Thanks to risk reduction of loans made to develop clean technology at Ford, an audit of the Energy Department's controversial loan program finds overall costs are slightly less than what DOE had predicted.
NEW YORK (CNNMoney) -- The Energy Department's controversial loan program got some much needed help on Friday.
An independent audit, ordered by president Obama, said the DOE's loan program could cost the government $2.7 billion due to risk from defaults, a little less than the $2.9 billion in costs the Energy Department had predicted.
The improved outlook was due to strength at Ford, which received a $5.9 billion loan guarantee from the government under the same broader program that backed now-bankrupt solar panel maker Solyndra.
But the audit also found slightly deteriorating conditions with the loans to most of the other companies, predicting a higher cost to the government for those.
The administration tried to spin the news in the best possible way.
"The report confirms that the overall loan portfolio as a whole is expected to perform well and holds less than the amount of risk envisioned by Congress when they designed and funded the program," White House spokesman Eric Schultz told CNN.
The audit broke up the loan program into three broad categories: loans to Ford and Nissan; loans to companies that have long-term commitments from utilities; and loans to manufacturers like Fisker or Solyndra. In total, the government has the authority to back $24 billion in loans.
It said it will cost the government about $2.5 billion to administer and absorb any losses from the $16.2 billion in loan guarantees made to the 28 companies that aren't Ford or Nissan.
That compares to the $2.2 billion the DOE had projected.
But thanks to big improvements in Ford's (Fortune 500) credit rating and stability from Nissan's ( ), the audit said it will only cost the government $166 million to service those loans, compared to a $753 million projection from DOE.,
The audit was ordered after solar panel maker Solyndra, which received a $535 million government loan guarantee, went bankrupt.
Solyndra's bankruptcy sparked a political firestorm, with critics accusing the administration of lax oversight, favoritism and blind support of technologies that don't work.
On Friday some of those critics let into the administration once again, arguing that any money lost supporting this technology is too much.
"It would be a stunning case of bureaucratic disregard to declare victory because the government is expecting to lose 'just' $3 billion," Michigan Representative Fred Upton and Florida Representative Cliff Stearns, both Republicans, said in a joint statement. "When taxpayers are the ones paying the price, this sort of managerial soul searching should take place before billions of dollars are doled out, not after."
But President Obama has refused to apologize for the programs, saying the government should support these businesses in their early years so the country can compete with industries in other nations that lavish support on their own clean-tech sector.
"Some technologies don't pan out; some companies fail," the president said during his State of the Union address. "But I will not walk away from the promise of clean energy."
The audit was conducted by Herb Allison, a former head of the financial services firm TIAA-CREF and one time advisor to John McCain.
The audit, like the Obama administration, noted that due to the long length of the loans and the speculative nature of the businesses that are backed, there will likely be several more companies that go bankrupt or need modifications to their loans in the years ahead.
An example of that occurred just this week when the automaker Fisker, which received $529 million under the program, said it was in negotiations to modify its loan.
The auditor recommended several steps to ensure the taxpayers get as much money back as possible. They include:
-- Hiring more staff at DOE with experience in this type of finance.
-- More clearly delegating authority at DOE.
-- More clearly defining what it is DOE wants out of these loans.
-- Creating an outside oversight board.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.98%||3.93%|
|15 yr fixed||3.04%||3.04%|
|30 yr refi||4.05%||3.99%|
|15 yr refi||3.11%||3.10%|
Today's featured rates:
|Latest Report||Next Update|
|Home prices||Aug 28|
|Consumer confidence||Aug 28|
|Manufacturing (ISM)||Sept 4|
|Inflation (CPI)||Sept 14|
|Retail sales||Sept 14|