$730M fed loan to Russian-owned steel firm withdrawn after GOP challenge
Headline first, then I’ll give you all the sordid background.
The Detroit News reports this afternoon that the Obama administration is canceling subsidies to Russian steel firm Severstal for production of advanced high strength steel for autos in Dearborn, Michigan. Pricetag: $730 million… (h/t William Amos)
Russian steel maker’s North American subsidiary will no longer be receiving a $730-million loan to produce advanced high strength steel for autos in Dearborn.
A U.S. Department of Energy official confirmed today that after reviewing Severstal North America’s project — which received a conditional loal commitment under the agency’s Advanced Technology Vehicle Manufacturing program months ago — it was decided that the agency would not award the funding after all.
It was not immediately apparent whether the loss of funding would put jobs at risk. At the time the conditonal loan commitment was announced last summer, Severstal North America had already filled more than half of the plant jobs expected to be created by the loan.
When the conditonal loan commitment was announced in July, the company said it expected its modernization efforts in Dearborn to create an estimated 2,500 construction jobs, 260 permanent manufacturing jobs and allow it to retain 1,400 manufacturing jobs. Energy Secretary Steven Chu said in a release then that the project would “help make American automakers more competitive as demand for lighter, more fuel efficient vehicles increases” and reduce imports.
But as the loan review went forward, Energy Department officials found reasons not to go ahead with the loan.
Par for the course: The White House/Energy Department will not reveal what those reasons were.
But it’s GOP watchdogs who raised questions about the deal last fall. The Hill:
The planned loan had come under attack from several GOP lawmakers, including House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.), and some of Severstal’s steel industry competitors. Sen. Dan Coats (R-Ind.) applauded the decision not to move forward.
“This announcement is a victory for taxpayers and steel manufacturers in Indiana,” he said in a statement. “The Severstal loan commitment never passed the sniff test, as multiple producers are already manufacturing this high strength steel without taxpayer financing.”
The rejection of the Severstal financing also comes amid wider GOP criticism of DOE loan and loan guarantee programs following the collapse of solar panel manufacturer Solyndra last year.
But LaVera said the decision not to move ahead with the Severstal loan was made on the merits of the specific case. “As we have consistently said, the additional due diligence the Department conducts after a conditional commitment is signed is an important part of the process and is vital to protecting the taxpayers,” he said.
Coats’ office, which assailed the White House policy of government picking winners and losers (all LOSERS from the taxpayers’ standpoint), applauds the decision:
“This announcement is a victory for taxpayers and steel manufacturers in Indiana,” said Coats. “The Severstal loan commitment never passed the sniff test, as multiple producers are already manufacturing this high strength steel without taxpayer financing. This is another example of why the government should not be in the business of picking winners and losers.”
In July, the DOE issued a $730 million loan to Severstal under the department’s Advanced Technology Vehicle Manufacturing Program to produce high strength, lightweight steel in Michigan. Six companies already manufacture the Advanced High Strength Steel that Severstal received a loan to produce– including Arcelor Mittal, Steel Dynamics and U.S. Steel in Indiana.
High strength steel has been manufactured in the United States since the 1980s and the current capacity for this steel actually surpasses current demand. Coats first raised concerns about the Severstal loan in a letter to Energy Secretary Steven Chu on August 2, 2011 and asked whether the DOE conducted appropriate market analysis before issuing its loan commitment.
In November 2011, Coats and Senator Pat Toomey (R-Pa.) sent a letter to Inspector General (IG) Gregory H. Friedman requesting a formal review of the Department of Energy’s (DOE) issuance of a conditional loan commitment to Severstal.
In their November letter, the senators wrote:
“Given the tremendous fiscal crisis that we find ourselves in today, it does not seem appropriate for the program to subsidize technologies that have already achieved commercial success through private sector means. American taxpayers deserve to know how the Department of Energy is making decisions regarding these types of loan investments.”
