A Special Report of the Congressional Oversight Commission

Summary

A special report of the Congressional Oversight Commission, dated June 27, 2023, giving its final examination of the Treasury's $700 million national security loan under the CARES Act to Yellow Corporation, formerly YRC Worldwide, Inc. It states that the loan, executed July 7, 2020, has a $300 million Tranche A and a $400 million Tranche B, and that the Treasury received a 29.6% equity stake. The Commission states that Yellow did not meet either of Treasury's two national security eligibility criteria and qualified under a catch-all provision on a Defense Department certification. It reports that Yellow spent $570,000 on lobbying in 2020 compared to zero in 2019, and that Defense Department officials first leaned toward a "yes" recommendation, then changed to "no". Appendices list stock holdings, sales and grants of Yellow officers and directors.

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Full text

A Special Report of the Congressional Oversight
Commission

June 27, 2023

Commission Member
U.S. Representative French Hill

TABLE OF CONTENTS

Introduction
Discussion of the Treasury’s National Security Loan to Yellow
Yellow’s Lobbying for National Security Loan
Benefits of National Security Loan to Yellow’s Key Stakeholders
Risks of Yellow’s National Security Loan to Taxpayers
Recommendations
Appendix A:  Timeline of Events Relating to Yellow’s to National Security Loan and
Communications Between Yellow, Defense Department, Treasury, and the U.S.
Congress

Appendix B:  Stock Holdings of Yellow SEC Reporting Officers and Directors

Appendix C:  Stock Sales of Yellow SEC Reporting Officers and Directors

Appendix D:  Stock Grants Awarded and Stock Purchases of Yellow SEC Reporting Officers
and Directors

1

INTRODUCTION
This is a special report of the Congressional Oversight Commission (“Commission”)
created by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).1 The
Commission’s role is to conduct oversight of the implementation of Division A, Title IV,
Subtitle A of the CARES Act (“Subtitle A”) by the U.S. Department of the Treasury
(“Treasury”) and the Board of Governors of the Federal Reserve System (“Federal Reserve”).
Subtitle A provided $500 billion to the Treasury for lending and other investments “to provide
liquidity to eligible businesses, States, and municipalities related to losses incurred as a result of
coronavirus.”2
Of this amount, $46 billion was set aside for the Treasury to provide loans or loan
guarantees to certain types of companies. Up to $25 billion was available for passenger air
carriers, eligible businesses certified to inspect, repair, replace, or overhaul services, and ticket
agents. Up to $4 billion was available for cargo air carriers, and $17 billion was available for
businesses “critical to maintaining national security.”3 The Treasury provided national security
loans to eleven businesses, totaling $735.9 million.4 One business, Yellow Corporation
(“Yellow”), which was formerly known as YRC Worldwide, Inc. (“YRC”), accounted for 95%
of the total loans.5 In this special report, the Commission provides its final examination of the
Treasury’s national security loan to Yellow.6

1 CARES Act, Pub. L. No. 116-136, § 4020, 134 Stat. 281 (2020).
2 Id. § 4003(a).
3 Id. § 4003(b). In addition, Division A, Title IV, Subtitle B of the CARES Act (“Subtitle B”) authorized the
Treasury to provide up to $32 billion in financial assistance to passenger air carriers, cargo air carriers, and certain
airline industry contractors that must be exclusively used for the continuation of payment of employee wages,
salaries, and benefits. Subtitle B is not within the jurisdiction of the Commission.
4 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-industry/loans-to-air-carriers-eligible-businesses-
and-national-security-businesses.
5 Yellow Corporation, YRC Worldwide Inc. is Renamed Yellow Corporation, Feb. 4, 2021,
https://investors.myyellow.com/news-releases/news-release-details/yrc-worldwide-inc-renamed-yellow-corporation.
6 This report was drafted, in part, while U.S. Senator Pat Toomey was still a member of the Commission. However,
this report was finalized after Senator Toomey resigned as a member of the Commission on January 3, 2023 in
conjunction with his retirement from the U.S. Senate.

2

DISCUSSION OF THE TREASURY’S NATIONAL SECURITY LOAN TO YELLOW
This special report of the Commission is a continuation of previous reports that
specifically examined the Treasury’s $700 million national security loan to Yellow.7 In these
previous reports, the Commission has consistently expressed concerns about this loan, including
questioning the initial decision to designate Yellow as a “business critical to maintaining national
security”, the lack of any substantive review by Treasury in regard to both the designation and
the terms of the proposed loan, and observing that Yellow’s precarious financial position at the
time of the loan exposed taxpayers to a significant risk of loss.
As a refresher, Yellow is a publicly traded company (“YELL” on the Nasdaq) and
provides transportation and logistics services, including to the U.S. Department of Defense (the
“Defense Department”).8 The company specializes in less-than-truckload (LTL) shipping where
smaller cargos from multiple customers are combined on one trailer.9 When Yellow received its
national security loan in July 2020, the Treasury stated that Yellow “provides 68% of less-than-
truckload services to the Defense Department.”10 At that time, Yellow was the fifth-largest U.S.
trucking company and the fourth-largest less-than-truckload U.S. shipping provider (i.e., where
smaller cargos from multiple customers are combined on one trailer).11 It was headquartered in
Overland Park, Kansas and had about 30,000 employees, the vast majority of whom were union
workers. Yellow had been rated non-investment grade for over a decade before the COVID-19
pandemic, struggled financially for years before the pandemic, and was at risk of bankruptcy
before it obtained a loan from the Treasury.12
On April 29, 2020, Yellow applied for a loan from the Treasury’s national security loan
program.13 Executed July 7, 2020, the Treasury loan to Yellow is for $700 million, broken up
into two tranches: (1) $300 million in Tranche A, which was intended to cover, among other

7 The Commission specifically examined Yellow’s national security loan in its third, seventh, eighth, and twelfth
reports, which are available on the Commission’s website at https://coc.senate.gov/reports/.
8 YRC Worldwide Inc., YRC Worldwide Expects to Receive $700 Million CARES Act Loan from U.S. Treasury, July
1, 2020, http://investors.YRC.com/news-releases/news-release-details/yrc-worldwide-expects-receive-700-million-
cares-act-loan-us.
9 YRC Worldwide Inc., Annual Report (Form 10-K), March 11, 2020, http://investors.YRC.com/static-
files/8092f183-eb4b-4ba7-bae2-fb4afc4f3e25.
10 U.S. Department of the Treasury, Treasury to Provide Loan to YRC Worldwide, July 1, 2020,
https://home.treasury.gov/news/press-releases/sm1049.
11 Jennifer Smith, Trucker YRC Seeks to Defer Millions in Benefits Payments, Wall Street Journal, June 18,
2020, https://www.wsj.com/articles/trucker-yrc-seeks-to-defer-millions-in-benefits-payments-11592508252.
12 Moody’s Investors Services, YRC Worldwide Inc. Ratings, https://www.moodys.com/credit-ratings/YRC-
Worldwide-Inc-credit-rating-834015; Jennifer Smith, Truckers Cut Spending as Factory Slowdown Weighs on
Operators, Wall Street Journal, April 7, 2020, https://www.wsj.com/articles/truckers-cut-spending-as-factory-
slowdown-weighs-on-some-operators-11586295247; Standard & Poor’s, U.S.-Based YRC Worldwide Inc.
Downgraded To 'CCC' On Anticipated Covenant Violation, Outlook Negative, May 28, 2020,
https://www.standardandpoors.com/en_US/web/guest/article/-/view/type/HTML/id/2450913.
13 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security
Businesses, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/loans-to-air-
carriers-eligible-businesses-and-national-security-businesses.

