The Washington Post reports:
The Treasury Department announced Wednesday that it will loan $700 million to a trucking firm that ships military equipment, in exchange for having U.S. taxpayers acquire an almost 30 percent stake in the company.
Under the unusual arrangement, the Treasury Department will provide the emergency loan to YRC Worldwide, while taking a 29.6 percent equity stake in the company. The U.S. government does not typically take ownership stakes in companies but was given permission to do so by Congress as a way to ensure taxpayer funds are not misspent.
That lede alone should be enough to raise an eyebrow. But it gets even more suspicious: YRC Worldwide's stock had already plunged 27 percent this year, and was down 85 percent over the last five years. The day before the deal was finalized, the company was only valued at $70 million.
Yet somehow, the company finagled a rare deal for a government loan worth 10 times more than the company itself. To hear Treasury Secretary Steve Mnuchin tell it, that's because the company is very, very important:
YRC is a leading provider of critical military transportation and other hauling services to the U.S. government and provides 68% of less-than-truckload services to the Department of Defense. This loan will enable YRC to maintain approximately 30,000 trucking jobs and continue to support essential military supply chain operations and the transport of industrial, commercial, and retail goods to more than 200,000 corporate customers across North America.
That argument might make sense on the surface, until you factor the part where YRC Worldwide is also being sued by the federal government for defrauding the Department of Defense out of millions of dollars. Read the rest