Trump-Era Bailout Of Trucking Giant Yellow Heads South, Leaving Taxpayers In The Dust

The sudden cessation of operations by the trucking titan, Yellow Corp. YELL, may lead to financial losses for American taxpayers, highlighting the inherent risks of government aid to corporations.

Government’s Lifeline To Yellow And Its Implications

In 2020, during the peak of the Covid-19 pandemic, the U.S. government loaned Yellow $700 million, a move that kept the company afloat and facilitated its business expansion plans.

The Treasury Department acquired approximately a 30% equity stake in the company as part of the deal. However, the handling of the loan by the Trump administration has since been scrutinized in at least three government investigations, The Wall Street Journal reports.

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Yellow Shuts Operations, Ready To File For Bankruptcy

Yellow has now ceased its operations and is anticipated to declare bankruptcy, following a series of mergers that left the company laden with debt and a deadlock with the Teamsters union. The Treasury’s equity stake is at risk of being obliterated. The possibility of the federal government recouping the loaned funds hinges on the amount Yellow can generate from the sale of real estate and other assets during bankruptcy.

In a conversation with the Journal, Adam Levitin, an expert in bankruptcy law at Georgetown law school, said, “I expect Treasury is just going to take its licks here.”

Despite the looming bankruptcy, a spokeswoman for Yellow remains optimistic that the company will repay its loan in full. She emphasized that Yellow adhered to the Treasury’s guidelines when applying for the loan and complied with the loan agreements.

The decision to grant the loan has been repeatedly questioned by lawmakers and a special inspector general. They argue that other trucking companies could have easily assumed Yellow’s military contracts, and the Trump administration did not adhere to standard procedures when offering the loan.

The Role Of The Trump Administration

Yellow’s workforce and the Teamsters union actively advocated for financial aid from legislators and the Trump administration, as revealed in a congressional report. The Pentagon initially recommended against recognizing Yellow as critical for national security, but this decision was overturned following a call between then-Treasury Secretary Steven Mnuchin and then-Defense Secretary Mark Esper, as revealed by congressional investigations.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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