These sorts of loans are typically vehicles for crony capitalism. Think Solyndra. But in this case the market has already resolved the issue. The plant the taxpayer backed loan is allocated for has already been built. The project was originally financed within the private sector. Why is megacorporation Alcoa now getting a plum loan?
The answer it appears is political. (Isn’t it always?)
(From David Stockman’s Contra Corner)
Paul Chessler, associate fellow at the National Legal and Policy Center, noted that Alcoa had proceeded with its plans in Tennessee as well as additional capacity in an Iowa plant because of high demand from automakers for the lightweight metal.
“So the project is happening without need for the DOE loan,” Chessler said.“It’s pretty audacious that DOE and Secretary Moniz would try to extract credit for a project that was already two years into development and construction.”
Perhaps not coincidentally, the announcement of the loan in late March came the day after Sen. Lisa Murkowski, D-Alaska, took the program to task in an Appropriations Committee hearing.
“This is the 48th consecutive month that the ATVM direct loan program has been unable or unwilling to finalize a new direct loan for an automaker or component supplier,” Murkowski, who separately chairs the Senate Energy and Natural Resources Committee, said at the hearing on the DOE’s proposed budget. “It really begs the question in terms of why we would continue to have this program on the books, why we would continue to have taxpayers’ support there.”