Energy Dept. Program Key to Auto Bailout Agreement
A deal struck by the White House and congressional Democrats yesterday to provide loans to American automakers will make use of a recently created Energy Department loan program that provides financial support to companies for the development of energy efficient vehicles.
The Advanced Technology Vehicles Manufacturing Loan Program, established through the Energy Independence and Security Act of 2007, is designed to provide up to $25 billion in direct loans to automobile and auto parts companies looking to build advanced technology vehicles that "provide meaningful improvements in fuel economy performance," according to the program's rules. Congress allotted $7.5 billion to seed the program, which is run through the Energy Department's Office of the Chief Financial Officer.
The loan program already has received nine loan applications, DOE press secretary Healy Baumgardner said in an e-mail statement Monday night. Energy continues to carry out the program, Baumgardner says "unless and until Congress takes action which revises the DOE program in such a way as to require DOE to revisit the current regulatory scheme and/or the way it is being implemented."
It seems Congress may do just that.
Later this week lawmakers are expected to approve a plan that would make $15 billion of the $25 billion in the DOE loan program available to Chrysler, Ford and GM.
"That is the maximum you can get" from the DOE program, Rep. Barney Frank (D-Mass.) said at a news conference yesterday.
In return, automakers face close federal oversight by the Government Accountability Office. The loans would go out next week and a Bush-appointed "car czar" would develop restructuring goals for the auto industry. An Obama-appointed czar would then assess the companies' progress on Feb. 15. The restructuring plans would be due from the companies by March 31.
No one who has applied for loans through the DOE program will be denied just because some of the money is being used for emergency loans, House Speaker Nancy Pelosi (D-Calif.) said at the same news conference. She will support the automaker loans so long as the DOE loan program's funding is replenished in a matter of weeks. The White House apparently balked at Pelosi's preference to provide auto company loans through the Troubled Asset Relief Program, preferring the Energy loan program instead.
All of this means that the Energy Department joins the Treasury Department as part of the government's quickly established infrastructure that will be used to rehabilitate the nation's economy. Several questions remain: Who will be the Bush and Obama car czars? How many additional people might DOE have to hire to implement the loans? Will DOE get its money back and when? How much money will other loan applicants receive? Stay tuned.
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