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Probe suggests Trump administration influenced pandemic relief loan to Yellow

$700 million loan to troubled LTL carrier still drawing scrutiny more than a year later

Yellow Corp. loan center of another investigation (Photo: Jim Allen/FreightWaves)

New claims surfaced Wednesday on how the $700 million pandemic relief loan made to LTL carrier Yellow Corp., formerly YRC Worldwide, came to be.

A press release issued by a Democrat-led committee investigating “waste, fraud, and abuse” in the CARES Act lending program said the group was seeking records from the Trump White House regarding its correspondence pertaining to the bailout loan made to Yellow (NASDAQ: YELL). In a Tuesday letter, Rep. James Clyburn, chairman of the Select Subcommittee on the Coronavirus Crisis, called on a national archivist to release the former president’s archives.

“The Select Subcommittee has obtained new evidence indicating that former White House officials may have been involved in helping Yellow to obtain this loan,” Clyburn said. He asserts the Trump administration may have leaned on the Treasury Department to approve the loan.

“Troubling reports have called into question Yellow’s eligibility for and use of those funds and raised concerns that the Department of the Treasury under the Trump Administration improperly approved this substantial national security loan to Yellow.”

The letter points to emails, “which show that Trump White House officials directly engaged with Yellow and its representatives regarding the company’s application for this national security loan, took steps to communicate with Treasury officials regarding the loan application, and received communications from Treasury regarding the loan.”

The press release also points to a potential “troubling conflict of interest” if former White House adviser Jared Kushner had any involvement in the loan’s approval.

Apollo Global Management (NYSE: APO), through affiliates, acted as the lead lender on a $600 million term loan to Yellow in September 2019. Clyburn’s letter says Apollo previously made a $184 million loan to a business operated by Kushner’s family in 2017. The letter says Apollo emailed Kushner after the CARES Act was enacted, “advocating for relaxed risk requirements in a pandemic loan program that Apollo stood to benefit from.”

The letter also suggests Apollo may have asked Kushner for favorable treatment on other relief loans where it “had a financial interest.”

Clyburn’s committee launched the investigation into Yellow’s loan on June 3, questioning its eligibility and use of the funds. The panel’s latest inquiry aims to determine “whether White House officials pressured or directed Treasury to disregard CARES Act requirements related to Yellow’s eligibility for and use of national security loan funds.”

Yellow loan under scrutiny since the beginning

The controversial bailout package provided to Yellow, a financially troubled carrier prior to the pandemic, has been scrutinized for more than a year now.

A bipartisan Congressional Oversight Commission was launched shortly after the Treasury’s $500 billion lending relief program was established. One of the commission’s focal points has been the loan made to Yellow, which qualified for the funds under a $17 billion provision in the act providing assistance to companies “critical to maintaining national security.”

The commission has raised several concerns with the Yellow loan in the past.

It questioned how a company responsible for 68% of the Defense Department’s LTL services is truly critical to the country’s survival when many other carriers are available. It also asked the Defense Department if it made adequate efforts to procure other LTL capacity should Yellow fail.

The commission has voiced concerns with Treasury’s underwriting criteria, noting that the interest rate didn’t properly reflect the risk to taxpayers. It has also taken issue with the loan’s $400 million second tranche that allowed Yellow to make substantial capital investments in its fleet, which it viewed as outside the scope of the program intended to address near-term liquidity issues companies were facing as a direct impact of COVID.

Treasury and Yellow defend the loan

At a December hearing, former Treasury Secretary Steven Mnuchin referred to the loan as “risky” and one that he would not have made, noting that it wasn’t subjected to normal underwriting criteria. He said Treasury was compelled by members of both parties to take losses on pandemic lending programs and to make the loan to Yellow, which would save 30,000 people from losing their jobs (80% of which were union). He also contended that the 30% equity stake and other collateral Treasury received in the deal was adequate.

Mnuchin also testified that no one from Kushner’s staff had reached out to him.

