Rescue of Troubled Trucking Company With White House Ties Draws Scrutiny

The company has said the loan will be used to pay pension and health care costs and to invest in trailers and trucks.

For months, the money went untouched, in part because the loans come with strict terms and requirements and corporations must be willing to hand over equity stakes in their companies to the federal government. To be eligible, most companies are supposed to have government contracts that involve emergency preparedness functions or top-secret facilities. The Treasury Department submits all applications that do not meet those criteria to the Defense Department for review.

That is what the Treasury Department did with YRC’s application, saying in a news release that the approval for the loan “was based on a certification by the secretary of defense that YRC is critical to maintaining national security.”

A July report from the Congressional Oversight Commission raised questions about the decision to grant the loan, asking why delivering food to bases was vital for national security and why the Treasury Department appeared to seek special signoff from the Defense Department to ensure that YRC was considered eligible. The panel, which was created as part of the legislation that was signed in March to oversee distribution of $2.2 trillion in federal virus relief, said it found the agreement questionable and predicted that the government could end up losing money on the deal given the company’s precarious financial position.

Some members of the commission also want to look into whether YRC’s relationship with Apollo influenced the approval of the loan, according to a person familiar with the matter. No decision has been made about moving the inquiry in that direction. The commission, which will hold its first hearing on Friday morning, has the power to request documents, call witnesses and coordinate with other congressional committees on oversight matters.

The loan has raised questions of favoritism in part because it appears to flout the Trump administration’s own public assertions that it would not use taxpayer money to prop up individual companies or bail out businesses that were in financial trouble before the pandemic struck. The YRC loan appears to be an exception.

“YRC was already in a precarious position given that they weren’t a very profitable company, they were already losing volume and market share, and they’ve been trying to turn this around forever,” said David Ross, an analyst at the investment firm Stifel. “In normal times when you have a recession, companies that aren’t the best companies go away.”