Congressional coronavirus watch group grilled Treasury secretary Steven mnuchinSteven MnuchinMenendez and Rubio Ask Yellen to Investigate JBS Meat Packer The Hill’s Morning Report – Brought to you by Goldman Sachs – Biden rallies Senate MPs behind massive spending plan Mnuchin dodges CNBC questions about knowing if Trump is lying about the election MORE Thursday about a bailout loan given to a shipping company as part of a program for companies critical to national security.
Members of the Congressional Oversight Commission (COC), established to oversee the implementation of the CARES law, pressured Mnuchin during a hearing on why the Treasury and Defense departments ruled necessary to lend 700 million dollars to YRC Worldwide.
The commission sharply criticized Mnuchin and the Defense Ministry’s decision to issue the bailout loan, as well as the loan terms they feared being too generous for a company with long-standing financial problems. Members also questioned whether YRC was really essential to national security and why the Pentagon had contracted YRC for a significant proportion of its shipping needs.
“At best, this is a loan that puts nearly a billion dollars at risk with minimal protections and helps a private equity giant sitting on billions of dollars of its own money,” the COC commissioner, Bharat Ramamurti, former political adviser to Sen. Elizabeth warrenElizabeth WarrenBipartisan Senators to Hold ‘Toxic Conservations’ Hearing Amid Britney Spears Controversy Senate Advances Consumer Bureau Choice Biden After Panel Deadlock White House Faces Increased Screams of Allies on Haitian migrants MORE (D-Mass.).
YRC Worldwide specializes in LTL (LTL) shipping, in which loads from multiple customers are combined into one trailer. The company performs 68% of the Department of Defense’s LTL services and also has contracts with the Departments of Energy and Homeland Security, according to the Treasury.
The Treasury loaned YRC Worldwide $ 700 million in July from a $ 30 billion pool allocated by the CARES Act to help airlines, aircraft manufacturers and other businesses deemed essential to national defense. In exchange, the Treasury Department took a 29.6% stake in YRC and has liens on part of its fleet as collateral.
Mnuchin presented the loan Thursday as a major success for the CARES Act, YRC and the U.S. taxpayer, citing the substantial rise in the company’s stock price after the department took a stake.
“I’m proud of the fact that we made YRC. It saved lots and lots and lots of jobs, ”Mnuchin said. He added that while he would not have given the same loan if he was running a bank or a hedge fund, he expects the government to make a profit.
Members of the commission were less optimistic.
representing French hillJames (French) French HillBiden to speak in person at United Nations General Assembly Senior lobbying Democrat leads bipartisan trip to Middle East MORE (R-Ark.), A former Treasury Department official and banker, told Mnuchin he didn’t think the federal government had taken enough collateral to back the loan to YRC.
He also expressed doubts that YRC’s financial woes are due to the pandemic, citing its history of bailouts and substandard debt offers before COVID-19 hit the United States.
“Despite the cancellation of all of its debts at that time,” said Hill, “this company found itself in exactly the same position before the pandemic.”
Ramamurti also asked Mnuchin why there was a need to lend to YRC when Apollo Global Management, a major investment firm, already had a $ 600 million stake in the company. He asked Mnuchin if the decision was influenced by the White House adviser Jared kushnerJared Corey KushnerHouse’s panel launches fight for Trump’s executive privileges in January 6 inquiry, whose family received more than $ 100 million in loans from Apollo.
Mnuchin denied any connection between Kushner and the YRC loan and said he never discussed the matter with President TrumpDonald TrumpUN meets with US, France canceled over timing issue Trump sues NYT, Mary Trump for story on tax history McConnell and Shelby propose government finance bill with no debt cap MOREthe son-in-law of. He also highlighted earlier requests from members of Congress on both sides to consider a loan to YRC.
The commission also asked several questions about YRC’s importance to U.S. national security and why the Department of Defense certified the company as a necessary recipient of rescue funds. Under Secretary of Defense Ellen Lord is scheduled to testify before the panel in a teleconference on December 18.
“Why the [Pentagon] being so dependent on such a weak company when there are a lot of companies – including union companies, for my friends across the aisle – that have enormous financial strength and provide services LTL? Hill asked.