By Bankruptcy-bound trucking firm Yellow received a whopping $700 million in Covid pandemic relief loans three years ago after Trump administration officials pushed for it despite objections from the Defense Department.
Yellow has repaid just $230 out of the $729.2 million in principal it still owes the U.S. Treasury for those loans, according to a government watchdog’s report in May. That single payment was made in June 2021.
The Teamsters Union, which represents Yellow workers, blasted the freight carrier in a statement Sunday and highlighted the Covid loans.
“Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government,” Teamsters General President Sean M O’Brien said.
Yellow told staff on Friday that it is completely shutting down, which would put 30,000 workers out of their jobs, and the Teamsters said the company plans to file for bankruptcy.
When it does, it will become the largest bankruptcy ever for a trucking firm.
A Yellow spokesman did not immediately respond to a request for comment from CNBC.
The Trump administration in July 2020 approved the $700 million in loans to then-financially troubled Yellow, formerly known as YRC Worldwide, under the so-called CARES Act, which authorized such for companies “critical to maintaining national security.”
At the time the loans were made, they represented 95% of the total funds disbursed under the CARES Act. The federal government received a nearly 30% stake in Yellow in exchange for the loans.
A House subcommittee in April 2022 issued a scathing report on the loans, saying they were extended to the company despite the assessment by Defense Department officials that the company was not “critical” to national security.
The report said, “The loan’s approval involved the intervention of top Trump Administration officials —potentially including the president,” Donald Trump.
According to the report, documents show that Trump White House chief of staff Mark Meadows planned to call Treasury Secretary Steven Mnuchin about Yellow’s request for the loans in May 2020.
“Secretary Mnuchin’s communications confirm President Trump’s interest in the loan approval,” the subcommittee noted in a statement about the report.
Read more of CNBC’s politics coverage:
“The morning that Treasury announced the loan to Yellow, Secretary Mnuchin sent Chief of Staff Meadows and the president’s executive assistant a CNN article reporting on the loan and highlighted that a union leader thanked President Trump for the loan — just months before the 2020 presidential election,” the statement said.
At the time the loans were made, the Department of Justice was suing Yellow for alleged fraud related to overcharges to the Defense Department for freight carrier services. The company in March 2022 agreed to pay about $6.85 million to settle that lawsuit.