3

things, healthcare and pension liabilities, real estate and equipment leases, and interest payments
on debt, and (2) $400 million in Tranche B, which was intended to finance the purchase of
tractors and trailers in accordance with the company’s capital expenditures plan, both due
September 30, 2024. Interest for Tranche A is LIBOR plus 3.5% (split between 1.5% cash
interest and 2.0% payment-in-kind (“PIK”) interest) and interest for Tranche B is LIBOR plus
3.5% (all cash). Additionally, the Treasury received a 29.6% equity stake in the Yellow.14
Since the CARES Act did not define the term “business critical to maintaining national
security”, the Treasury had virtually unfettered discretion to define this term. The Treasury
defined this type of business as a business that was at the time of its application for a national
security loan performing under a defense contract of the highest national priority or operating
under a top secret facility security clearance.15 Yellow did not meet either of these two national
security eligibility criteria. However, Yellow qualified for the program under a “catch-all
provision” created by the Treasury allowing it to determine if a business is critical to maintaining
national security based solely on a recommendation and certification from the Secretary of
Defense or the Director of National Intelligence. In the view of the Commission, their “catch-all
provision” is not an effective policy and should not be considered in future periods where
Treasury loan programs are considered by Congress.
The Commission first examined the Treasury’s loan to Yellow in its third report.16 That
report raised concerns with the Treasury’s decision to deem Yellow a business critical to
maintaining national security and the process for reaching that conclusion. The Commission
noted that it is far from clear that the fourth-largest LTL shipping company in the United States
is critical to maintaining national defense because it reportedly delivers “food, electronics and
other supplies to military locations around the country.”17 The third report also raised concerns
about the riskiness of the Treasury’s loan to Yellow given the company’s poor financial
condition before the COVID-19 pandemic.
The Commission’s seventh report raised concerns that the Defense Department did not
provide the Commission a satisfactory explanation for how Yellow was critical to national
security. The report also raised serious concerns about the terms and conditions of the Treasury’s
loan to Yellow. Yellow was operating at a loss and had poor credit ratings—both before and
during the pandemic. The Commission noted the significant risk that Yellow could default on the

14 YRC Worldwide Inc., UST Tranche A Term Loan Credit Agreement, July 7, 2020, at 55,
https://home.treasury.gov/system/files/136/YRC-Documentation.pdf.
15 U.S. Department of the Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security
Businesses, Apr. 10, 2020, https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-and-A-
national-security.pdf; Defense Contract Management Agency, Defense Priorities & Allocations System (DPAS),
May 7, 2019, https://www.dcma.mil/DPAS/ (“A DX rating is assigned to those programs of the highest national
priority”).
16 Congressional Oversight Commission, the Third Report of the Congressional Oversight Commission, Jul. 20,
2020, https://coc.senate.gov/report/the-third-report-of-the-congressional-oversight-commission-2/.
17 Kate Davidson & Jennifer Smith, U.S. Treasury to Lend $700 Million to Trucking Firm YRC Worldwide, Wall
Street Journal, July 1, 2020, https://www.wsj.com/articles/u-s-treasury-to-loan-700-million-to-trucking-firm-yrc-
worldwide-11593602409.

4

loan and the fact that the Treasury’s lien position was less favorable than that of Yellow’s other
creditors.
The Commission’s eighth report focused on the national security loan program as a
whole, including the Treasury’s loan to Yellow. The reported concluded the Defense Department
should have used a more robust criteria and process for recommending and certifying that a
business is critical to maintaining national security. The report also concluded that the Treasury
should better understand the underlying collateral when underwriting a loan and better measure
the incurred losses caused by COVID-19.
The Commission’s twelfth report again examined the Treasury’s loan to Yellow. The
report noted that the Commission was unable to substantiate the assertion the Treasury and the
Defense Department made indicating that Yellow provided 68% of less-than-truckload (“LTL”)
services to the Defense Department. The report also called attention to Yellow’s increased
lobbying efforts in 2020 at the time it was seeking financial assistance from the federal
government. Further, in addition to failing to fully establish that Yellow was “essential,” the
structure of the Tranche B loan is purely financing the existing business capital expenditure plan
of the company and no way is justified “to provide liquidity to eligible business-related losses
incurred as a result of the coronavirus.”
Overall, the Commission continues to believe that the Treasury and the Defense
Department made missteps in deeming Yellow as critical to maintaining national security and in
executing the loan to Yellow. This report further analyzes:
1. Yellow’s lobbying efforts to secure a national security loan;
2. How key Yellow stakeholders benefited from the Treasury loan; and
3. How Yellow’s low credit quality and the terms and conditions of its national security
loan continue to put taxpayers in a precarious position.
Finally, the report concludes with a series of recommendations based on the
Commission’s multi-year examination of Yellow’s national security loan.

5

YELLOW’S LOBBYING FOR NATIONAL SECURITY LOAN
The Commission’s twelfth report called attention to Yellow’s increased lobbying efforts
in 2020 when it was seeking a national security loan. Yellow spent $570,000 on lobbying efforts
in 2020 compared to zero in 2019, $80,000 in 2018 and $75,000 in 2017.18 The Commission
noted the correlation between lobbying the government and Yellow’s ability to secure a $700
million loan. The Treasury confirmed that several Senators and members of Congress sent
letters19 to Treasury urging them to provide Yellow a loan.
Yellow has previously engaged in these types of activities. In 2009 during the financial
crisis, Yellow also was on the verge of bankruptcy, and Yellow had planned on applying for a $1
billion federal government bailout20 before entering into a debt swap arrangement with a group
of banks.21 Yellow’s lobbying efforts, in conjunction with intensive political contacts by
organized labor, totaled $800,000 for that year. The following year in 2010, Yellow spent
approximately $150,000 less on lobbying and the spending decline trended until 2020, as
outlined in the table below.

18 United States Senate Lobbying Disclosure, Registrations & Quarterly Activity,
https://lda.senate.gov/system/public/.
19  Letter from Representative Sharice Davids (D-KS), U.S. House of Representatives, to Secretary Mnuchin, Apr. 2,
2020; Letter from the Chairman Peter A. DeFazio (D-OR) and Ranking Member Sam Graves (R-MO), Committee
on Transportation and Infrastructure, U.S. House of Representatives, to Secretary Mnuchin, Apr. 17, 2020; Letter
from Senators Ron Wyden (D-OR) and Pat Roberts (R-KS), United States Senate, to Secretary Mnuchin, Apr. 22,
2020; Letter from Representative Albio Sires (D-NJ), U.S. House of Representatives, to Secretary Mnuchin, Apr.
22, 2020; Letter from Rep. Bill Pascrell, Jr. (D-NJ), U.S. House of Representatives, to Secretary Mnuchin, May 5,
2020; see also Letter from Rep. Donald M. Payne, Jr. (D-NJ), U.S. House of Representatives, to Secretary Mnuchin,
Apr. 20, 2020.
20 Reuters, YRC decides not to apply for federal bailout funds, Jun. 12, 2009,
https://www.reuters.com/article/yrc/yrc-decides-not-to-apply-for-federal-bailout-funds-idUSN126982620090613.
21 Pierre Paulden & John Detrixhe, Goldman Sachs Helps YRC Avert Bankruptcy Following Hoffa’s Plea, Jan. 1,
2010, https://www.bloomberg.com/news/articles/2010-01-01/goldman-sachs-helps-yrc-avert-bankruptcy-following-
hoffa-s-plea.