House GOP Oversight and Government Reform Committee chair underscores that but for conservative lawmakers’ objections, this rotten deal would have gone through:
“While I am pleased that the Department of Energy has reconsidered it decision to fund a $730 million loan to Severstal, it’s deeply disconcerting to know that this loan would have gone forward had Congress not raised concerns,” said Chairman Issa. “Following the waste of taxpayer dollars in the collapse of Solyndra, the Department of Energy needs to work on being better guardians of taxpayer dollars.”
***
Author Craig Bouchard, Vice Chairman and co-founder of Esmark Inc., has a related book, America for Sale, that provides investigative details on how Obama manufacturing czar/Big Labor lawyer Ron Bloom attempted to force his company to sell to Severstal. He wrote me a few years ago:
For background. I’ve spent nearly two years negotiating with and then against Ron in his role with the USW. Its been a brother/nemesis relationship. I can’t think of anyone who spent as much time with him in recent years as me. His support and that of the USW helped my company shock the steel world in 2006/2007when we won our hostile battle against the giant Brazilian firm CSN to acquire a nasdaq company (Wheeling Pittsburgh Steel). In the process we went from a very small company to becoming the 4th largest American steel producer. In 2008 the tables turned and after our board voted to sell our company to an Indian firm (Essar), the steel workers under Ron’s leadership opposed our board action.They preferred a Russian firm (Severstal), after a quiet deal made with Frankin Templeton’s Mutal shares (led by Peter Langerman). The USW/Russians/Franklin went hostile trying to force us to sell to Severstal. This was a very visible public fight. The USW finally litigated against us. I went up against Ron in a secret arbitration in Washington DC and won. All of this makes very interesting reading in the book.
By the way, did you know the USW committed 500 people to Obama’s campaign? Ron [o]rchestrated that. Ron’s top two agenda items are card check and legalizing 12 million illegal aliens. The USW believes both to be the key to increasing union participation/dues. (people forget…it[']s a business)
I used the knowledge I gained to write quite a bit about foreigners buying critical US assets. For instance, in steel, foreign companies now own 51% of US Steel production, with the Russians owning half of that. These Russian firms all received Russian “Tarp” money, so, in a sense, Putin controls a big chunk of the firms that build our national defense.
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Putin owns a big chunk of the firms that build our national defense and we are paying China to build theirs. This won’t end well.
Thank you for the very kind Hat Tip Michelle.
More of the same old, same old from this administration.
If we saw a fruit tree in our orchard that produced nothing but rotten fruit year after year, we would cut it down.
God bless Issa and Coats for this! Issa is knee deep trying like heck to help get bho and team accountable for all their evil dirty deeds.
Thank you so much Michelle for this post. But, how many others has bho and team given to other nations that hurt American’s? I saw a few days ago that a plane that Boeing made is going, per bho, to some foreign company?
Michelle, thank you and Doug for doing the work to inform us where the bhopress won’t.
L
key word: loan.
more like: payoff
They never would have cancelled the loan if they thought they could get away with it! How many more of these slimy deals are going on under our noses? If the private industry has a good market for this steel, and it is successful, what the hell is this administration doing trying to fund it? I’ll tell you…another power play. They won’t be satisfied until the government runs everything and there is NO MORE PRIVATE INDUSTRY. Constant vigilance is the only way we can save our country!
Thanks, MM, for your vilgilance!! If we can get these a-holes out of DC this year, maybe we will survive. If not…I doubt we will be able to hold the line for another 4 years. This is the tipping point.
These communists aren’t even trying to hide their agenda any more! Communists…running our country. Can we NOW call it treason??? If not now, then WHEN??
That’s a GOOD thing: American-made product sold (for lots of money) to a foreign buyer.
Wow. I’m so jealous. Never had a Michelle h/t.
what was the reason for not giving the loan? did they not agree to the terms of the loan, you know? never make money, screw the taxpayers, and invest in unicorns and leprechauns. or did they find no major obama donors were listed on the board of this company?
