WASHINGTON (Reuters) – U.S. Treasury Secretary Steven Mnuchin said on Thursday he would recommend that his successor next year consider selling the $700 million emergency government loan made to trucking company YRC Worldwide (NASDAQ:YRCW) at a profit for taxpayers.
Mnuchin, speaking to a congressional oversight commission on federal coronavirus aid programs, said the loan to YRC, which hauls goods for the Defense Department, “was a risky loan.”
“We’ve been fortunate that the economy recovered, and that the equity is doing well and I am going to recommend that next year, whoever is Treasury secretary seriously look at selling this loan and recovering what I think will be a profit to taxpayers because this was a success,” Mnuchin said.
The $700 million loan to YRC, which reported a net loss of $104 million in 2019, came with a 30% equity stake in the trucking firm.
It was the largest and most controversial of 11 loans made from a $17 billion coronavirus rescue fund that was initially intended to bail out large defense contractors such as Boeing (NYSE:BA) Co and General Electric (NYSE:GE) Co.
Mnuchin has since closed the program to new loans and is asking Congress to reallocate unused funds for aid to small businesses, municipalities, individuals and schools.
Members of the bipartisan Congressional Oversight Commission established under the $2 trillion CARES Act grilled Mnuchin on the decision to make the loan to YRC, a company that has been frequently in financial difficulty.
Mnuchin, who has not publicly acknowledged that he will be succeeded by President-elect Joe Biden’s Treasury nominee, Janet Yellen, said the Treasury made the loan to protect Defense Department operations and to protect thousands of jobs that would be lost if the company failed.
Mnuchin added that if he was still in charge of his former bank, OneWest, he would have rejected YRC’s application as a commercial loan. “But as you recall both Congress and outsiders encouraged us to take losses,” he said.
YRC’s shares were trading at $5.50 on Thursday, up from $1.85 on June 30, the day before the Treasury loan was announced.
Mnuchin was also asked by commission member Bharat Ramamurti, an attorney and former Democratic Senate aide, whether he was aware that one of YRC’s largest creditors, Apollo Global Management (NYSE:APO), had “close personal ties” to White House adviser Jared Kushner, including a $184 million loan to the Kushner Companies.
Kushner is the son-in-law of President Donald Trump.
Mnuchin said he was not directly aware of this and did not take it into account in approving the loan. He added that neither Kushner nor anyone on Kushner’s staff reached out to Mnuchin about a loan to YRC.
Source: Economy - investing.com