6

Yellow Lobbying Spending
2009-202022
Year
Amount
2020
$570,000
2019
$0
2018
$80,000
2017
$75,000
2016
$210,000
2015
$130,000
2014
$320,000
2013
$620,000
2012
$500,000
2011
$637,500
2009
$800,000
The Commission obtained documents from the Defense Department and the Treasury
that provide a window into Yellow’s efforts to lobby for a national security loan. These
documents show that Yellow or its lobbyists made contact with multiple Defense Department
officials involved in Defense Department’s process for certifying Yellow as a “businesses critical
to maintaining national security.” In their communications with the executive branch, lobbyists
for Yellow suggested they had been in close touch with White House officials throughout the
national security loan process and had discussed how the company employs 24,000 drivers who
are part of the International Brotherhood of Teamsters (“Teamsters”) union.23 In their
communications, lobbyists for Yellow also suggested that Teamsters President Jimmy Hoffa had
reached out to the Trump administration and that Mr. Hoffa was seeking a meeting with the

22 United States Senate Lobbying Disclosure, Registrations & Quarterly Activity,
https://lda.senate.gov/system/public/.
23 Email from Erskine Wells, Principal, BGR Group, to Jennifer Stewart, Chief of Staff to the Secretary of Defense,
June 16, 2020; Email from Alexis Ross, Deputy Chief of Staff to the Secretary of Defense, to Jennifer Stewart,
Chief of Staff to the Secretary of Defense, June 26, 2020.

7

Secretary of Defense to advocate for Yellow’s national security loan application.24 A detailed
review of Yellow’s lobbying communications is available in the House Select Subcommittee on
the Coronavirus Crisis’s April 27, 2022 report on Yellow’s national security loan.25
The documents obtained by the Commission also show that the Treasury had more
involvement in the process for designating companies as critical for national security than
previously indicated. Defense Department officials were initially prepared to recommend “yes”
to certifying Yellow as critical to maintaining national security, despite a Defense Department
analysis that indicated that other trucking companies could replace Yellow’s work with the
federal government. Defense Department officials notified the Treasury of its likely “yes”
recommendation. However, Defense Department officials then changed their recommendation to
“no” (and notified the Treasury of this change) due to concerns about a Justice Department
lawsuit alleging Yellow had overbilled its services to the Defense Department for years.26 One
day after Defense Department officials notified the Treasury that the Defense Department would
likely not certify Yellow as critical to maintaining national security, the Treasury requested an
urgent call with Secretary Esper, which took place on June 26, 2020. Secretary Esper certified
Yellow as critical to maintaining national security the same day as the call, June 26, 2020, and
the Treasury finalized the loan to Yellow on July 7, 2020. See Appendix A for more details on
this timeline of events.

24 Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to the Secretary of
Defense, June 16, 2020; Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to
the Secretary of Defense, June 19, 2020.
25 House Select Subcommittee on the Coronavirus Crisis, Staff Report: ‘We Had Our Hand in the Cookie Jar’: The
Trump Administration’s $700 Million ‘National Security’ Loan to Yellow Corporation, Apr. 27, 2022,
https://coronavirus.house.gov/news/reports/clyburn-trump-admin-yellow-national-security-report-covid-oversight.
26 Note: This lawsuit was settled in March 2022 with Yellow agreeing to pay the Defense Department $6.8 million.
Yellow did not admit liability and Yellow denied the lawsuit’s core allegations. Yellow Corporation, SEC Form 8-K
re Yellow Corporation Settles Decade-Old Dispute with United States Government, Mar. 10, 2022,
https://investors.myyellow.com/static-files/b3981d26-2ea9-41b7-8c9a-b39987adeef7.

8

BENEFITS OF TREASURY LOAN TO YELLOW’S KEY STAKEHOLDERS
The analysis presented below shows how Yellow’s SEC-reporting executive officers (i.e.,
officers whose stock holdings are listed in Yellow’s U.S. Securities and Exchange Commission
(SEC) proxy statements and directors and the Teamsters benefited from Yellow’s status as a
going concern due to Treasury’s national security loan.
YELLOW’S REPORTING OFFICERS AND DIRECTORS
Through an analysis of Yellow’s relevant SEC filings,27 quantified in Appendix B, C, and
D, the Commission sought to understand how Yellow’s reporting officers and directors have
benefitted with both unrealized and realized stock gains after Treasury’s loan to Yellow. The
time period analyzed covers the months leading up to the loan in July 2020 into 2022.
Stock Holdings and Unrealized Value
Appendix B shows the Yellow common stock holdings of Yellow’s reporting officers and
directors on April 11, 2019, March 23, 2020, March 30, 2021, and April 4, 2022.28 The chart
also shows the unrealized value of these stock holdings based on the stock price on these dates.
Yellow’s reporting officers and directors had Yellow stock holdings—in some cases substantial
holdings—which they stood to lose in the event of a Yellow bankruptcy. They benefitted from
Yellow avoiding bankruptcy and also from the rise in Yellow’s stock price that occurred in the
months after Treasury’s loan to Yellow.
On March 23, 2020, Yellow’s reporting officers and directors collectively owned
approximately 2.4 million shares of Yellow common stock that was worth $4.2 million when
Yellow’s stock price was $1.72. These shares represented about 6.4% of the approximately 37.58
million shares of Yellow common stock outstanding on March 23, 2020. On March 30, 2021,
Yellow’s reporting officers and directors collectively owned approximately 1.9 million shares of
Yellow common stock that was worth $16.1 million when Yellow’s stock price was at $8.54.29

27 The Commission examined Yellow’s proxy statements issued in 2019, 2020, 2021, and 2022, and the SEC Form
4s (Statement of Changes in Beneficial Ownership) for Yellow SEC reporting officers and directors from February
1, 2020 through July 22, 2022. The Commission believes that these dates provide a good picture of the holdings of
these officers and directors before and after Treasury’s loan to Yellow in July 2020. The SEC requires directors,
officers, and owners of ten percent of a company’s stock file SEC Form 4 before the end of the second business day
following the day on which a transaction resulting in a change in beneficial ownership has been executed.
28 The information in this chart is taken from Yellow’s SEC Schedule 14A proxy statements issued in June 2019,
April 2020, April 2021, and April 2022, which are available at https://investors.myyellow.com/node/27111/html,
https://investors.myyellow.com/node/27861/html, https://investors.myyellow.com/node/28681/html. These dates
provide a good picture of the holdings of these officers and directors before and after Treasury’s loan to Yellow in
July 2020.
29 Id. Officers and directors who leave the company are not required to report their holdings after their departures. It
is possible that officers and directors continued to own Yellow shares after they left the company, but Yellow is not
required to disclose that information. Appendix B lists the Yellow reporting officers whose stock holdings are listed
in Yellow’s proxy statements. This list is smaller than the entire universe of Yellow reporting officers, which are

