Did White House Push for $535 Million Loan to Now Bankrupt Solyndra?Posted: September 2, 2011
Minkoff Minx highlighted this story earlier today, but I thought I’d expand on it a little bit. As Minx wrote earlier, Solyndra is a solar energy company that the Obama admnistration has hyped as an example of the potential of green energy technology to create jobs in the U.S. From the LA Times editorial page:
Solyndra was the first company to be awarded a federal loan guarantee under the stimulus, worth $535 million. Taxpayers are likely to end up on the hook for much if not all of that amount, a highly embarrassing development for President Obama because he was among the company’s biggest cheerleaders. He visited its Fremont plant in May 2010 even though PricewaterhouseCoopers had weeks earlier raised doubts about its plans for an initial public offering by questioning whether it could continue as a going concern.
That’s especially troubling because Solyndra is backed by one of Obama’s key fundraisers, George Kaiser of Tulsa. Congressional Republicans were raising alarms about Obama’s connections to Solyndra well before Wednesday’s announcement, with GOP members of the House Energy and Commerce Committee voting in July to subpoena documents from the Office of Management and Budget on the loan-guarantee decision.
Two important questions are raised by Solyndra’s failure: Should the government be in the business of picking winners and losers by providing loan guarantees to risky energy ventures? And is Obama using stimulus funds to reward his political contributors?
The Times says “yes” to the first question and “maybe” to the second, pending the results of the House investigation.
As the LA Times noted, questions were being asked about the Solyndra loan even before the bankruptcy announcement. Brian Ross and his colleagues at ABC News have also been looking into the White House connection.
ABC News and the Center for Public Integrity’s iWatch News first reported on questions about the choice of Solyndra for the loan in May after the Department of Energy disclosed it was being forced to restructure its loan package for the company, which was showing early signs of financial distress. One of Solyndra’s major investors was George Kaiser, an Oklahoma billionaire who raised between $50,000 and $100,000 for Obama during the 2008 election.
Following the ABC News and iWatch News reports, the House Energy and Commerce Committee opened their own investigation into the loan and into the Kaiser link, which Stearns office said in a statement “raised concerns that politics may have played a role in putting taxpayer dollars at risk making this loan guarantee.” ….
White House officials deferred ABC News’ request for comment on this report to the Department of Energy. There, officials told ABC News and iWatch News that it used objective factors in selecting Solyndra. The department released a statement Wednesday on its website blaming changing economics in the industry — including a major push by Chinese firms to drive down solar panel prices — for the company’s collapse along with two other domestic firms. According to the Energy Department, the price for solar products dropped 42 percent in 2011.
I don’t know why anyone would be surprised to learn that Obama was using government money to help his big donors. Isn’t that what he’s been doing with Wall Street since the fiscal crisis began? Even before he was elected, Obama whipped for TARP. If he hadn’t convinced members of the Congressional Black Caucus to vote for it, the bailout bill never would have passed. So now Republicans control the House, and they can’t wait to investigate.
House Energy Committee Chair Fred Upton (R-MI) sent a letter to the White House
which calls on the White House to turn over correspondence between administration officials, Solyndra and its investors….”How did this company, without maybe the best economic plan, all of a sudden get to the head of the line?” Upton told ABC News in an interview this week. “We want to know who made this decision … and we’re not going to stop until we get those answers.”
The White House denies any involvement in the approval of the loan, although members of the administration have enthusiastically and publicly praised it. Yet more neutral observers have been critical of the deal.
While Energy Department officials steadfastly vouched for Solyndra — even after an earlier round of layoffs raised eyebrows — other federal agencies and industry analysts for months questioned the viability of the company. Peter Lynch, a longtime solar industry analyst, told ABC News the company’s fate should have been obvious from the start.
“Here’s the bottom line,” Lynch said. “It costs them $6 to make a unit. They’re selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan.”
Furthermore, OMB considered the loan to be “risky,” according to ABC News.
The White House’s Office of Budget and Management viewed the arrangement as a riskier bet to taxpayers than DOE had. That forced the government to set aside millions more in case of a default, iWatch reported last month.
I guess we’ll have to wait and see what happens, but I can only assume that Republicans in the House are going to be on this like white on rice. They hate Obama and they hate green energy.