Yellow has contended all along that it committed no wrongdoing and that the information it supplied Treasury in the application process was “completely accurate, and the use of the loan funds were and are completely appropriate, transparent, and in full compliance with the loan agreements.”

“When negotiating with the Department of the Treasury, all guidelines were followed, and the due diligence process was extensive,” Yellow said in a statement to FreightWaves.

The company contends it is a critical link in the supply chain and that many carriers couldn’t perform the work it does for the Defense Department.

“Yellow reached out to the appropriate executive and legislative branches to help save 30,000 jobs and protect the vulnerable U.S. supply chain during the height of the COVID-19 crisis. Our request received bipartisan Congressional support and the full support of the International Brotherhood of Teamsters.”

The company has slowly been clawing its way back to profitability since it received the loan. The new trucks and trailers it has recently purchased are part of its company-wide overhaul aimed at boosting returns.

Click for more FreightWaves articles by Todd Maiden.


  1. Johnny Irish

    So if Yellow aka YRC would have closed and let go of 30,000 of its personnel they could have collected unemployment of a average $597.00 per week for 26 weeks which would have totaled of $465,660,000. And then an additional $600.00 Government bonus for being out of work due to covid pandemic of $600.00 per week for 16 weeks which would have totaled $288,000,000.00. So not only did jobs get saved the tax payer is net positive $53,660,000.00. Now I am sure if I could get enough people to whisper into Congressman Clyburn ears that some how President Trump had been apart of the death of President Lincoln before President Trump was born I am sure the congress would find a way to hang that on him as well. Unfortunately the United States Congress and the senior Management of Yellow suffer from the same DMMS problem. (Dyfunctional Moron Managemen Syndome). Oh Congressman Clyburn in case your not aware you have 2 Yellow Freight Serivce Centers in your district and Augusta, GA. and Columbia SC. also service your district as well. I am sure those who relay on Yellow are happy they are still here. OH AND FYI the stock was at $1.42 per share and is at $7.10 on Friday October 8th. I do not work for Yellow but If I had the Money I would buy it and scare the hell out of many.

  2. Kirk Smith

    I am a republican and a broker in the trucking industry and this loan should never have happened. If you can’t profitably keep your company afloat prior to Covid in a very competitive LTL market, you should either file bankruptcy and restructure or go out of business, liquidate and allow the market the quickly and naturally adjust. YRC’s rationale for this loan is absolute bunk. It is NOT the governments role to bail out failing companies in an industry that can easily adapt to and absorb their business and employees. $700,000,000.00 stinks to high heaven as a reward for failure from a Republican administration. This was a dirty inside deal that’s just shady as sh*t.

  3. Dick Bischoff

    Democrats clearly suffering from Trump Derangement Syndrome. YRC’s begging for a bailout worked with both parties, it won’t work again so I give em three years. I laugh every time I see the Holland trailers touting 100% free healthcare for the union workers. All paid for by the taxpayers at this point. They just need to be left to die next time, they are a bottom feeder along with Central Transport and Road Runner.

  4. Freight Zippy

    Yellow is the poster child for corporate welfare. If it were not for taxpayers funding this disaster it would have been closed.
    No other LTL Carrier gets this level of government welfare, if any at all.
    After the $700 million; we taxpayers funded pensions to the tune of $82 BILLION that were already paid for, but mismanagement by the teamsters caused them to go underfunded.

    America needs to give up on this train wreck of a carrier and get the taxpayers $$$ back…. Now…

  5. Mike

    They scream about lack of carries and drivers and yet head off in this direction? Go ahead, knock Yellow out, it will only further cripple logistics. Why would Trump, or anyone for that matter, other than a democrat… Why, in their right mind, want to wipe out a company that is vital to the economy, with jobs and logistics? I look at the government monies that are pissed away on all of their other BS, where the hell is the transportation funding from the Obama era? The monies Biden was in charge of? A trillion dollars gone, POOF! My God…

    1. Dick Bischoff

      Gubbamint is not in business to bail out failing companies, YRC will piss through this 700 million like crap going through a goose. I give em 3 years and they’ll be flat broke yet again.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.