9

These shares represented about 3.7% of the approximately 51.27 million shares of Yellow
common stock outstanding on March 30, 2021. On April 4, 2022, Yellow’s reporting officers
and directors collectively owned approximately 1.6 million shares of common stock that was
worth $9.6 million when Yellow’s stock price was $6.09. These shares represented about 3.1%
of the approximately 51.49 million shares of Yellow common stock outstanding on April 4,
2022.
Yellow shares sold by Yellow’s reporting officers in the period between March 23, 2020
and April 4, 2022 were either scheduled sales made pursuant to Rule 10b5-1 trading plans or
sales triggered by tax withholding requirements. No Yellow directors made Yellow stock sales
during this period.
In 2021, Yellow’s reporting officers and directors collectively purchased 260,000 shares
of Yellow common stock valued at $1.75 million, based on the dates of those purchases. As of
July 22, 2022, these holdings were worth only $1 million.
Stock Sales and Realized Value
Appendix C shows Yellow common stock sales made by Yellow’s reporting officers and
directors from February 1, 2020 through July 22, 2022.30 During this period, these officers sold
658,243 shares of Yellow stock on various dates and at various prices. Collectively, the realized
value of these sales was $3.80 million. The stock sales made by Yellow’s CEO, Darren Hawkins,
accounted for almost two-fifths of the realized value of these sales. These reporting officer sales
were either scheduled sales made pursuant to Rule 10b5-1 trading plans or sales triggered by tax
withholding requirements. No Yellow directors made Yellow stock sales during this period.
Stock Grants Awarded and Unrealized Value
Appendix D shows Yellow common stock grants awarded to Yellow’s reporting officers
and directors from February 1, 2020 through July 22, 2022.31 During this period, 20 officers and
directors were awarded 3.06 million shares of common stock with an unrealized value of $12.34
million. The Commission calculated this unrealized value by assuming that all shares vested on
the dates on which they were awarded and by using the closing stock price of the shares on the
dates on which they were awarded.32 The ultimate realized value of these shares, if any, depends

those officers whose Yellow stock transactions must be disclosed in a SEC Form 4. The reason for this is the proxy
rules only require that certain officers have their stock holdings listed in a proxy statement. Appendix B and C list
all Yellow SEC reporting officers, as the Yellow SEC filings from which the Commission drew information for
those charts include information for all Yellow reporting officers.
30 The information in this chart is taken from Yellow’s SEC Form 4s (Statement of Changes in Beneficial
Ownership) from February 1, 2020 through July 22, 2022, which are available at
https://investors.myyellow.com/financial-information/sec-filings.
31 The information in this chart is taken from Yellow’s SEC Form 4s (Statement of Changes in Beneficial
Ownership) from February 1, 2020 through July 22, 2022.
32 Yellow’s stock price for all dates was sourced from Bloomberg. The Commission calculated this amount for

10

upon the prices at which they are sold. That said, these stock grants are another way in which
Yellow’s reporting officers and directors stand to benefit from Yellow’s avoidance of
bankruptcy.
The data in Appendix D is organized by the cumulative number of stock grants awarded
over the time period. The unrealized value column in Appendix D calculates each transaction
using the stock price on the date the stock grant was awarded and adds up each transaction,
resulting in a total monthly figure. The Commission calculated the unrealized value of these
shares by assuming that all shares vested on the dates on which they were awarded and by using
the closing stock price of the shares on the dates on which they were awarded.
TEAMSTERS
The Teamsters also benefitted from the Treasury’s national security loan to Yellow. The
loan enabled Yellow to pay off certain pension and healthcare obligations to the Teamsters and
likely prevented Yellow from going bankrupt.
As described below, the Treasury’s loan to Yellow contains two parts (i.e., tranches). The
first tranche of $300 million (Tranche A) was used by Yellow to cover, among other things,
healthcare and pension liabilities, real estate and equipment leases, and interest payments on
debt.33 Before Yellow obtained this loan, it deferred millions of dollars of pension and healthcare
payments for its largely unionized workforce for March, April, and May 2020.34 In April 2020,
Yellow “told a large multiemployer health-care fund that the missed contributions would be paid
once Yellow received” a loan from the Treasury.35 On July 1, 2020, Yellow’s CEO, Darren
Hawkins, stated that the funds from the Treasury would allow the company to pay off three
months of missed pension and healthcare payments, which were “roughly $40 million a
month.”36 On or around July 2, 2020, after Treasury announced its intent to provide a loan to
Yellow, the company began to repay some of these missed payments.37
In addition, the Teamsters hold a direct interest in Yellow as a result of the Teamsters’
ownership of Series A Preferred Stock. Yellow issued one share of Yellow’s Series A Preferred

illustrative purposes. Yellow’s compensation plans for officers and directors impose restrictions on when the shares
of officers and directors vest.
33 U.S. Department of the Treasury, Transaction Documentation, Jul. 8, 2020,
https://home.treasury.gov/system/files/136/YRC-Documentation.pdf.
34 Jennifer Smith, Trucker YRC Seeks to Defer Millions in Benefits Payments, Wall Street Journal, Jun. 18, 2020,
https://www.wsj.com/articles/trucker-yrc-seeks-to-defer-millions-in-benefits-payments-11592508252.
35 Id.
36 Kate Davidson & Jennifer Smith, U.S. Treasury to Lend $700 Million to Trucking Firm YRC Worldwide, Wall
Street Journal, Jul. 1, 2020, https://www.wsj.com/articles/u-s-treasury-to-loan-700-million-to-trucking-firm-yrc-
worldwide-11593602409.
37 Brian Kaberline, YRC makes partial payment to employee health funds, Kansas City Business Journal, Jul. 6,
2020, https://www.bizjournals.com/kansascity/news/2020/07/06/yrc-makes-partial-payment-to-employee-health-
funds.html.

11

stock on July 22, 2011 to the Teamsters “to confer certain board representation rights.”38 This
share is valuable to the Teamsters because as the holder of this share the Teamsters are permitted
to appoint two directors to Yellow’s board of directors.

38 Yellow Corporation, SEC Schedule 14A - Proxy Statements, Jun. 2019, Apr. 2020, Apr. 2021, Apr. 2022,
https://investors.myyellow.com/financial-information/sec-filings; Yellow Corporation, SEC Form 10-K - 2020
Annual Report, Dec. 31, 2020, https://investors.myyellow.com/node/28441/html; Yellow Corporation, SEC Form 8-
K, Jul. 22, 2011, https://investors.myyellow.com/node/22921/html.

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RISKS OF YELLOW’S NATIONAL SECURITY LOAN TO TAXPAYERS
The Commission questions whether Yellow’s precarious financial position at the time of
the loan, and continued struggles, expose taxpayers to a significant risk of loss. Yellow
experienced both revenue declines and negative free cash flow in 2019 and 2020.39 The company
ended 2019 with only $109 million in cash and cash equivalents. This amount was insufficient to
absorb any adverse events. On May 12, 2020, a representative of Yellow wrote an email to the
Treasury indicating “bottom line, [Yellow] is in need of a loan from Treasury or they won’t
make it through the summer.”40 On June 2, 2020, a Moody’s analysis noted Yellow’s liquidity
was “weak” prior to the Treasury loan and Yellow’s credit rating was Caa1, which Moody’s
noted is reserved for debt “judged to be of poor standing and subject to very high credit risk.”41
Yellow’s very high credit risk was not a new development but instead a product of decades of
mismanagement by Yellow, evidenced by Yellow’s financial restructurings in both 2009 and
2011.42 In 2019, prior to the COVID pandemic, Yellow was engaged in yet another corporate
restructuring in an attempt to turn around its struggling fortunes. After Yellow obtained its loan
from the Treasury, the company’s CEO stated that the loan gave “the unique ability to focus on
and accelerate the enterprise transformation strategy that we began implementing in 2019.”43
Subsequent to the Treasury loan and improvements in Yellow’s operations, Moody’s
upgraded Yellow’s liquidity rating to “adequate” and credit rating to B3 (up from Caa1) in
December 2021, which Moody’s noted is reserved for debt “considered speculative and subject
to high credit risk.”44 Despite positive trucking industry and operating tailwinds, Yellow still had
negative free cash flow in 2021, 2022, and free cash flow is expected to remain negative in 2023,

