A new congressional report found that the Treasury Department gave a dubious $700 million loan to a failing trucking company with funds allocated by the bipartisan CARES Act.
Only companies that were fulfilling important defense contracts or had high-level security clearance should have been eligible for such loans, the report states. Yellow, the trucking company that received the loan, did not meet these requirements.
However, by securing the approval of the Department of Defense or the director of national intelligence, the agency could grant the loan even if the national security conditions were not met. Using this "catch-all" provision, the Treasury granted the loan and took on ownership of roughly a third of the company.
The federal government has recently come under scrutiny for its lack of oversight in sending out COVID-19 relief funds. A recent report from the Small Business Administration inspector general found that more than $200 billion was disbursed to fraudsters within just two of the relief programs offered by the feds.
"They should have put basic fraud controls in place to verify people's identity and to make sure targeted relief was getting into the right hands," the former executive director of the Pandemic Response Accountability Committee told the Associated Press.
When the Treasury Department granted the loan to Yellow, it was rated as a poor investment and in dire financial straits. Since receiving the loan, the value of the trucking service has plummeted, leaving taxpayers on the hook for the fallout.