News Column

GOP Jumps on Obama for Fisker Loan

April 25, 2013
electric car

GOP lawmakers lashed out Wednesday against the Obama administration for approving Department of Energy-backed loans to electric car manufacturer Fisker Automotive, reviving a partisan fight over the president's investments in clean-energy technology.

Earlier this week, the troubled automaker missed a $10 million loan payment, and the Energy Department announced that it had recouped approximately $21 million from a Fisker reserve account that it is applying toward the loan.

Overall, Fisker -- now on the precipice of bankruptcy -- had received $192 million of $529 million in loan money before it was suspended, and taxpayers are now at risk of losing $171 million from two loans awarded to the company.

The much ballyhooed carmaker was founded in 2007, and its highly styled sports cars and sedans caught the attention of several celebrities.

"Fisker should have never received taxpayer money," said Rep. Jim Jordan, R-Ohio, at an House Oversight subcommittee hearing centering on the Fisker loan. "Taxpayers effectively subsidized luxury, novelty vehicles for the likes of Justin Bieber, Leonardo DiCaprio and Al Gore."

The $171 million would be the biggest loss of federal loan money since solar panel manufacturer Solyndra declared bankruptcy in 2011 after receiving a $528 million loan.

During last year's presidential campaign, GOP nominee Mitt Romney used Fisker's troubles to question President Obama's spending policies. Fisker was promoted by Vice President Biden as an innovative company that would produce thousands of jobs, and he was on hand to announce in 2009 that Fisker would reopen a shuttered former General Motors factory in his home state of Delaware, where it was to produce plug-in, electric hybrid vehicles. The plant was never completed and never produced any cars.

Romney also referred to the Fisker loan as "crony capitalism," and one of his top aides, Ed Gillespie, made an issue of the fact that venture capitalist and Obama donor John Doerr was an early investor. Rep. Elijah Cummings, D-Md., senior Democrat on the House Oversight Committee, noted that another top Fisker investor is Ray Lane, who has backed mostly Republicans, including former New York mayor Rudolph Giuliani, Sen. John McCain, R- Ariz., and former president George W. Bush.

"There is no evidence the department did anything wrong with this loan," Cummings said. "No evidence that the (Energy) Department employed lesser due diligence than it did with successful loans to Ford, Nissan, Tesla and VPG."

The company has faced a series of tough breaks since it began production of its sports car, the Karma, in March 2011. Shortly after production of the Karma began, a manufacturing defect in the cars' batteries resulted in a safety recall. Then the battery manufacturer, A123, filed for bankruptcy in October 2012. Fisker has sold just 2,000 of its Karma models and hasn't assembled a vehicle in nearly nine months.

Democrats on the House committee said the loans to Fisker represent about 2% of the overall portfolio for Advanced Technology Vehicles Manufacturing. "In the world outside the Beltway, anyone who succeeds 98% of the time would get an A+," said Rep. Matthew Cartwright, D-Pa.

But Republicans, including Jordan and Rep. Darrell Issa, R-Calif., questioned how the Obama administration could give Fisker, which had a CCC+ credit rating, such a large loan.

Republicans also released internal Energy Department e-mails, including one from June 2010, that suggest the administration was warned that Fisker was not meeting milestones set as part of the loan. In the e-mail, Sandra Claghorn, a department loan official, wrote that Fisker "may be in limbo due to a lack of compliance with financial covenants."

The department, however, received the needed certification five days after the e-mail and Fisker subsequently made the loan payment.

White House spokesman Jay Carney charged Wednesday that Republicans were using documents out of context in an effort to embarrass Obama. "The committee's efforts to stoke false controversy by selectively leaking a few out-of-context documents just do not stand up to scrutiny," Carney said.




For more stories covering politics, please see HispanicBusiness' Politics Channel



Source: Copyright USA TODAY 2013


Story Tools