39 Yellow Corporation, SEC Form 10-K for the period ended December 31, 2019 , Mar. 11, 2020,
https://investors.myyellow.com/node/27841/html; Yellow Corporation, SEC Form 10-K for the period ended
December 31, 2020 , Feb. 11, 2021, https://investors.myyellow.com/node/28441/html.
40 Email from Erskine Wells, Principal, BGR Group, to Daniel Kowalski, Counselor to the Secretary of the
Treasury, May 12, 2020.
41 Moody’s Investors Service, Ratings Symbols and Definitions, Jun. 2, 2022,
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=pbc_79004#:~:text=Obligations%20rated%20
Ba%20are%20judged,subject%20to%20substantial%20credit%20risk.&text=Obligations%20rated%20B%20are%2
0considered,subject%20to%20high%20credit%20risk.&text=Obligations%20rated%20Caa%20are%20judged,to%2
0very%20high%20credit%20risk; Moody’s Investors Service, Yellow Corporation: Update to credit analysis
following upgrade of CFR to B3, Jan. 19, 2022, https://www.moodys.com/credit-ratings/Yellow-Corporation-credit-
rating-834015/reports#.
42 Yellow Corporation, SEC Form 8-K, Jul. 22, 2011, https://investors.myyellow.com/node/22921/html; See, e.g.,
David Twiddy, YRC Worldwide bondholders approve debt-for-equity swap, Kansas City Business Journal, Dec. 31,
2009, https://www.bizjournals.com/kansascity/stories/2009/12/28/daily22.html.
43 Yellow Corporation, Press release: YRC Worldwide Reports Second Quarter 2020 Results, Aug. 3, 2020,
https://investors.myyellow.com/news-releases/news-release-details/yrc-worldwide-reports-second-quarter-2020-
results.
44 Moody’s Investors Service, Rating Action: Moody's upgrades Yellow Corporation's CFR to B3 from Caa1;
outlook stable, Dec. 23, 2021, https://www.moodys.com/research/Moodys-upgrades-Yellow-Corporations-CFR-to-
B3-from-Caa1-outlook--PR_460563.

13

given high levels of capital investments and a thin operating margin.45 In addition, both S&P and
Moody’s downgraded Yellow’s credit rating to CCC+/Caa1 due to “significant risk Yellow
cannot refinance its upcoming debt maturities.”46 According to Bloomberg, Yellow’s risk of
default was rated on June 22, 2023 at the riskiest category for companies (i.e., not investment
grade or even speculative grade) at “Distressed 2,” with a one-year default probability of
18.9%.47 Yellow’s one-year default risk cratered to a level of “Distressed 2,” with a default
probability of 20.5% on June 16, 2022.48 For context, FedEx Corporation’s (“FedEx”)
Bloomberg one-year default risk rating is “Investment Grade 9,” and FedEx’s one-year default
probability was 0.12% on June 22, 2023 and hit a high of 0.5329% on September 26, 2022.49
Yellow had very high credit risk before receiving a loan from the Treasury and its remains a
company with high credit risk nearly three years since receiving that loan.

The structure of the Treasury’s loan to Yellow exposes taxpayers to heightened risk. The
Treasury’s loan to Yellow contains two parts (i.e., tranches) that mature on September 30, 2024.
Both tranches have an interest rate of London Inter-bank Offered Rate (“LIBOR”) +3.50%. The
first tranche of $300 million (“Tranche A”) was used to cover, among other things, healthcare
and pension liabilities, real estate and equipment leases, and interest payments on debt. The
second tranche of $400 million (“Tranche B”) was used to finance the purchase of tractors and
trailers in accordance with the company’s capital expenditures plan that must be submitted to,
and approved by, the Treasury. Again, Tranche B is simply a taxpayer subsidized support of
Yellow’s capital expenditure plan with no direct connection to losses in and from the
coronavirus.
Tranche A is secured by a third lien, behind the claims of Yellow’s senior secured asset-
based revolving credit agreement (“ABL revolver”) and the company’s senior secured term loan
(“term loan”), which are both cross-collateralized.50 This means that in a negative credit event,

45 Moody’s Investors Service, Yellow Corporation: Update to credit analysis following upgrade of CFR to B3, Jan.
19, 2022, https://www.moodys.com/credit-ratings/Yellow-Corporation-credit-rating-834015/reports#.
46 Moody’s Investors Service, Moody's downgrades Yellow Corporation's CFR to Caa1 on refinancing risk, May 15,
2023, https://www.moodys.com/research/Moodys-downgrades-Yellow-Corporations-CFR-to-Caa1-on-refinancing-
risk-Rating-Action--PR_476677; S&P Global, Yellow Corp. downgraded to 'CCC+' on uncertainty around the
refinancing of its upcoming maturities, Feb. 27, 2023, https://disclosure.spglobal.com/ratings/en/regulatory/article/-
/view/type/HTML/id/2953902.
47 Bloomberg, Yellow Corporation 1-year default risk and 1-year default probability for the period of Jan. 1, 2020
through Jun. 22, 2023, data retrieved from Bloomberg Terminal Jun. 22, 2023. Bloomberg’s Distressed 1-year
default risk scale ranges from 1 to 5 (with 5 being the highest risk).
48 Bloomberg, Yellow Corporation 1-year default risk and 1-year default probability for the period of Jan. 1, 2020
through Jun. 22, 2023, data retrieved from Bloomberg Terminal Jun. 22, 2023.
49 Bloomberg, FedEx Corporation 1-year default risk and 1-year default probability for the period of Jan. 1, 2020
through Jun. 22, 2023, data retrieved from Bloomberg Terminal Jun. 22, 2023. Bloomberg’s Investment Grade 1-
year default risk scale ranges from 1 to 10 (with 10 being the highest risk).
50 U.S. Treasury, UST Term Loan Credit Agreement, Jul. 7, 2020, https://home.treasury.gov/system/files/136/YRC-
Documentation.pdf. Note: Cross collateralization is the act of using an asset that's collateral for an initial loan as
collateral for a second loan. If the debtor is unable to make either loan's scheduled repayments on time, the affected
lenders can eventually force the liquidation of the asset and use the proceeds for repayment.

14

the ABL revolver and the term loan creditors will have claims on Yellow’s assets of up to $1.05
billion.51 The Treasury has a first lien on all equipment purchased under Tranche B.

