House Republicans Slam Government 'Bet' on Fisker Automotive

Scathing critiques met Fisker executives and DOE officials at a House hearing Wednesday.

Henrik Fisker, owner of Fisker Automotive, poses next to a Karma at the North American International Auto Show Monday, Jan. 14, 2008 in Detroit.

Henrik Fisker, owner of the bankrupt Fisker Automotive, said he did not believe "that any taxpayer dollars have been lost," at a House Oversight Committee hearing Wednesday.

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Department of Energy officials and Fisker Automotive executives were on the hot seat Wednesday as House Republicans grilled the pair for hours on the $192 million of taxpayer money given to the now nearly bankrupt electric carmaker, some of which was disbursed even after the company missed key production targets and deadlines.

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"There were mistakes made that Mitt Romney wouldn't have made the day he left grad school," said Rep. Darrell Issa, R-Calif., chairman of the Committee on Oversight and Government Reform.

In what lawmakers decried as a "bad bet" on an unproven, non-viable company, taxpayers essentially subsidized "luxury, novelty vehicles for the likes of Justin Bieber, Leonardo DiCaprio and Al Gore," said Rep. Jim Jordan, R-Ohio, the subcommittee chairman who called the hearing.

"They had a triple C rating, they're under collateralized, they can't meet payroll, and now we're surprised?" Jordan added. "All the evidence points to that they should never have gotten the loan in the first place."

Though Fisker Automotive headlined the hearing, on trial was the DOE's loan-guarantee program, which has endured much criticism in recent years over a slew of failed or struggling loan recipients including solar panel maker Solyndra and lithium ion battery supplier A123 Systems.

But Democrats argued that a few bad apples don't spoil the whole bunch, highlighting success stories like Tesla, the electric car maker that received a $465 million loan through the same DOE program as Fisker.

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"That loan is on track to be repaid and instead we're focusing on a $192 million loan made to Fisker," said Rep. Matt Cartwright, D-Penn.. "There should be Congressional oversight, but there's an extensive amount of cherry picking here."

Nicholas Whitcombe, former acting director of the car loan program under which Fisker received funds, also defended the government's actions, arguing the DOE program served as life support through the severe economic downturn, helping revive big auto manufacturers such as General Motors and Nissan.

"Four years ago, the American automobile industry was on the brink of collapse during a historic economic crisis," Whitcombe said in prepared testimony. "Now, in part because of help from the [Advanced Technology Vehicles Manufacturing] program, America's automotive industry is reinventing itself — expanding production, growing profits, creating jobs, and making more fuel efficient automobiles."

Loans made through the ATVM program — currently totalling more than $34 billion — support the development of "advanced technology vehicles" and associated components according to the DOE website.

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But the program's role in salvaging big U.S. auto manufacturers from financial ruin was little consolation to House Republicans, who highlighted Fisker's failure to meet the Monday deadline for a payment on their DOE loan. The loan, originally approved for $529 million, put the car company on the map according to experts, and allowed Fisker Automotive to raise more than $1 billion in private investment.

Blaming the company's recent troubles on issues with its battery supplier and recalls of its plug-in hybrid sports car, the company's former CEO Henrik Fisker argued that the company is still viable.

"I do not believe that any taxpayer dollars have been lost," he told lawmakers during the hearing.

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