Another bank and a trucking firm collapsed in late July, adding to the list of companies that have buckled under economic pressure in the United States.
Heartland Tri-State Bank (HTSB) of Elkhart, Kansas failed on July 28 – with the Federal Deposit Insurance Corporation (FDIC) assuming control and organizing a sale soon after. The FDIC agreed to take up all of HTSB's deposits, eventually reaching a purchase and assumption agreement with Dream First Bank (DFB) of Syracuse, Kansas. HTSB's four branches reopened as DFB branches on July 31.
Earlier this year, America witnessed the second-, third- and fourth-largest bank failures in its history. These failures have shown a pattern in that whenever a small bank fails, the federal government through the FDIC orders a larger bank to absorb it. Eventually, this will lead to an unusual surge of unification in the banking industry. (Related: The banking collapse of 2023 is now officially bigger than the banking collapse of 2008.)
Also, HTSB's failure and its acquisition by DFB comes amid the Federal Reserve enforcing radical measures in an effort to keep more banks from crashing.
The trucking industry is also falling on very tough times that even one of the big players has stopped its operations altogether.
On July 30, trucking firm Yellow Corporation stopped its operations and announced it will relieve al 30,000 of its workers. The closure of the 99-year-old company was the culmination of its financial difficulties, as Yellow amassed more than $1 billion in debt.
The company had been in a fight with the Teamsters Union, which represents about 22,000 drivers and dock workers in the company. A week before Yellow ended its operations, the Teamsters canceled a threatened strike that had been incited by the company's failure to contribute to its pension and health insurance plans. Instead of proceeding with the strike, the union allowed the company an extra month to produce the necessary payments.
But by the end of July, Yellow had ceased picking up freight from its customers and was making deliveries only of freight already in its system. The news was confirmed by both the union and trucking industry consultant Satish Jindel.
Teamsters General President Sean M. O'Brien said in a July 31 statement: "This is a sad day for workers and the American freight industry. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government."
Yellow Corporation owes government $1.5 billion
Yellow's closure is also a sad day for taxpayers, as the company owed Washington a huge amount of money. As of late March 2023, it had an outstanding debt of about $1.5 billion – with $729.2 million owed to the government as part of a loan.
During the Trump administration in 2020, the U.S. Department of the Treasury (USDT) granted Yellow the pandemic-era loan on national security grounds. But a congressional probe in July 2023 found that the USDT and the Department of Defense "made missteps in this decision." Lawmakers also found that Yellow's "precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss."
Yellow's woes also followed several trucking company debacles involving Florida's Flagship Transport in Florida and North Carolina's FreightWorks Transport.
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Watch Dunagun Kaiser and Gregory Mannarino expounding on the FDIC picking survivor banks in the video below.
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