The Treasury loan is scheduled to be repaid only after Yellow’s other obligations are
repaid. As seen in the chart below, the ABL revolver matures on January 9, 2024. After that, the
term loan matures on June 30, 2024. The Treasury’s loan matures on September 30, 2024. This
leaves the taxpayer the last creditor to get repaid.
While not a creditor, the Teamsters have a master collective bargaining agreement with
Yellow that expires on March 31, 2024. The Teamsters are entitled to two selections on Yellow’s
board of directors and the Teamsters, who represent 79% of Yellow’s workforce, benefited from
Yellow’s corporate restructurings in both 2009 and 2011.52 In regards to upcoming labor
negotiations, the Teamsters general president Sean O’Brien has said, “it is not left for the
Teamsters to save this company; we have given enough. What happens next is out of our
control.”53 Moody’s has noted that the concentration of Yellow’s workforce represented by the
Teamsters presents a social risk due to the possibility that Yellow’s relationship with its union
deteriorates and that this results in work stoppages.54
Date of Maturity/
Expiration
Financial Instrument/
Contract
Counterparty
Amount
January 9, 2024
ABL revolver
Bank syndicate
$450 million
March 31, 2024
Master collective
bargaining agreement
Labor union
79% of workforce
June 30, 2024
Senior secured term loan Private equity
$600 million
September 30, 2024 Two-tranche term loan
Treasury
$700 million

51 Yellow Corporation, SEC Form 10-K for the period ended December 31, 2021, Feb. 4, 2022,
52 Yellow Corporation, SEC Form 10-K for the period ended December 31, 2009, Mar. 22, 2010,
https://investors.myyellow.com/node/22466/html; Yellow Corporation, SEC Form 10-K for the period ended
December 31, 2011, Feb. 28, 2012, https://investors.myyellow.com/node/23571/html.
53 Freightwaves, Teamsters not ‘bailing out’ Yellow again, unmoved by carrier’s finances, Jun. 13, 2023,
https://www.freightwaves.com/news/teamsters-not-bailing-out-yellow-again-unmoved-by-carriers-finances.
54 Moody’s Investors Service, Yellow Corporation: Update to credit analysis following upgrade of CFR to B3, Jan.
19, 2022, https://www.moodys.com/credit-ratings/Yellow-Corporation-credit-rating-834015/reports#.

15

As additional security for the Treasury’s loan to Yellow, the Treasury received 15.9
million shares of Yellow’s common stock.55 Based on Yellow’s stock price on June 22, 2023, the
value of the Treasury’s common stock position is approximately $21 million.56 The value of
Treasury’s equity position in Yellow has fluctuated from as low as $20 million on May 31, 2023
to as high as $233 million on December 8, 2021. In addition to stock price fluctuations, Yellow’s
stock has a relatively low daily trading volume, meaning the Treasury stake will not be able to be
easily sold or exchanged for cash without a significant change in price. From January 1, 2020 to
June 22, 2023, an average of 1.3 million shares of Yellow stock were traded per day, including a
low of 202 thousand shares on one day in that period57 For context, during the same period, the
S&P 500 index traded 675 million shares per day, including a low of 207 million shares.58 Also
during the same time period, another trucking company, FedEx, traded an average of 2.7 million
shares per day, including a low of 445 thousand shares.59 It will be difficult for Treasury to
dispose of its 15.9 million shares of Yellow without the risk of severely lowering the stock price
and this will adversely impact both taxpayers and Yellow’s other shareholders.
While the Commission understands that the Treasury obtained Yellow stock as part of the
loan agreement to provide a monetary upside for the taxpayer (an equity stake currently worth
$21 million), the Commission believes that this equity holding does little to mitigate the
downside risks of the Yellow loan. In a downside scenario, the equity stake will be worth little
(or nothing) and taxpayers will be left with limited claims on Yellow’s assets.

55 Yellow Corporation, 2020 Annual Report, Feb. 11, 2021, https://investors.myyellow.com/static-files/c7b4a86d-
ddd4-444b-80e6-0603b6b5876b (see “U.S. Treasury Loan”).
56 Bloomberg, Yellow corporation equity price for Jun. 22, 2023, retrieved from Bloomberg Terminal Jun. 22, 2023.
57 Bloomberg, Yellow Corporation equity trading volume for the period of Jan 1, 2020 through Jun. 22, 2023, data
retrieved from Bloomberg Terminal Jun. 22, 2023.
58 Bloomberg, S&P 500 Index equity trading volume for the period of Jan 1, 2020 through Jun. 22, 2023, data
retrieved from Bloomberg Terminal Jun. 22, 2023.
59 Bloomberg, FedEx Corporation equity trading volume for the period of Jan 1, 2020 through Jun. 22, 2023, data
retrieved from Bloomberg Terminal Jun. 22, 2023.

16

RECOMMENDATIONS

The following recommendations are based on the Commission’s multi-year examination
of the Treasury’s national security loan program.
1. Congress should not create an open-ended sector specific (such as national security)
loan program in the future.
• While the national security loan program may have been a well-intentioned response
to extraordinary events, it ultimately proved to be unnecessary and morphed into
something that Congress never intended—a risky taxpayer bailout for businesses, like
Yellow, that struggled financially before the COVID-19 pandemic and were not
critical to maintaining national security.
• Former Treasury Secretary Steven Mnuchin has publicly stated that the national
security loan program was developed with the thought that Boeing and General
Electric might need loans from the government.60 However, as Secretary Mnuchin
later acknowledged, these companies did not need such loans because the markets
recovered and they were ultimately able to borrow in the markets.61 That arguably
should have been the end of the story for the national security loan program.
• But whenever Congress gives the Executive Branch billions of taxpayer dollars and
enormous discretion to hand them out, it is understandably difficult for the Executive
Branch to resist the urge to do so. The only airtight way to prevent a sector-specific
loan program from straying from its original intent is to not create such a program in
the first place or have substantial “off-ramps” if not needed or very tight “guardrails”
as to liquidity, assessment, and approval.
• The Treasury’s National Security Loan Program ended up being redundant as the
Federal Reserve’s emergency programs served the same set of companies. For
example, many of the National Security Loan Program recipients could have qualified
for the Main Street Lending Program, which was intended for small and medium-
sized businesses. Larger businesses with access to the capital markets were eligible to
receive support under the Federal Reserve’s Primary Market Corporate Credit Facility

60 Saleha Mohsin, Mnuchin May Ease Rules for $17 Billion Security Funds, Bloomberg, June 11, 2020,
https://www.bloomberg.com/news/articles/2020-06-11/mnuchin-says-he-may-ease-rules-for-17-billion-security-
stimulus.
61 Congressional Oversight Commission, the Eighth Report of the Congressional Oversight Commission, Dec. 31,
2020, https://coc.senate.gov/sites/default/files/2021-01/COMMISSION%20December%20Report%2012-
31%20FINAL%2C%20appendix.pdf, see 59, 73. Secretary Mnuchin told the Commission at a hearing on December
10, 2020 that “the good news is that the markets recovered, and so many of the companies that we thought we would
have to make loans to were able to borrow in the markets, companies like Boeing and GE that we thought were
going to be major military contractors.” He also stated at that hearing that “I can tell you the original concept of the
national security loans was for critical suppliers, and we thought—we were worried about Boeing.”

17

and Secondary Market Corporate Credit Facility.
2. If Congress were to create another sector-specific (e.g., national security) loan
program in response to future emergency events, the statute establishing the
program should, at a minimum, contain the following features to limit the risk of the
program straying from its original intent.
• Congress should clearly define the term “business critical to maintaining
national security” and prohibit the Executive Branch from having unfettered
authority to designate a business as critical to maintaining national security.
o The CARES Act did not define the term “business critical to maintaining national
security.” As a result, the Treasury had virtually unfettered authority to define this
term as it wanted. The Treasury defined a “business critical to maintaining national
security” as a business that at the time of its application was performing under a
defense contract of the highest national priority or operating under a top secret
facility security clearance.62
o Unfortunately, the Treasury’s definition was not limited to these two national
security eligibility criteria. The Treasury also created a catch-all provision that
allowed it to determine that a business was critical to maintaining national security
based solely on a recommendation and certification from the Secretary of Defense
or the Director of National Intelligence. The Treasury did not establish criteria for
how the Treasury, the Secretary of Defense, and the Director of National
Intelligence would implement this catch-all provision.
o The discretion afforded to the Treasury, Secretary of Defense, and the Director of
National Intelligence opened the door for outside parties, including lobbyists and
members of Congress, to influence the process. The Commission’s twelfth report
called attention to Yellow’s increased lobbying efforts in 2020 when it was seeking
a national security loan. Yellow spent $570,000 on lobbying efforts in 2020
compared to zero in 2019, $80,000 in 2018 and $75,000 in 2017.  The Commission
noted the correlation between lobbying the government and Yellow’s ability to
secure a $700 million loan. The Treasury confirmed that several Senators and
members of Congress sent letters to Treasury urging them to provide Yellow a loan.
o In practice, this catch-call provision proved to be the exception that swallowed the
rule. Most of the Treasury’s national security loans, including its loan to Yellow,
were made under this catch-all provision. The result was that the Treasury made a

62 U.S. Department of the Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security
Businesses, Apr. 10, 2020, https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-and-A-
national-security.pdf; Defense Contract Management Agency, Defense Priorities & Allocations System (DPAS),
May 7, 2019, https://www.dcma.mil/DPAS/ (“A DX rating is assigned to those programs of the highest national
priority”).

