In this paper we study
geometry associated to an isoholonomy variational problem on a fat bundle. We
prove that the energy function satisfies the Palais-Smale condition on the space of
horizontal paths. We blow up the singularity of the horizontal loop space.
Then we study the closed geodesics. We relate the number of connected
components of the space of loops with trivial holonomy to the topology of the fat
bundle.