The Congressional Oversight Commission released the following statement after outlining a culmination of its findings over the past three years from its investigation into the $700 million loan that trucking company Yellow Corporation, formerly YRC Worldwide, Inc., received from the Treasury Department.
Commissioner French Hill states, “The report released today by the Commission verifies that Yellow should have never received a $700 million taxpayer bailout from Treasury. The company had long-standing financial troubles before the pandemic and was not critical to maintaining national security given it was not the sole provider of such services. Yellow’s reckless actions to use taxpayer funds on expenditures unrelated to the purpose of the loan program is exactly why Congress needs to ensure that there are better guardrails as to where future Treasury loans are being distributed and how the loans are being used.”
Based on their examination of the Treasury’s $700 million loan to Yellow, the Commission provided the following recommendations to prevent taxpayer bailouts from happening again with future emergency loan programs:
Congress should not create an open-ended, sector-specific loan program in the future, such as the national security loan program.
If Congress creates another sector-specific emergency loan program, the statue should clearly define eligibility and not allow any type of catch-all provision like in the instance of Yellow.
Congress should prohibit businesses that receive loans from using the proceeds on expenditures unrelated to the purpose of the loan program.
Congress should limit the eligibility of future sector-specific loan programs to businesses that are in good financial condition prior to the emergency events that lead to the program’s creation.
Congress should require sector-specific loans to be underwritten and structured in ways that more effectively mitigate the risk of loss to taxpayers.
The DOD should not rely on its contractors for critical information relevant to making decisions about certifying a business as critical to maintaining national security and must improve its oversight over its subcontractors, not just its prime contractors.
The Commission’s special report can be viewed here.