Chu: Expect more loan guarantee failures
“But the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest — while supporting a total of 60,000 American jobs and helping us compete for a rapidly growing global industry,” he said.
Chu spoke in response to the release of a White House-commissioned outside review of the loan guarantee program, which called for better oversight but also cut the estimate of taxpayer money at risk from recipients defaulting.
The White House commissioned the report last October amid increasing GOP criticism over the bankruptcy of Solyndra, the California solar panel company that collapsed in September after receiving a $535 million loan guarantee two years earlier.
Beacon Power Corp., an energy storage company that received a $43 million guarantee (and drew $39 million of its federally backed loan), has also filed for bankruptcy. The Energy Department, however, expects to recover more than 70 percent of the money.
But the outside report on the Energy Department’s $23.8 portfolio includes a reduced federal estimate of taxpayer risk of losses to roughly $3 billion, compared to an earlier $5 billion department estimate.
The report evaluated 30 loan guarantees (and direct loans to automakers) but did not include Beacon and Solyndra.
The green energy loan guarantee program was first authorized in a 2005 energy law that passed with bipartisan support and was signed by President George W. Bush.
The program received new funding in the 2009 stimulus law that was used to back loans for Solyndra, Beacon and other companies.
House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) called the reduced taxpayer risk estimate in the report cold comfort.
“It would be a stunning case of bureaucratic disregard to declare victory because the government is expecting to lose ‘just’ $3 billion,” Upton said in a statement.
“One key lesson is that taxpayers should not have been placed in the position to lose one dollar, let alone billions, all because the stimulus allowed companies with shaky finances to apply for and receive taxpayer support without putting up any money,” he said.
The review was conducted by Herb Allison, a former Treasury Department official who oversaw the Troubled Asset Relief Program.
This post was updated at 6:50 p.m.