Fisker Automotive, Inc, got a federal loan of $529 million to produce its $100,000 Fisker Karma hybrid, built not in America by American workers but in Finland by Finnish workers. Fisker has not produced a car since last summer and recently dumped all its rank and file employees. The company faces bankruptcy and could represent the largest loss of federal loan money since Solyndra. But according to the Associated Press there’s more to the story.
The Obama administration, it turned out, knew as early as 2010 that Fisker was not in compliance with loan requirements. Even so, Fisker kept getting money until June 2011. Aoife McCarthy, Department of Energy mouthpiece, said one person raised only a possibility that Fisker was failing. Turns out it was, and now Congress is looking into it in hearings on “the Department of Energy’s Bad Bet on Fisker Automotive.”
“Whatever they spent on Fisker was just not going to be enough,” one Detroit restructuring expert testified. Sen. Charles Grassley asked “How did the Energy Department determine Fisker’s potential before writing a check? Was there due diligence, or instead a blind hope that Fisker would produce something useful?” The DOE’s Aoife McCarthy responded that Fisker did not represent the wider efforts of the Obama administration to promote green vehicles. “There will always be an element of risk with investments in the most innovative companies,” she said. Further, the $529 million loan to Fisker was one of 33 clean-energy loans that failed.
So taxpayers shouldn’t worry that government picked a loser in Fisker because, count ‘em, 33 federal loans went bad. Other estimates peg the number of federally-backed troubled or bankrupt energy companies at 50. What we have here is misguided and wasteful policy that subsidizes failure then justifies it on the grounds of other failures. And none of this is supposed to reflect badly on administration clean-energy policy. Even by Washington’s low standards that is truly pathetic.