WASHINGTON – Treasury Secretary Steven Mnuchin defended government decision to lend $ 700 million in coronavirus supplies to trucking companies
YRC worldwide Inc.,
He told a congressional oversight panel on Thursday that the loan would benefit taxpayers.
Members of the bipartisan Congressional Oversight Commission, the watchdog group that oversees the Treasury Department’s loan programs, have questioned how the Overland Park, Kansas-based company qualified for state aid despite the precarious financial situation before the pandemic.
Mr Mnuchin admitted the loan was risky and said he was under pressure from lawmakers to lend to troubled businesses, even if it meant a loss of money.
“If my bank had taken this loan, we wouldn’t be making this loan,” said Mr. Mnuchin, who served as chairman of OneWest Bank prior to joining the Trump administration. “That doesn’t mean I don’t think we’re safe and we’ll get our money back.”
YRC, one of the country’s largest freight forwarding companies, qualified to help through a $ 17 billion loan program. The Treasury Department said it made the national security decision based on recommendation and guidance from then Secretary of Defense Mark Esper.
YRC handles 68% of Department of Defense general cargo shipments that have shippers grouped cargo into a single trailer and is the premier transportation provider for the Department of Homeland Security and U.S. Customs and Border Protection, the Treasury Department said in a letter dated Jan. September to the Commission.
Mr Mnuchin said the government expected losses on the loan but said the economy has recovered faster than expected, as have the company’s assets. “I’m actually pretty proud that we did YRC,” he said. “It saved many, many, many jobs. I’ve got calls from the company, from truckers, from other people who appreciate it. “
He said “whoever is finance minister” should consider selling the loan next year and getting the profits back to taxpayers.
YRC did not immediately respond to a request for comment. CEO Darren Hawkins said in an interview this summer that the company was pursuing the loan because of “the hole created by the pandemic.”
YRC generated $ 4.87 billion in operating revenue last year, but has also been grappling with heavy debt for years. The company employs approximately 30,000 workers, including 24,000 members of the International Brotherhood of Teamsters. It is the fifth largest U.S. trucker by revenue in 2019, according to transportation research provider SJ Consulting Group Inc.
Commissioner Bharat Ramamurti, a Democratic attorney, urged Mr. Mnuchin if he knew that the company would risk bankruptcy without government assistance. Mnuchin said he did – and did he know that one of YRC’s greatest creditors,
had ties with White House adviser Jared Kushner, President Trump’s son-in-law.
Mr. Mnuchin said neither Mr. Kushner nor any of his staff contacted him about the YRC loan.
French Hill (R., Ark.) MP, who is also a member of the commission, questioned the loan terms agreed by the Treasury Department, suggesting that the government had not secured sufficient collateral from the company to protect American taxpayers. When Mr. Mnuchin announced the current stock value of YRC, Mr. Hill replied, “That’s because the stock went up because you made this loan.”
YRC shares rose 75% after the relief deal was announced on July 1, and nearly tripled by Thursday. The company’s lenders also gave the troubled trucker Debt burden postponement for 3 ½ years after announcement of the aid package.
A Government Surveillance Authority report released Thursday found that tax officials were speeding up their evaluation of the YRC loan and not following standard procedures for reviewing the application, which was approved nearly three months before any other national security loan program loan. Although other firms have faced similar difficult funding conditions, the Treasury Department has not rushed other applications based on funding needs, the report said.
Of the 74 companies that applied for loans under the National Security Program, the Treasury Department approved 11 loans totaling approximately $ 736 million.
Write to Kate Davidson at [email protected]
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