The White House pointed to a new independent report into the government’s energy loan portfolio as evidence that the program has functioned well and “holds less than the amount of risk envisioned by Congress when it created and funded the program.”

Did that lead House Republicans to drop their objections to the program and beg the president to start issuing new loans? Not quite. Energy and Commerce Committee Chairman Fred Upton and Oversight and Investigations Subcommittee Chairman Cliff Stearns called the audit “a long-overdue acknowledgement that the Obama administration has a problem.”

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The audit [PDF] was done at the administration’s request by Herb Allison, a former Treasury official, Well Fargo executive and national finance chairman for John McCain’s 2000 presidential campaign. Allison’s 75-page report includes a number of recommendations for strengthening oversight of the program, but the key takeaway seems to be that the 30 loans for renewable energy and alternative vehicles that he looked at will likely end up costing the government about $2.7 billion.

That’s not chump change, but then again, government loan programs of all sorts have always built in an expectation that a small percentage of the loans will go belly-up. To cover those losses, the government estimates a “credit subsidy cost” for each loan. With some loan programs, the party receiving the loan has to pay that cost, which is often around 10 percent of the loan’s value. In 2009, with credit markets frozen, Congress appropriated $6 billion to pay credit subsidy costs for renewable energy loans to encourage participation in the program.

That money was chipped away at during the budget battles of that followed, and the most recent estimate from the U.S. Department of Energy (DOE) was that it had $2.9 billion in credit subsidy costs on the line. But Allison’s report says the risk is less than that—$200 million less. Thus, the White House’s claim of vindication.

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