18

risky national security loan to Yellow—a business with long-standing financial
troubles that, based on any common-sense measure, was not critical to maintaining
national security given that the shipping services it provides to the military could be
provided by other trucking companies.
o The catch-all provision created by the Treasury allowed the national security
program to stray from Congress’s original intent. In any future national security
loan program, Congress should not create (or permit the Executive Branch to
create) any type of catch-all provision and should clearly define the term “business
critical to maintaining national security.”
• Congress should prohibit businesses that receive national security loans from
using the loans on expenditures unrelated to the purpose of the loan program.
o The CARES Act authorized the Treasury to make loans “to provide liquidity to
eligible businesses . . . related to losses incurred as a result of the coronavirus.”63
Despite this statutory language, Tranche B of the Treasury’s national security loan
to Yellow provided the company $400 million to finance the purchase of tractors
and trailers in accordance with its capital expenditures plan. This type of spending
is beyond the intent of the CARES Act as it is not covering COVID-19 losses. The
Treasury had no business lending a trucking company money to buy tractors and
trailers, just as it would have had no business lending airlines money to buy
airplanes. In any future national security loan program, Congress should clearly
limit the use of loans to expenditures that are directly related to the purpose of the
program.
• Congress should limit any national security loan program to businesses that are
in good financial condition prior to the emergency events that lead to the
program’s creation.64
o A national security loan program should not be used as a mechanism to bailout
businesses with deep-seated financial problems that pre-date the emergency events
that trigger the creation of a program. Before the COVID-19 pandemic, Yellow was
a financially struggling company that had a long-term non-investment grade (i.e.,
junk) rating and previous close calls with bankruptcy over the years. The pandemic
did not cause Yellow’s longstanding problems, nor is the Treasury’s loan to the
company likely to solve those problems. As a result, taxpayers face a heightened
risk of loss from Yellow’s loan.

63 CARES Act, Pub. L. No. 116-136, § 4003(a), 134 Stat. 281 (2020).
64 See for example the additional safeguards imposed on the Federal Reserve by the Dodd Frank Act regarding their
design and implementation of Sec. 13(3) facilities. Congressional Research Service, Federal Reserve: Emergency
Lending, March 27, 2020, https://crsreports.congress.gov/product/pdf/R/R44185

19

o In any future national security loan program, Congress should limit the program to
businesses that were in good financial condition prior to the emergency events that
lead to the program’s creation. For example, Congress could limit the program to
businesses that had an investment-grade credit rating from a nationally recognized
statistical ratings organization (NRSRO)65 prior to the emergency events.
Businesses with an investment-grant credit rating have at worst “moderate credit
risk and may contain certain speculative characteristics.”66
• Congress should require national security loans to be underwritten and
structured in ways that more effectively mitigate the risk of loss to taxpayers.
o Yellow has other obligations that come due before the Treasury’s national security
loan matures on September 30, 2024. When coupled with Yellow’s high credit risk
and the Treasury’s third-lien position on Tranche A of its loan, the Treasury may
have put taxpayers in a precarious position. In any future national security loan
program, Congress should consider requiring national security loans to be paid back
before a company’s other creditors and mandating that the federal government’s
claims on a company’s assets be at least as good as the claims of other creditors
(i.e., pari-passu). Such creditor protections should be required regardless of
whether Congress allows the federal government to obtain an equity stake in a
company as part of a national security loan. In other words, an equity stake should
supplement, not replace, congressionally mandated creditor protections.
• The Defense Department (1) should not rely on its contractors for critical
information relevant to making decisions about certifying a business as critical
to maintaining national security and (2) the Defense Department must improve
its oversight over its subcontractors not just its prime contractors.
o Both Treasury and the Defense Department cited figures claiming that Yellow
“provides 68% of less-than-truckload services to the Defense Department” as
justification for the designation, but the August 13, 2021 correspondence from the
Defense Department showed that it was provided by Crowley Logistics and that
USTRANSCOM has “no way of verifying their accuracy or completeness.”
o The Commission found that this often cited “68% of less-than-truckload services”
figure originated from communications from Yellow and its representatives and

65 U.S. Securities and Exchange Commission, Current NRSROs, last visited Jun. 22, 2023,
https://www.sec.gov/ocr/ocr-current-nrsros.html.
66 Moody’s Investors Service, Ratings Symbols and Definitions, Jun. 2, 2022,
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=pbc_79004#:~:text=Obligations%20rated%20
Ba%20are%20judged,subject%20to%20substantial%20credit%20risk.&text=Obligations%20rated%20B%20are%2
0considered,subject%20to%20high%20credit%20risk.&text=Obligations%20rated%20Caa%20are%20judged,to%2
0very%20high%20credit%20risk. An investment-grade credit rating from a NRSO, such as Moody’s or S&P,
equates to Baa3/BBB- or higher.

20

was not independently verified by the Defense Department.
o The Commission’s own review, as detailed in its Twelfth report from April 2021,
estimated that Yellow constituted a range of 20% to 40% of the Defense
Department’s LTL shipments from 2018 to 2020, based on a total amount of LTL
Defense Freight Transportation Services (“DFTS”) of $59.98 million. Yet the
Defense Department and Treasury have continued to cite the 68% figure even
though the Defense Department acknowledges that it is just “a snapshot in time”
and that it was plausible that Yellow could have just been on the high end of their
shipment services. Furthermore, Defense Department’s own internal evaluation of
Yellow questions “how the company could have 70% of the less-than-truckload
awards with the government and not show up on [Federal Procurement Data
System].”
o All oversight of subcontractors is left to the prime contractors, yet Yellow, which is
a subcontractor of Defense Department prime contractor Crowley, was deemed as
critical to national security based on figures that Crowley provided about the nature
of Yellow’s financial health, business, and operations. The Defense Department did
not even question or attempt to verify those figures, such as the 68% LTL. The
Defense Department cannot justify a subcontractor as being critical to national
security if they have no understanding of, oversight over, or accountability
mechanism with respect to the company.
• Congress should limit any national security loan program to non-pre-revenue
companies. These loan recipients must have a direct and immediate impact on
national security, not based on speculation over potential future impact.
3. The Treasury should seek to disposes of its Yellow stock and loan holdings to
minimize the risk of loss to taxpayers.
• There is a significant risk, as described above, that the Treasury’s equity and debt
stakes in Yellow will be worth little if the Treasury continues to hold them. To
minimize the risk of loss to taxpayers, the Treasury should immediately explore
options to sell (a) its 15.9 million shares of Yellow stock no later than January 1,
2024, and (b) its $700 million loan to Yellow before the loan’s September 30, 2024
maturity date.

