Question: Why bail out a company defrauding American taxpayers? Answer: Favoritism
At a virtual congressional hearing in May, Republican Senator Moran demanded Treasury Secretary Mnuchin bailout a trucking company called YCR Worldwide. That company, YRC Worldwide, lost more than $100 million in 2019. In 2018, the Justice Department sued YRC, for overcharging and defrauding the Defense Department out of millions of dollars. YRC inflated the weights of thousands of shipments, billing the government based on those false numbers in “an affront to American taxpayers.”
Mr. Mnuchin assured the senator that “we will look at that specific company and see what we can do and get back to you.” YCR did not go through normal channels or follow procedure. Then six weeks later, YRC received a bailout from the Treasury Department of a $700 million loan in exchange for a 30 percent stake in the business.
Mnuchin gave the loan from a $17 billion slush fund Congress set up controlled by Mr. Mnuchin. It was the first company to receive a loan from that fund. The company’s stock price soared 74 percent. YCR became one of the largest recipients of taxpayer money despite their known history of fraud.
Why Play Favorites?
The New York Times explains: YRC has financial backing from Apollo Global Management. Apollo is a private equity firm with close ties to Trump and other administration officials. In 2017, Josh Harris, founder of Apollo, advised the Trump administration on infrastructure policy and discussed a possible White House job with Jared Kushner, Mr. Trump’s son-in-law and senior adviser. That same year, Apollo lent $184 million to Mr. Kushner’s family real estate firm, Kushner Companies.
In January, he nominated the company’s former chief executive, William Zollars, to the United States Postal Service’s board of governors. In April, President Trump chose YRC’s chief executive, Darren Hawkins, to serve on a coronavirus economic task force.
The loan raises questions of favoritism because it contradicts the Trump administration’s public promise that taxpayer money would not bail out businesses that were in financial trouble before the pandemic struck. The YRC loan appears to be an exception.
“It sends a chilling message to the American people that the Trump administration has no problem throwing nearly a billion dollars to wealthy, well-connected companies like YRC, while they refuse to provide adequate assistance for the unemployed or protect workers as the pandemic worsens,” said Kyle Herrig, the president of Accountable.US. Trump should not play favorites with taxpayer money.