressional Oversight Report have sent the stock tumbling. At the end of trading today, the stock was down to $6.51 per share.
“The $700 million taxpayer backed loan Treasury made to Yellow, formerly YRC, was a mistake,” Congressman French Hill (R-AR) said in a written statement according to reporting by Arkansas Online. “Based on the oversight work conducted by the Commission, there is no evidence to support Yellow being critical to national security which means these loans should never have been executed.”
At the time of the loan’s approval, the Mnuchin’s Treasury Department told commissioners that YRC handled 68% of the Defense Department’s LTL shipping. Treasury and DOD both gave that 68% figure, and according to the oversight report, that number was “used frequently to justify why Yellow was deemed critical to national security.” Yet the despite following up and specifically asking, the commission was “unable to substantiate the 68% figure based on a review of materials.”
The $700 million loan raised some eyebrows when it was made, even here at TruckersReport. But Secretary Mnuchin assured taxpayers that they would eventually make money on the loan because the federal government had received a 30% stake in the company as part of the loan agreement.
At the time the loan was made, a 30% stake was worth around $28.4 million. Even at the company’s highest recent valuation, a 30% stake would be worth around $162.2 million.
Yellow maintains that the loan was and is a good thing.
“Our agreement with the U.S. Department of the Treasury was mutually beneficial,” wrote a Yellow spokesperson according to Arkansas Online. “The department invested in the future of the Company and our 30 thousand employees with the belief that it would pay off. Today, taxpayers are beneficiaries of this investment.”
Source: USSenate, truckinginfo, freightwaves, fool, freightwaves, treasury, truckersreport, truckersreport, SEC
50 comments. Add a comment.
J Ossowski says
” Today, taxpayers are beneficiaries of this investment.” Taxpayers received $162.2 million worth of stock and were only forced to pay $700 million for it. I guess, in the Swamp, that could be considered a “good deal”. Here in reality, it’s considered theft and corruption and outright bribery.
Sandra Hudson says
AND THE FEDS ARRESTED BERNIE? NOW, WHO IS GOING TO ARREST THE FEDS? ONLY IN AMERICA–YIKES–WHAT A MISTAKE!
As time goes by a lot more of the past 5 years will start floating up.
All anyone can ever do is change the govt. Thank god for elections.
ONLY IF they are free & fair elections……………
Eddie Moore says
The feds need to arrest the republicans senators and get the country back on its feet.
Just more of the fleecing of America! The corruption will never end until it is forced to end.
Stephan Jones says
YRC’s new name, Yellow Government Transportation
Now that’s funny the truth but funny
They will soon bite the dust ,as ups sold ups freight ,when they bought roadway , on the road to ruins
That’s not good as we will be down to Fed Ex alone and they could charge whatever they want.No competition if UPS goes under.
Corrupt AF Gov’t: ” Well, that might have been a mistake…”
Taxpayers: “YA THINK!!??”
“We think, but not until after we give away your money…”
What did yellow spend all that money on? Sure wasn’t on their equipment!
I can tell you what they spent that money on. The top people just padded there bank accounts and that’s were all the money went. I can guarantee not one penny went to there aging rust bucket trucks or trailers or there employees. They should have to account were every penny went but they won’t have to.
Probably right. They will retire and let Yellow go under.
ricci Logan says
Good ole Covid-19 virus, the perfect political weapon….don’t know why anyone would be surprised by this, but then again look at the millionaires created when they get to government
It’s no surprise to most people I’m sure.
The money is still there.
It’s just padding the pockets of all the good old buddies who have access to it.
You can bet anyone who had anything to do with it hasn’t done without a thing while the poor people do without because all the loan money is gone.
They didn’t use it on the company or it wouldn’t be broke in a year.
3 months before Consolidated Freight went out of business I told people they were going bankrupt. The signs were a $50 million dollar loan they took from GM for payroll. Now a $700 million loan will buy more time but YELLOW will go bankrupt and take down at least one USF company REDDAWAY with it. There will no longer be anyone around to pay all the retirement benefits for the Teamsters. I was wondering why the billboard ads were popping up for Teamsters asking us to join.
Eddie Moore says
When, they go out of business that mean the union employees will have to go to work. Union employees want the business to pay insurance for their families when they don’t work for the business and that is call greed.
YRC or Yellow may be Teamsters, but the Teamster is involved in more than just Trucking companies nowadays.
Oh what a tangled web we weave !
