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All DOE loans, including Fisker and Tesla loans will be reviewed

Republican 2012 U.S. Presidential hopeful Mitt Romney wrote a scathing opinion piece alleging that Tesla Motor Comp. (TSLA) and Fisker Automotive, Inc. obtained their loans through corrupt backdoor dealings between the Obama administration and campaign donors like Al Gore, a Fisker investor.  Mr. Romney called the loans high risk and called them an inappropriate use of government resources.

In response to that and other allegations regarding the Tesla and Fisker loans [1][2], the Obama administration has agreed to a complete review by a third-party of all Department of Energy loans.

Aside from the various "green" automotive loans, the review will also encompass solar loans, including the half billion dollars loaned to failed solar startup Solyndra.  President Obama expressed no regrets about spending taxpayer money on that loan in recent interviews.

The review will also encompass nuclear energy loans.  These loans have received less scrutiny, as there's mutual support from both the Obama administration and Republicans for nuclear energy.

The review will last 60 days.  For those hoping for a non-Washington face on the review process, they will be severely disappointed.  The review will be conducted by Herb Allison, a former Department of Treasury employee who was the brains behind the Bush and Obama administrations' $700B Troubled Asset Relief Program (TARP) — a program that included the $85B USD auto industry bailout [1][2][3].

Herb Allison
The "independent" review with will be headed by past Treasury official Herb Allison, who was the brains behind the TARP government bailout. [Source: PressTV]

During that time, the loan process will continue as normal according to DOE press secretary Damien LaVera.  He comments, "The department will continue to perform due diligence on existing loan applications while this 60-day review is being conducted."

Chrysler Group LLC is currently waiting for word on whether its $3.5B USD loan request was approved as part of the $25B USD Advanced Technology Vehicle Manufacturing Program.

Chrysler hydraulic hybrids
Chrysler is currently awaiting the verdict on its request $3.9B USD in "green" loans, which will be partially applied to building battery-free hydraulic hybrids.
[Image Source: Chrysler via Engadget]

Potentially on the chopping block is a $730M USD loan approved in July to the Dearborn-based North American arm of Russian steelmaker Severstal OAO (CHMF:MCX), which is largely owned by a Russian billionaire.   House Oversight and Government Reform Committee Chairman Rep. Darrell Issa (R-Calif.) attacked the loan in a letter to DOE Secretary Steven Chu.  In that letter, he points out that Severstal released statements indicating it had enough money to pay for the project itself.

Eight other projects are also in their final stages of approval, but have received less scrutiny.

So far, the DOE has allocated $9.2B of the $25B USD in auto industry loans.  Of that, the most money went to Ford Motor Comp. (F), which received $5.9B USD in funding to help finance its Ford Focus Electric and other hybrid/EV efforts.  Next biggest was the $1.9B for Nissan Motor Comp., Ltd.'s (TYO:7201), followed by the $1B USD for Tesla and Fisker.

Of course when debating the merits of loans three things must be kept in mind:
  1. These are loans so they must be repaid with interest.
  2. If the recipient goes out of business the government isn't guaranteed getting fully repaid.
  3. If the recipient goes out of business, the government can attempt to recoup part of the funds in the bankruptcy/liquidation proceedings.
Congress will grill DOE Secretary Steven Chu about the loans on November 17.

Source: DetroitNews



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Obama's Billionaire Contributors will be Mad
By pityme on 10/31/11, Rating: 0
RE: Obama's Billionaire Contributors will be Mad
By Shig on 10/31/2011 4:02:15 PM , Rating: 4
Please leave Tesla out of this, they have great management, an amazing patent portfolio, a 2nd generation car that is already sold out, and streamlined manufacturing. Elon Musk did all of this while creating jobs for America, investing in our future, and facing opposition from EVERYONE the entire time.


