A House subcommittee held a heavily politicized hearing Wednesday on the suspended federal loan awarded to a California maker of luxury hybrids.
View full sizeThe Fisker Karma, a sports luxury plug-in hybrid car, is shown at the 2010 Los Angeles Auto Show. Newly released documents show that the Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the loan after questions were raised about the company's statements. The Energy Department did not realize for four months that Fisker had missed a crucial production target that was required as part of a half-billion dollar government loan, documents released Wednesday show. The mistake allowed Fisker to obtain an additional $32 million in government funding before the loan was suspended in June 2011.
Rep. Matt Cartwright, a freshman Democrat whose 17th Congressional District in Pennsylvania includes the Easton area, said the $192 million received by Fisker before the loan was suspended represents just 2 percent of the overall loan program.
Even if Fisker goes bankrupt, as many expect, the loan program is on track to recoup 98 percent of its investment, Cartwright said during a hearing before the House Oversight & Government Reform's subcommittee on economic growth and regulation.
View full sizeU.S. Rep. Matt Cartwright is a Democrat whose 17th Congressional District in Pennsylvania includes the Easton area. Rep. Jim Jordan, subcommittee chairman, shot back: “Only in Washington would a $200 million loss be viewed as a success.”
The Obama administration did not make the suspension of the $529 million loan public until early last year, nearly eight months after it stopped making payments to Fisker and long after the Energy Department first warned that Fisker was not meeting milestones to protect taxpayers.
The administration’s actions — or failure to act — came under sharp criticism Wednesday from Republicans at a hearing before the House Oversight and Government Reform Committee. GOP lawmakers accused the Obama administration of negligence and worse while Democrats dismissed the hearing as a “show trial” intended to embarrass the president.
“The committee’s efforts to stoke false controversy by selectively leaking a few out-of-context documents just do not stand up to scrutiny,” White House spokesman Jay Carney told reporters Wednesday.
Jordan, R-Ohio, said it was hard to understand why the Energy Department ever thought Fisker was a viable company that should receive taxpayer money.
“The Obama administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face,” Jordan said.
Jordan called the loan program “one of the most disastrously mismanaged and corrupt programs in U.S. history,” a claim at which Cartwright and committee Democrats scoffed.
The oversight panel is looking into the federal loan to the troubled car maker, which has laid off three-fourths of its workers amid continuing financial and production problems. Fisker has not built a vehicle since last summer and has failed to secure a buyer as its cash reserves have dwindled.
Despite those losses and widespread reports that bankruptcy is imminent, the company’s founder and namesake said Wednesday he is proud of its achievements.
Henrik Fisker, who resigned as board chairman in March, told the House panel that “cutting edge technology” developed by the Anaheim, Calif.-based company could “pave the way for a new generation of American car manufacturing.” Fisker said he is especially proud of the $100,000 Karma hybrid, which Time Magazine called one of the 50 best inventions of 2011.
Fisker has sold fewer than 2,000 Karmas, despite early projections of 11,000 sales per year.