The Energy Department is taking a $139 million loss on a loan to struggling electric car-maker Fisker Automotive after it found an investor to take a portion of an outstanding loan.
The agreement between the Energy Department and Hybrid Technology reached Friday is a step in an eventual deal to transfer Fisker's assets, which includes Hybrid Technology assuming roughly $170 million of the federal loan, to a subsidiary of the firm. Fisker filed for Chapter 11 bankruptcy protection as part of the arrangement.
The agency noted that subsidiary planned to restart production of Fisker's Karma model and that engineering and design would continue in California. It also noted that taxpayers were able to recover three-fourths of the original $529 million loan, as the agency froze a bulk of the loan in 2012 following a poor rollout for the Karma vehicle.
"Recognizing that these investments would include some risk, Congress established a loan loss reserve for the program, and the Energy Department built in strong safeguards to protect the taxpayer if companies could not meet their obligations," said Energy Department spokesman Bill Gibbons.
The Energy Department said Congress understood that the Advanced Technology Vehicles Manufacturing program, through which the loan was disbursed, carried some risk when it approved the program in the waning days of President George W. Bush's administration. The agency noted that failed loans have accounted for about 2 percent of the total program value.
But the program has taken a beating on Capitol Hill, especially from House Republicans.
They say the ATVM program and other Energy loan programs are examples of the Obama administration picking winners and losers, and favoring clean energy over fossil fuels.
Rep. Marsha Blackburn, R-Tenn., the vice chairman of the House Energy and Commerce Committee, took aim at the Fisker news, characterizing it as another example of ill-advised policy.
"Time after time, this administration has fumbled the ball with their attempts to pick winners and losers when it comes to American energy. As a result of President Obama's misguided policies, the Department of Energy loan guarantee program is quickly becoming a highly utilized stimulus program for foreign investors," she said.