RE: Obama's Billionaire Contributors will be Mad
By SPOOFE on 10/31/2011 4:07:54 PM , Rating: 5
Regardless, if they're getting loans just like a bunch of other troubled companies, and if they have yet to pay back those loans, they deserve scrutiny. If everything's kosher, who cares? And if it's not, wouldn't you like to know?


By JasonMick (blog) on 10/31/2011 4:41:27 PM , Rating: 3
quote:
Regardless, if they're getting loans just like a bunch of other troubled companies, and if they have yet to pay back those loans, they deserve scrutiny. If everything's kosher, who cares? And if it's not, wouldn't you like to know?

To be fair Ford got some of the same loan pot -- (almost 12 times as much, to boot). I'm not saying Ford (or Tesla) don't deserve criticism, just pointing out they're one of the ones some Republicans label as a "good guy", so picking on Tesla for taking a loan is hypocritical if you're praising Ford.


RE: Obama's Billionaire Contributors will be Mad
By borismkv on 10/31/2011 5:31:29 PM , Rating: 5
Except that Ford has existed for more than a century, has been profitable for decades, has a market cap about 15 times that of Tesla, and has 1/5 of their total debt available in cash reserves (Ford has about 75 times as much cash on hand than Tesla). Giving Ford a loan is not nearly the gamble giving one to Tesla is. Investing in Ford is a sound long-term investment. Investing it Tesla is Venture Capitalism.


By JasonMick (blog) on 10/31/2011 5:38:37 PM , Rating: 3
quote:
Except that Ford has existed for more than a century, has been profitable for decades, has a market cap about 15 times that of Tesla, and has 1/5 of their total debt available in cash reserves (Ford has about 75 times as much cash on hand than Tesla). Giving Ford a loan is not nearly the gamble giving one to Tesla is. Investing in Ford is a sound long-term investment. Investing it Tesla is Venture Capitalism.

True the Tesla investment could be argued to be higher risk for the points you raised, but Tesla was profitable (albeit briefly) when the loan was originally granted, I believe (or at least was a bit before the loan grant).

Again it got $465M, Ford got $5.9B USD, so it only got ~1/12th the money -- perhaps given the risk.

There are really only two perspectives on the topic:
1. The government shouldn't play bank and loan companies money.
2. The government can loan companies money, but based on some sort of arbitrary definition of risk.

If you're for 2, you're just debating what you feel is too risky vs. what someone else does. It's highly arbitrary.

And when you add in the topic of variable amounts of money (e.g. loaning less money to "riskier" firms, more money to veteran firms) the issue becomes even more complicated and arbitrary (e.g. how much is too much to give to a "risky" firm?).

Not making any value judgments myself, just noting the complexity of the issue.


By borismkv on 10/31/2011 5:44:31 PM , Rating: 2
What the government *should* be doing is creating standards that mitigate much of the risk associated with the loans they give out. I don't have much problem with the government loaning money to businesses, but they should do so at rates that result in some amount of return to the American people. Of course, the government already has *some* standards in place for that. The issue at the heart of the matter is whether those standards were violated.

A lot of what I've seen from this administration is symptomatic of leadership that either doesn't understand or doesn't care about conflicts of interest. So either the administration is woefully inept or severely unethical and corrupt.


By SPOOFE on 10/31/2011 6:48:57 PM , Rating: 2
quote:
The government can loan companies money, but based on some sort of arbitrary definition of risk.

The riskier the loan, the higher the interest. Ford paid nasty interest payments on the loan. Everything was aboveboard and fairly conventional, even if the argument can be made that those options shouldn't exist. The overall point being is that the two aren't even remotely comparable.


By SPOOFE on 10/31/2011 6:46:43 PM , Rating: 3
Ford paid it back, and the country made money on the deal. If Tesla was in a similar position, I'd be saying the same for them. Conversely, if Ford still owed our country money, I'd insist they get scrutinized, too.