Well so much for ‘ Eastern Promises’.
Fiat bought an additional 5% of Chrysler.
It now holds 58.5% of Chrysler stock.
Iacocca’s Italian blood lives on.
How soon before Owretchedwhiner appears with all fingers pointed accusingly at the right, arrogantly and self-righteously bemoaning how many jobs those do-nothing, job-killing Republicans sacrificed by objecting to another
illegal and immoral appropriation of taxpayer moneyjob stimulating loan? And we all know he will!Hey, Obamao…when is the pipeline going in? Seriously, if that project is lost to the chi-coms, obama will suffer big time in the polls. The unions want it and the majority of the American People want it. So, what is the hold up? This makes NO sense!
How can you apply the “sniff test” in Washingtoon. I mean, how can you single out one turd’s odour in the cesspool? Easy. Any deal this administration is into reeks. No test needed. A turd is a turd.
No, he won’t. The tragedy of our times is that the Right is so thoroughly discredited in this country Obama can do and say anything and the majority of the public will believe him. He would just say that he wanted to give the pipeline to the American workers but Republican obstructionism made it impossible so he had to go with China. Tell me the bulk of the American people won’t buy it. As for as I can see, the only question for the 2012 election is how big Obama’s landslide will be. Will it be huge (Santorum) or only moderate (Romney)?
Somewhere, Hank Rearden is grinning.
And grinning…
*What I want to know is when does Boehner plan to start impeachment hearings; P-BO has crossed the line this week, and he-will-not-stop unless someone intervenes; Bold action is required right here, right now when the POTUS takes continued action extra-constitutional; What will it be Boehner, the death of our Republic, along with the continued lining of establishment GOP pockets, or salvation?; The ball is in your court now, for what WE warned you about 4 years ago!!!
OT On my local Fox news channel, when they are reporting on political news their logo looks just like Obamas, with the words “You Decide”.
Just wondering if anyone else has noticed this on their local Fox station.
Oh sure, they make steel, but how many of them launder taxpayer dollars and kick it back to politicians? How’s a comrade to retire from the Politburo – oops I mean Congress – fabulously wealthy? Surely not on their salaries! I only hope they were tipped off with insider information so they could sell their stock before they were hurt financially.
or short the stock, and make a few bucks at some dolt’s expense!
Well if you were a Progressive, you would graft rotting branches onto the good trees because it’s unfair for them not to share the blight. Besides, that rotten tree might not produce good fruit, but that doesn’t mean this rotten tree won’t. Or that one, or that one. We simply must make all the trees rotten because somehow, someday, unicorns will make it all good.
Why wasn’t this money loaned to Brazil to drill for oil?
On January 06, 2012 at 05:01 pm, happyscrapper said:
I agree with what Rush said about it. Urkel is playing both sides for campaign cash.
Selfish little thug.
Same old, same old. Unless you reduce the size of government, this will happen with both parties.
Since discussing political behaviour concerning two ideologically identical parties is of no value, I thought I would give you guys some information to think about. So, here goes:
If the highest quality 1 carat diamond stones sell for around $1500 at the wholesale level, and if the average wedding band can be bought for under $200 at retail, then why, when the two are put together in a stylized manner, does a store like Costco sell such a ring for around $10,000? And when one checks Costco’s average margin – Revenue minus COGS, that number only equals 14%. Now, Costco might make a higher margin on jewellery than food offerings, but how high do you think it is? And so, where does all the profit go if the diamond miners aren’t making the bulk of it, the manufacturers likely aren’t and places like Costco are supposedly the low-price champions of the retail market?
Exit questions: Should you be negotiating with your jewellery retailer, such as Costco or Zales? Should you convince your girlfriend or wife that diamond jewellery prices are highway robery? Should you just stay single and never have to buy such a ring for any female companion?
Hmmm.
