In a contentious hearing yesterday, the House GOP members of the House Oversight Committee aggressively questioned Fisker Automotive executives and an Energy Department staffer about a loan Fisker received from the Energy Department.
The attacks were reminiscent of those made in hearings on Solyndra and were more of a reflection of the committee’s hyperpartisan agenda than any real oversight duty. It also suggested some hypocrisy as GOP lawmakers attacked the Energy Department for “picking winners and losers” in a loan program that they themselves had sought to exploit for their own “winners.”
Fisker received the $529 million loan through the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), which began under President Bush. In fact in 2008, the Bush Administration urged Fisker to apply for a loan. The company raised more than $1 billion in outside financing. Fisker had received $192 million of the federal loan when the Department of Energy suspended the loan in June 2011. Since then, the government seized $21 million back from Fisker as a partial loan repayment. For context, the larger Energy Department clean energy loan program has leveraged more than $55 billion in total economic investment in 33 projects.
Who is to blame for this loss? Fisker met the conditions of the contract when it was made, and so the Energy Department had to follow the contract’s terms. If bankers could foreclose on a mortgage just because they heard the homeowner got a bad employment review, most would be outraged. As long as the homeowner met the terms of the loan, the bank is not allowed to foreclose. Risk exists in the market.
DoE invested in fast-growing electric car company Tesla Motors (as well as Ford and Nissan North America). Tesla is paying back its loan early, employs nearly 3000 workers, recently turned a profit, and its stock price recently hit an all-time high. Though it is possible that they lost money on Fisker, they helped to create a successful new company, and strengthen two others.
At the hearing Rep. Darrell Issa, the chairman of the full committee, made an extended appearance at this subcommittee hearing to lambaste Henrik Fisker (the company’s former chairman), Bernhard Koehler (Fisker’s COO), and Nicholas Whitcombe from the Energy Department’s Loan Program Office. Issa was joined by Rep. Jim Jordan and other Republican members who each attacked the program as an example of centralized planning, crony capitalism, and a reason why the government should not be getting into the venture capital game.
In fact, as CAP has reported, many GOP critics of the loan program have themselves requested money for their own favorite projects. Rep. Jordan, who attacked the Department of Energy for picking winners and losers himself requested money for a company’s proposed project in his district called Global Energy.
Issa himself acknowledged one thing during the hearing that may have slipped by most observers: He tried, and failed, to get a loan guarantee for a company called Aptera Motors. Based in Issa’s district, Aptera had designed a three-wheeled electric car. The company failed and has since been purchased by a Chinese-American partnership, but there may have been more fundamental issues with the company’s business plan as Wired reported in 2011:
Southern California electric vehicle startup Aptera Motors is out of time, out of money and out of luck. It announced today that it is shutting its doors, liquidating its assets and laying off its staff…. The truth is, Aptera always faced long odds and has been in trouble for at least two years. The audience for a sperm-shaped, three-wheeled, electric two-seater was never anything but small.
Design issues aside, when Issa was flacking it, Aptera had other concerns. Initially, three-wheeled cars were ineligible for DoE loans. But Rep. Issa and Rep. Brian Bilbray got the law changed so that the car would be eligible. The company also received funding from one of Issa’s campaign donors, and the firm’s CFO paid a $40,000 fine to the SEC for an accounting fraud charge from her time working at Delphi. All of this did not stop Issa from sending a letter to Energy Secretary Chu requesting a loan (reported to be $150 million) for the company through the ATVM loan program.
Issa has complained about delays in the loan guarantee program, but with funding requests like this to parse through, a rigorous process is an asset to taxpayers. To date, Issa’s Oversight Committee has not held a hearing to investigate congressional support for projects such as these.