By Ringold on 11/1/2011 12:08:50 AM , Rating: 2
quote:
just pointing out they're one of the ones some Republicans label as a "good guy",


I'd actually say the party was well divided on Ford, GM and Chrysler's government support (though Ford didn't directly get bailed out the most recent time around). Seemed like about half the party, the populist wing of the party, didnt mind it, while the other half took the same approach that they would to Tesla: If GM and Chrysler couldn't make a profit, let them fail and allow others to rise from their ashes.

Chrysler, especially, was an abortion of justice, if anyone reads in to how the government ignored contract law regarding its bond holders.


RE: Obama's Billionaire Contributors will be Mad
By jimbojimbo on 10/31/2011 5:43:54 PM , Rating: 3
If you're selling out of cars but still losing millions of dollars a year you're in trouble.


By SPOOFE on 10/31/2011 6:47:25 PM , Rating: 2
That's what we call a "poor business plan".


By web2dot0 on 10/31/2011 6:35:35 PM , Rating: 2
Great. Before you get all excited, let them review it first ...

Remember how that research funded by Koch brothers to disprove global warming is man made ? hahahaha ...

Oh I forgot, don't celebrate too soon, because this is all about political posturing, nothing else.


By KCjoker on 10/31/2011 7:19:46 PM , Rating: 2
We shouldn't be loaning Fisker any money since the're not even an American company. And if Tesla is so great they shouldn't need any help. And I don't want any republican's giving their buddies loans either so it's not about hurting Obama. Let companies fail or succeed on their own.


Predatory loans
By lightfoot on 10/31/2011 3:52:08 PM , Rating: 2
These loans are also highly speculative, given at below market rates, and issued to borrowers who are unlikely to ever be able to repay them.

The administration seems to be using all the same tricks that they learned from the housing market. No-doc loans to people who can't afford them and have no intention of paying them back.




By Richard875yh5 on 10/31/2011 7:18:48 PM , Rating: 2
I have to say Ford has a lot of guts about making an ad depicting GM as Government Motors when they themselves are taking lots of free handouts (5.9 billions for the Ford Focus and......

http://jalopnik.com/5704575/ford-bmw-toyota-took-s...




US tax payer funding the world!
By rsmech on 10/31/2011 11:57:28 PM , Rating: 2
How much money has the US taxpayer given to other counties in the past 3 years? from the bank bailouts, aid, DOE loans, If other counties wish to sell products in the US THEIR gov't can back them. I don't pay taxes so Japan, China, Russia, ect. can sell their products here. I can't even put into word how stupid this is in these economic times. Can someone please explain? Why would we still be GIIVING money to China then borrow it or why would we give Brazil $ to drill for oil then pay them for the oil?




Headline says it all...
By integr8d on 11/1/2011 3:41:06 AM , Rating: 2
To be fair to DT, they seem pretty balanced in how they report things. It's much appreciated.

I'm sure Fox News will be shouting that Mittens got something done. "Look. He's presidential," they'll say.

I've got news for everyone that ascribes to conservative ideals; Mitt Romney is the best Plan B the progressives could've hoped for. If they can't enjoy Barack's encore performance, then the guy that instituted mandatory health care in the state that he governed, as well as goes both ways, on every issue, will do just fine. Why do you think the mainstream media touted him as the premiere frontrunner from Day 1? That's who want (or will settle for)!

RON PAUL 2012




Ugh
By th3pwn3r on 11/1/2011 10:05:52 AM , Rating: 2
I don't understand the logic of our government.

Why in the world do we give out loans when we're in debt ourselves?

If you owe $30,000 to loans and creditors would you give lend $10,000 to your buddy? Probably not, I wouldn't. The problem is that they try to justify it in thinking there will be a return and a possibility of profit but in this day and age it's not too likely. Times is tough.




Awww Sookie Sookie!!!!!
By Spuke on 10/31/2011 3:49:23 PM , Rating: 1
Never thought I'd see this one! Although, they just HAD to have one "their own" involved.




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