Washington, D.C. – U.S. Senator Pat Toomey (R-Pa.), a member of the bipartisan Congressional Oversight Commission, offered the following opening remarks at today’s public hearing examining loans to businesses critical to maintaining national security:
“In March, unprecedented turmoil in credit markets threatened the ability of businesses, states, and municipalities to obtain capital. Credit markets were on the verge of shutting down, and without intervention, private credit was very likely going to stop flowing to businesses, states, and municipalities.
“Congress did not want these economic disruptions to result in gaps in our national security. There was a very real concern that established national defense firms, essential national defense firms, could even collapse. The CARES Act program announcement succeeded in stabilizing the markets, and averted a crisis in the national security sector. In fact, the top five national security firms raised over $40 billion in bond sales since March.  
“Since creditworthy firms have generally been able to access private markets, only those with lower grade credit, or limited access to credit in the first place, appeared to have applied for national security loans. Of the eleven businesses that have used the national security loan program, five had negative profits in 2019 before the coronavirus struck. At least three are early stage companies including SpinLaunch Inc., an essentially pre-revenue venture whose products are commercially unproven.
“While I am glad that the national security sector is now stable, I would like to understand better why the Treasury made loans to what appears to be startups and what may have been, or close to a, fundamentally insolvent company like the YRC…The question in my mind is whether or not these loans adhere to the criteria set out under the CARES Act and whether or not they were a prudent use of taxpayer funds.”

Watch Senator Toomey’s full opening remarks here