Lawmakers: Trump officials overruled Pentagon on $700M pandemic loan for trucking firm
House Democrats alleged in a new report Wednesday that senior Trump administration officials overruled Department of Defense officials in awarding a $700 million pandemic relief loan to a trucking company.
Why it matters: The loan received by the company, YRC Worldwide (now named Yellow Corp.), represented 95% of the total disbursed funds under the CARES Act national security loan program, according to the Democratic staff of the House Select Subcommittee on the Coronavirus Crisis.
The company, which some analysts believed was on the verge of failing in May of that year, received money set aside for companies critical to maintaining national security despite objections from Defense officials that its services to the Pentagon were not essential and could be assumed by other companies.
- The Department of Treasury announced in July 2020 that Yellow was receiving the loan because it "provides 68% of less-than-truckload services to the Department of Defense" and "to support essential military supply chain operations."
- The subcommittee alleges that the 68% figure related by the Treasury came from the company itself and double the Pentagon's actual number (34%) for 2019 and 2020.
What they're saying: "Today's Select Subcommittee staff report reveals yet another example of the Trump Administration disregarding their obligation to be responsible stewards of taxpayer dollars," Majority Whip Rep. James Clyburn (D-S.C.), chairman of the subcommittee, said in a statement Wednesday.
- "Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career DOD officials and in clear disregard of provisions of the CARES Act intended to protect national security and American taxpayers," he added.
Defense officials also objected to the loan because the Department of Justice had sued Yellow in 2018 for "systematically" overcharging the Pentagon for freight carrier services and making false claims to hide misconduct.
- Yellow resolved that lawsuit last month by agreeing to pay the government almost $7 million.
- In exchange for the loan, which was given at a lower interest rate than was prescribed by the CARES Act, the Treasury got an almost 30% stake in the company.