Clarification: Wholesale level is price that diamond miners sell rough, uncut diamonds to cutters/polishers, not the price that said cutters/polishers sell to Costco. But having said that, I doubt the mark-up from such crafters is that high to cause such a disparity in price as the diamond/gold offerings get moved onto the retail operators.
John Boehner is silent.
Mitch McConnell is silent.
They have never taken any action against the treasonous actions of Obama and his administration. A lot of soft fluffy worded statements. Nothing more. These guys and the rest of their buddies are complicit in the fleecing of America.
Way off topic here but…
The hits keep coming. Apparently in Illinois, you have to show ID and sign a log when you buy drain cleaner.
Isn’t that racist? Forcing an African-American to show an ID to clear his pipes? I mean, the crap can be backing up in his toilet. The importance and urgency is right up there with flying on an airline or renting a video…nothing so insignificant like showing an ID to vote for the morons who write these laws.
***
I hope Comrade Obama can get some credit for His great work creating jobs for unemployed workers–all over the world! In Gaza, in Brazil, in Colombia, in China, in Canada, in Mexico, and with this steel boondoggle–a good A for effort in Russia. All with American Taxpayer bucks. Smart–no brilliant!–power in action.
***
The Good Comrade just wants to “even the playing field” a little–on our backs. And the American Pravda Media just keeps sweeping this C**P under the rug.
***
John Bibb
***
This is what we get after 75 ‘Tea Party Republicans’ went into office last year. But rest assured, on any issue of current and future importance, GOP clowns will get on the talking head shows like Hannity, O’Reilly and etc., spin their positions Fast and Furiously and you will wonder if you didn’t accidentally tune into the latest Professional Wrestling program.
The loan that almost came to pass wouldn’t have anything to do with UAW President Bob King’s relationships to—
a) Ford (which received a nearly $6 billion loan in the same DOE Advanced Technology Vehicle Manufacturing program),
b) the Ford River Rouge Complex (where King rose to power; Rouge Steel, which was owned by Ford, became a fully owned subsidiary of OAO Severstal in 2004), and
c) the Local 600 (which is the union King belonged to in Dearborn and is the same union whose numbers include the Severstal North America workers), would it? Maybe not, but it might be worth noting.
Oh, I should add that Bob King also has close ties to the administration, receiving an appointment to the White House’s Advisory Committee for Trade Policy and Negotiations. As UAW Vice President, King “directed the Ford, Severstal, and Competitive Shops/Independent Parts Suppliers Departments of the UAW.”
Well, now. We already know of Obama’s close ties to the unions. These connections, though…they’re just coincidental, right? Forgive me, I’m just speculating. So let me speculate a little more.
Why would a “financially sound” company of any kind, foreign or domestic, be given a loan of this magnitude unless, as Sen. Coats said, the government is deciding who should win and who should lose?
Hey, America, let’s do Obama’s union buds another solid. Oops! Busted.
Alexei Mordashov, the Russian billionaire CEO and majority shareholder of OAO Severstal, does his darndest to try to make people believe that he has no interest in getting our money for his company’s wholly owned subsidiary:
Gah. He sounds like someone who gets his talking points straight from the Democratic Party. What does he care about making America less dependent on foreign oil? Funny how a business who claimed to be complying with the requirements of a two-year due diligence process suddenly did not meet the appropriate loan conditions after some people finally took notice of the situation.
I agree with Sen. Coats—there’s a fair amount of reekage to this story.
Welcome to Zimbabwae.
It’s all about using the peoples money to line the pockets of the regime. This is worthy of a Third World dictatorship.
To paraphrase Vladimir Lenin: “When we hang the last American, Barack Obamma will be lending us the money to buy the rope.”
Oblame-o’s priority list:
1. Catch up on golf.
2. Give lots of speeches.
3. TV appearances.
4. Meet with ABC,NBC,CBS, news anchors.
5. Lunch with Soros.
6. Hire more czars.
7. Declare congress in session and appoint more thugs.
8. catch up on golf.
