Members of the House Oversight and Government Reform Committee today took turns alternately hammering or defending the U.S. Department of Energy's loans to sinking hybrid manufacturer Fisker Automotive. Not much was revealed about Fisker's current status, but there was plenty of what Congress is best at: partisan bickering.
Ex-CEO Henrik Fisker, current COO Bernhard Koehler and Energy Department loan superviser Nicholas Whitcombe (pictured above) were called before the committee because its members wish to examine any wrongful practices that led to Fisker getting $192 million from the government.
Fisker was approved for a $529 million line of credit, but only ever drew down $192 million before they were cut off in June 2011. In other big news to come out today, Obama administration officials knew as early as June 2010 that Fisker wasn't hitting their milestones.
At the hearing Fisker, Koehler and Whitcombe were at times ignorant, evasive and combative when confronted by even more combative congressman like chairman Rep. Darrell Issa (R-Calif.) and Rep. Jim Jordan (R-Ohio.) Democrats, on the other hand, took this opportunity to emphasize that besides Fisker, everything is hunky-dory with the Advanced Technology Vehicles Manufacturing Loan Program, which also gave money to Ford, Nissan, Tesla and a cab company. About 150 companies applied.
A few interesting tidbits to emerge from the hearing were that in one of their applications for a loan, Fisker Automotive said they projected sales of about 250,000 Karmas by 2015, inlcuding 60,000 Karmas in both 2011 and 2012. I'd say they were overly optimistic here, and that's an understatement.
In addition, and this may not come as a surprise to anyone, Koehler said the company may be forced to declare bankruptcy.
Due to a variety of issues including fires, recalls, Hurricane Sandy and the loss of battery supplier A123 Systems, Fisker only ever sold about 2,000 cars, and they have not produced new ones since last summer.
At the same time, Koehler and Whitcombe reaffirmed that Fisker is working to repay the government what they owe, and Koehler even said they are "working day and night" to find a solution to their cash flow problem.
But in the end the hearing just proved how politicized Fisker has become, and how much critics are trying to saddle the Obama administration with the blame for its loss of nearly $200 million in taxpayer dollars — even though, as both sides acknowledged, ATVM began in 2008 under the Bush administration with substantial bipartisan support.
So in the end, how you feel about Fisker may come down to how you vote.
If you're a Republican, you're wondering why the Energy Department cut Fisker off in June 2011 when they knew in Feb. 2011 — if not sooner — that they were missing their milestones, costing taxpayers some $32 million. You're wondering why Fisker was approved for loans when they made the Karma in Finland, although they planned to build the now-dead Atlantic at a former GM plant in Delaware.
You're wondering why Fisker was given a $529 million line of credit when they had a rather risky bond credit rating. You wonder why they were given money to work on the cheaper Atlantic when they hadn't yet reached success with the Karma.
You consider Fisker to be the new DeLorean or Bricklin, except a version of them that went down with substantial taxpayer money. You see Fisker as the next Solyndra, the failed solar panel manufacturer that also received Energy Department loans.
You're wondering why Fisker received government support at all considering they did receive $1.2 billion in private funds from sources private-equity/venture capital firm Kleiner Perkins Caufield & Byers, and you are concerned about alleged ties between Fisker and Democratic Party donors. And you agree with Jim Jordan when he tells Henrik Fisker he "must have laid it on thick" to convince the Energy Department to grant his company these loans.
“It makes no sense to me how the Dept. of Energy approved this loan from the get-go," Jordan said. "And now we’re surprised the American taxpayer is out $200 million? They should never have gotten it in the first place.”
But if you're a Democrat, you think that to make an omelette, you've got to break some eggs, and Fisker is the egg in this case. You think, as Rep. Matt Cartwright (D-Penn.) said, that most Energy Department loans are exceeding Congress' expectations, and that at the end of the day Fisker only represented about 2 percent of total loans.
You think it's absurd to say that the Energy Department somehow used less diligence in giving loans to Fisker than they did for Tesla or Ford or Nissan. You believe the Fisker officials when they say they did not have political relationships with the Obama administration, and that they were pushed to apply for loans by the Bush administration.
You believe the Washington Post when they rate former presidential candidate Mitt Romney's 2012 claim that Fisker was engaged in "crony capitalism" as a lie.
And you believe Rep. Gerald Connolly (D-Va.) when he says that throughout history, the U.S. government has funded a variety of projects that may have had some losses but later led to big payoffs including GPS, nuclear technology and even the Internet.
And you're concerned that over-politicizing the Fisker debacle will led to less future public investment in worthy projects.
“We want to get it 100 percent right 100 percent of the time," Connolly said. "But that’s not how the world works. And if we go too far (for political reasons), we will have a chilling effect on American innovation. That is my concern with this kind of hearing.”
At least, that's the sense you get if you sit through today's hearing. I think that like most issues, allowing the Fisker debate to become completely divided along the lines of "Republican" or "Democrat" is silly. Things are usually more nuanced than that.
But I think Fisker does deserve scrutiny here because they did receive $200 million of our money they may not be able to pay back. When you take public money and you fail — and Fisker appears to be headed that way — you get called to the carpet.
What we will learn from all of this, as well as its impact on future government investment in green cars, remains to be seen. My hope is that we'll be able to cut through all the noise and political point-scoring and actually learn something at all.
Photo credit AP