Ralph I says
Oh no crap, theyre in bed with teamster union. Of course its orchestatred. You have welfare leeches who can work but sit home collecting living poor, then you got big unions leeching gov and private so that a guy in a hi lite markered vest holding a stop sign can eventually make 250k a year or more after 5-10 years working
Charles Ball says
One thing about YRC/Yellow was that it is a closed union shop. You can’t get a job with them UNLESS you are part of the union.
Corey Jackson says
If I were employed by YRC, I’d be looking to get my 401k money out now!!!!!
I worked for a company that went bankrupt and they could not touch the 401-K money. It was all paid out to the drivers in time, but the paychecks were a different thing.
Get off the cross, this is how we find out secret war against the Russians. The Russians ,it turns out ,are just animals. They skirt around the Geneva convention regulations on a daily basis. They tear off the limbs of small children with antipersonnel mines disguised as toys. The Russian people have no moral center other than Vladimir Putin and he is a monster.
This oversight investigation and the press swirling around it need to stop and move on to a different target.
Might I suggest Bill and Melinda Gates, or perhaps Warren Buffett? Mr. Buffet has broad financial shoulders, he can stand the heat. Now, be gone with your treacherous selves.
“My crusade is more important than yours!!! Stop talking about whatever you are interested in, put on these tinfoil hats, and parade around with these signs saying ‘The End is Near!'”
HARRY A JACKSON says
I demand to know who bought stock in this company around the time of these loans?
Did any of the Govt officials or their families/friends benefit from insider trading?
Also, a list of campaign contributions from YRC, or it’s affiliates or employees.
Matthew Eitzman says
I bought stock and made about $5300 when I sold it. I spent the profits on hookers and crack.
Oh hell I was at that party with you lol
Scott Hayden says
We have the finest government money can buy.
Bought stocks in them last year at 1.50$ For 5k when they reached 9$ I sold all my shares and made 25k, I finally realized the only way to deal with these corporations and the corruption is you gotta play their game.
Just remember that they control the game – you don’t. So if they notice you playing, and decide to play against you, you’re certain to lose.
Scrounging the crumbs that fall out of a predator’s mouth puts you dangerously close to it’s teeth.
And they just placed an order with Peterbilt for 1200 new tractors- go figure.
Watching the very slow death of a once great company. Won’t be long and they’ll be buried next to Consolidated Freightways…the marker has already been placed. Who says there’s no insider trading in Congress…the numbers speak for themselves.
All I know is that I pass these garbage trucks standing still on the interstate all day long and just always feel bad for the driver. Sad trucks, pay, and company!
James LaKing says
sounds like munchin was trying to work with DEMOCRATS AGAIN the lying deceetful DDEMOCRAT TRASH they are screwed us with their lies. DEMOCRATS the party of lies deceet and misery.
Good thing Donald drained the swamp, as he claimed to do.
Mnuchin and his Goldman Sachs friends are the poster boys for financial corruption.
Matthew Eitzman says
I hope YRC turns things around. I’m hopeful that things will improve.
Such a waste of taxpayers money
The taxpayers will never get anything in return
Bezos should buy it and fold it into amazon.
David Marsh says
Bezos doesn’t want any part of the union, he can’t afford it with his lifestyle.
that’s a good idea
Well you don’t know that this company has Alost of old fool , the union owns 30% of the company so when they need a pay off they just go into the employee retirement fund and get the money
You notice the CELADON story has faded and now YRC. Before CELADON a steady supply of crappy people have come and gone in the trucking industry. Dodging those company’s and avoiding being left stranded and having a paycheck bounce is like playing whackamo?
David Marsh says
The top dogs just got million dollar bonuses, and us blue collar schleps got $177.00!
Why would anyone question this group of executives?
Unless you work at YRC/Yellow, you have no Idea how many hours the employees have been putting in the last 10 Months. they’ve gone from the majority unemployment line from the summer of 2020 to working mostly 70 hour shifts. there has been new equipment arriving and many older low millage tractors seeing much needed daily repairs.. it cannot happen over night! we can only hope, for some of us a brighter future within moderately significant changes. believe me most of us are extremely stressed, exhausted and worry about our future. nonetheless we are getting the hours in, sleeping in our own beds as opposed to sitting at home unemployed or out there in the OTR sector fighting for freight, home time and searching for a place to park and rest.
I drive 5 nights a week and go home and sleep in my own bed every day. I start and log in around 2130 at night and work up to 1130 or less each day and still make over $90,000 @ year and get a new truck every 500,000 miles and it is kept up well with maintenance and the trailers are well taken care of to as long as drivers do the pre and post trips.
Do anybody know where I can buy a Volvo Electric Truck with Sleepers?