9. Take Air Force 1 on daily fun flight.
10. Plan daily campaign stops for the rest of the year
11.Consider pipeline decision and then ask for more information.
12.More speeches, campaign stops, lunches, golf.
13. Consider pipeline decision, ask Soros if it is ok.
14. Golf, lunch, White House coctails and special entertainment.
15. Repeat 1-14 over and over.
99. Election day.
100. Turn down pipeline.
Wow. Someone involved with the federal government helping to keep Indiana from being hosed.
They won’t be around long.
You guys are so much more eloquent than me–thanks for saying what I am thinking.
If Owebowmao were a communist manchurian candidate, what would he do differently?
(He IS a communist manchurian usurper)
It IS treason Happy, and it was treason when they all (Congress, courts, media, etc.) agreed that they would go along with the Alinsky against those who KNOW that an illegimate ineligible usurper was sworn in as President.
Sadly that includes many I used to greatly respect and admire.
Alinsky Rules!
The Repulic is dead.
ID to buy drain cleaner? But no ID for voting………
The Usurper needs the foreign vote to win again. Why do you think the deportations have stopped and voter ID l;aws are being prevented from being enforced?
Can a non-crony American firm get such a loan?
NO WAY.
We shouldn’t expect any pro-America decisions from this White House. Nothing he does. or has done, has been for the healing of, or the maintenance of a constitutional America.
Oh, sure, Obama will say “someone needs to look out for the middle class,” but it isn’t him. In actuality, the only thing he’s giving America is the middle finger. Simply perusing his personal spending, his seemingly endless number of vacations and “business” trips during this recession, should speak volumes about his priorities. He spends millions of taxpayer dollars on fun, while many in America are scraping by trying to pay bills. He is NOT one of us…not by a long shot.
Everything Obama does between now and election day MUST be subjected to close scrutiny, and contested. I don’t know about the rest of you, but this is one American that knows where Obama’s heart is, and it is not with us.
Actually, it’s kinda surprising Soros’ investment fingerprints weren’t all over this Severstal thing. Guess the Ruskies are still pissed off at Soros for collapsing their ruble. Otherwise the loan amount would have been doubled (just like Soros’ investment in Petrobas in Brazil just prior to Jackas-In-Chief’s massive $Billion dollar loan guarantee). That’s just how Obastard rolls. Just sayin’ …
Russian mob owns half the foreign stake in US steel production? What happens when The Kenyan President for life nationalizes the once US steel industry? The bosses are going to be pretty angry.
So, this coming world war…. not tank production for the USA? No airplane production with the coming closing of the big Boeing facility in Wichita?
Dismantling and holding a fire sale…change we can believe in.
Issa needs to take the gloves off and soon in Fast and Furious. The DOE cave was probably a bone to get him to back off. This smells like raw open sewer lines.
Can we get an audit on the White House Pharmacy too?
Part of the appeal of video games is that you get to make your own choices and build your character and gameplay around those choices.
If Gore builds a video game, it will pretty much be automated and just make all the choices for you. Much like his comrade’s brand of government. I can’t see it going too far.
On January 7th, 2012 at 4:52 pm, EdDantes said:
When your sinus cavity is full of $h!t you can’t conduct a sniff test, There is no other odor at their level, but it’s all about convincing themselves they smell flowers. When Harry Reid said “You tourist stink” he was smelling the turds around him in Washington.
Thankfully there are a few politicians like Issa who can still smell the stench around them and have morals to try to do something about it.
If this POTUS gets re-elected, I echo the above post saying “the Republic is dead”.
It is patently illegal for the federal government to be loaning taxpayer money to any entity for any reason. All the Constitution permits is infrastructure expenditures to facilitate domestic commerce. Crikey.
The American Taxpayer is still being viewed as a cash cow to be bled at the leisure of the latest politicos in positions of power. Apparently people have to start going to jail before it will stop, but we have no leadership with stones enough to start action.
And the band played on…
Actually does it even allow that much? It mentions post roads, but no other kinds of roads.