Independent Review: DOE’s Loan Guarantee Program

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Money_TreeThe White House just released a rigorous review of the controversial Department of Energy loan guarantee program, which was completed by an independent consultant.

The Report of the Independent Consultant’s Review with Respect to the Department of Energy Loan and Loan Guarantee Portfolio was led by Republican Herb Allison, whose conservative credentials include a stint as national finance chairman for then-presidential-candidate Senator John McCain (R-AZ), as well as time at the Treasury Department and with Merrill Lynch. He was appointed to lead the review by President Obama.

The review assessed the 30 U.S. Department of Energy (DOE) “Evaluated Loans” as of November 28, 2011, in “three broad categories,” each with “a distinctive project type and loan structure.” The total amount involved, the review found, was $23.77 billion. But the loans “were structured as funding commitments, with limited or, in many cases, no funds drawn under the loans at closing.” Only 35 percent of the total amount was actually drawn.

The important point about the drawn amount, the review pointed out, is that it shows how carefully the taxpayer was protected when the loan programs were set up. “DOE will,” the review pointed out, have further opportunities “to protect itself against taking on elective risk” as the projects to which the money was committed unfold.

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Source: Herman K. Trabish | Greentech Media