Obama Administration Revives Loan Program Despite Fisker Failure

Friday, 04 Apr 2014 01:24 PM

By Sandy Fitzgerald

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The Energy Department plans to revive a loan program to back advanced fuel-efficient vehicles, even though two of the program's first five recipients that had received millions ended up failing.

The Advanced Technology Vehicles Manufacturing Loan Program, launched by former President George W. Bush and expanded by President Barack Obama, hadn't made any new loans since 2011, The Wall Street Journal reported.

"Today we are presented with an opportunity to hit the accelerator on U.S. auto manufacturing growth," Energy Secretary Ernest Moniz said during a Motor & Equipment Manufacturers Association conference in Washington this week. "Motor vehicle parts manufacturers play a significant role in the development and deployment of new technologies to meet the demand for fuel-efficient vehicles."

Many automakers complained the loan process was too long and difficult. The Energy Department said it has revised the application process to speed up reviews.

The program has some $16 billion left of the $25 billion earmarked, even after two major funding controversies. Luxury hybrid maker Fisker Automotive Inc., which received $192 million from the program, declared bankruptcy in 2013, the same year the Vehicle Production Group LLC, which received $50 million, stopped production.

The program had much more success with Tesla Motors Inc., the electric-car maker which repaid its $452 million loan last year.

Fisker's loan from the program was only part of federal financing of its failed efforts.

According to its bankruptcy filings in November, Fisker also owns tax breaks worth $320 million.

The Energy Department also extended the company a $529 million credit line in 2009 as part of the Obama administration's efforts to boost advanced vehicle development in the United States.

But despite the loans and tax breaks, Fisker generated some $800 million in net operating losses in recent years.

In April 2013, when a House panel held a hearing about Fisker's troubles, lawmakers criticized the Obama administration for granting taxpayer-financed loans to the company.

House Oversight and Government Reform Chairman Darrell Issa said at the time that program never should have considered Fisker. The California Republican questioned the Obama administration's plan to revive the financing program.

"Despite the Energy Department's appalling track record of loan programs, which put taxpayer money on the line to fund junk-bond-rated companies, this administration will do anything to shove their ideology-driven policy forward.," Issa said in a statement quoted by the Journal.

Overall, the loan program has provided some $8.4 billion in financing since 2009, including more than $5 billion to Ford Motor Co. alone, according to the Journal.

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