21

Appendix A:
Timeline of Events Relating to Yellow’s National Security Loan and Communications
Between Yellow, Defense Department, Treasury, and the U.S. Congress

Date
Yellow
Defense Department
Treasury
Congress
April 2020
4/2
4/17
4/20
4/22

Congressional letters of support sent to Treasury.1
4/24
Yellow submits application for national security loan program to Treasury.2

May 2020
5/5

Congressional letter of support sent to Treasury.1
5/11-
5/12
Yellow contacts Treasury to indicate the poor financial shape Yellow was in and indicating
Yellow would fail without a Treasury loan.3

June 2020
6/10
Yellow CEO letter to Secretary of Defense requesting a waiver to
certify Yellow as “critical to maintaining national security”4

6/10
6/11

Yellow establishes contact with TRANSCOM, Office of Under
Secretary of Defense for Acquisitions and Sustainment, and Office
of Secretary of Defense.5

6/15
Yellow CEO call with Deputy Commander of TRANSCOM.6

6/16
Yellow requests phone call between Teamsters President and
Secretary of Defense. Request was later withdrawn.7

6/17
Yellow communications with Office of Secretary of Defense.8

6/19

Congressional letter of support sent to Treasury.9
6/19

Internal discussions about certification.10

6/22

Defense Department Industrial Policy team notifies Treasury it will be
recommending “yes” for designating Yellow as a business critical to
maintaining national security.11

6/24

Defense Department Industrial Policy notifies Treasury
recommendation has changed to “no” for Yellow’s national security
designation based on additional information received about the Justice
Department lawsuit against Yellow.12

6/25

Treasury reaches out to Office of Secretary of Defense to schedule a
6/26/20 call between Secretary of Treasury and Secretary of Defense.13

6/26

Secretary of Defense certifies Yellow as critical to maintaining national
security.14

July 2020
7/1
Yellow notifies Defense Department that Treasury loan has been
approved.15

7/7

Treasury finalizes loan
agreement.16

22

Notes
•
Yellow:  Communications Yellow initiated
•
Purple:  Communications Congress initiated
•
Green:  Communications Treasury initiated

1 Letter from Representative Sharice Davids (D-KS), U.S. House of Representatives, to Secretary Steven Mnuchin, Apr. 2,
2020; Letter from the Chairman Peter A. DeFazio (D-OR) and Ranking Member Sam Graves (R-MO), Committee on
Transportation and Infrastructure, U.S. House of Representatives, to Secretary Steven Mnuchin, Apr. 17, 2020; Letter
from Senators Ron Wyden (D-OR) and Pat Roberts (R-KS), United States Senate, to Secretary Steven Mnuchin, Apr. 22,
2020; Letter from Representative Albio Sires (D-NJ), U.S. House of Representatives, to Secretary Steven Mnuchin, Apr.
22, 2020; Letter from Rep. Bill Pascrell, Jr. (D-NJ), U.S. House of Representatives, to Secretary Steven Mnuchin, May 5,
2020; see also Letter from Rep. Donald M. Payne, Jr. (D-NJ), U.S. House of Representatives, to Secretary Steven
Mnuchin, Apr. 20, 2020.
2 Yellow Corporation, Application to National Security Loan Program, Apr. 24, 2020.
3 Email from Erskine Wells, Principal, BGR Group, to Brian Morgenstern, Deputy Assistant Secretary for External Affairs
at Treasury, May 11, 2020; Email from Erskine Wells, Principal, BGR Group, to Daniel Kowalski, Counselor to the
Secretary of the Treasury, May 12, 2020.
4 Yellow Corporation, Letter from CEO Darren Hawkins to Secretary of Defense requesting favorable “critical to
maintaining national security” recommendation and certification from the Secretary of Defense, Jun. 10, 2020.
5 Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to the Secretary of Defense, Jun
10, 2020; Email from Darren Hawkins, CEO, Yellow Corporation, to Vice Admiral Dee Mewbourne, Deputy Commander
TRANSCOM, Department of Defense, Jun. 10, 2020; Email from Alexis Ross, Deputy Chief of Staff to the Secretary of
Defense, to Karen Saunders, Chief of Staff to Under Secretary of Defense for Acquisition and Sustainment Ellen Lord,
June 10, 2020; Email from Bill Wanamaker, Executive Director, American Trucking Associations, Jun. 10, 2020.
6 Email from Darren Hawkins, CEO, Yellow Corporation, to Vice Admiral Dee Mewbourne, Deputy Commander
TRANSCOM, Department of Defense, Jun. 16, 2020.
7 Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to the Secretary of Defense,
Jun. 16, 2020; Email from Erskine Wells, Principal, BGR Group, to Jennifer Stewart, Chief of Staff to the Secretary of
Defense, June 16, 2020.
8 Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to the Secretary of Defense,
Jun. 17, 2020; Email from Erskine Wells, Principal, BGR Group, to Jennifer Stewart, Chief of Staff to the Secretary of
Defense, Jun. 17, 2020.
9 Letter from Senator Jerry Moran (R-KS), U.S. Senate, to Secretary Steven Mnuchin, Treasury, Jun. 19, 2020; Letter from
Senator Roger Wicker (R-MS), U.S. Senate, to Secretary Mark Esper, Defense Department, Jun. 19, 2020; Letter from
Ranking Member Senator James Inhofe (R-OK), U.S. Senate, to Secretary Mark Esper, Defense Department, Jun. 19,
2020.
10 Emails between Alexis Ross, Deputy Chief of Staff to the Secretary of Defense, Jennifer Stewart, Chief of Staff to the
Secretary of Defense, Karen Saunders, Chief of Staff Under Secretary of Defense for Acquisition and Sustainment Ellen
Lord, Kerry Smith, Chief of Correspondence Management Division, Defense Department, and Captain David Soldow,
Executive Secretary, Office of Secretary of Defense, Jun. 19, 2020.
11 Email from Dr. Christine Michienzi, Chief Technology Officer, Office of Under Secretary of Defense for Acquisition
and Sustainment Ellen Lord, to Laura Black, Director of Policy and International Relations at the Office of Investment
Security (CFIUS), Treasury, Jun. 22, 2020.
12 Email from Dr. Christine Michienzi, Chief Technology Officer, Office of Under Secretary of Defense for Acquisition
and Sustainment Ellen Lord, to Laura Black, Director of Policy and International Relations at the Office of Investment
Security (CFIUS), Treasury, Jun. 24, 2020.
13 Email from Executive Assistant to the Secretary of the Treasury, to Anne Powers, Scheduler, Office of the Secretary of
Defense, Jun. 25, 2020.
14 Defense Department, National Security Designation Certification for Yellow Corporation, Jun. 26, 2020.
15 Email from Erskine Wells, Principal, BGR Group, to Jennifer Stewart, Chief of Staff to the Secretary of Defense, Jul. 1,
2020.
16 Treasury, U.S. Treasury Term Loan A and B Credit Agreement for YRC Worldwide, Jul. 7, 2020,
https://home.treasury.gov/system/files/136/YRC-Documentation.pdf.

23

Appendix B:
Stock Holdings of Yellow SEC Reporting Officers and
Directors

24

25

Appendix C:
Stock Sales of Yellow SEC Reporting Officers and
Directors

26

27

Appendix D:
Stock Grants Awarded and Stock Purchases of Yellow SEC
Reporting Officers and Director

28

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