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  (Source: cleantechnica.com)
The Obama administration defended a loan of over $500 million to a Silicon Valley-based solar panel company that recently went bankrupt despite warnings

The Obama administration defended a loan of over $500 million to a Silicon Valley-based solar panel company that recently went bankrupt despite warnings, saying that the economy was to blame and that alternative energy investments must carry on regardless. 

According to MSNBC, the government loaned solar panel company Solyndra $535 million in 2009. The move was set to stimulate economic growth through environmentally friendly jobs. But Solyndra recently declared bankruptcy, laying off 1,100 workers. 

Last week, the Federal Bureau of Investigation (FBI) raided Solyndra's headquarters to investigate whether the government was given the wrong idea when it handed over the hefty loan. Emails from government employees were found, and are raising questions about the Obama administration's actions back when Solyndra was given the loan. 

According to The Washington Post, the emails contained warnings from government employees about the viability of Solyndra. Only days before the final approval, an email predicted that the project would run out of money in September 2011 -- which is exactly what happened. 

Another email from government staffers questioned the model the government was using, but said "given the time pressure we are under to sign off on Solyndra, we don't have time to change the model."

Reports state that the White House pushed the loan ahead despite warnings in order to meet political deadlines. That way, Vice President Joe Biden could announce the final approval at the groundbreaking for the new plant two years ago. 

The U.S. Department of Energy's loan office and the White House budget office is defending their decisions, saying that the Solyndra loan was well in place during the final years of President George W. Bush's administration. 

“In fact, by the time the Obama administration took office in late January 2009, the loan programs staff had already established a goal of, and timeline for, issuing the company a conditional loan guarantee commitment in March 2009,” said Jonathan Silver, executive director of energy loan programs.

Much of the Wednesday hearing consisted of "assigning political blame," where Representative Cliff Stearns (R-FL) who is the chairman of the Energy and Commerce subcommittee on oversight and investigations, criticized the Democratic minority for voting against the subpoena documents in regards to the deal. 

“It should not take a financial restructuring, bankruptcy and an F.B.I. raid for my colleagues on the other side of the aisle to put politics aside and join us in our efforts,” said Stearns.

Representative Diana DeGette (D-CO) responded by saying that solar energy is not an issue of Democratic or Republican, but rather the security of American energy innovation in the future. 

Democrats didn't defend Solyndra, but did defend the government's ability to push the solar industry in order to compete with China, which is encouraging solar energy on a large scale. 

Representative Joe Barton (R-TX) added that the U.S. Department of Energy is expected to award billions of dollars more in loan guarantees by the end of this month alone, and questioned its ability to choose those who will receive the loans. 



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Investment?
By lightfoot on 9/14/2011 3:44:24 PM , Rating: 5
quote:
The Obama administration defended a loan of over $500 million ... saying that the economy was to blame and that alternative energy investments must carry on regardless.

The problem with Democrats like Obama is that they don't know the difference between an investment and a hand out.

In order for it to be considered an investment, you need to have an expected rate of return.




RE: Investment?
By fic2 on 9/14/2011 4:33:23 PM , Rating: 2
If an investment company had been foolish enough to put $500M into this company they probably would have ended up with 90% of the stock and control of the company. Gov't is to stupid to even do this. Although to be a little fair - if the gov't had control of the company the result would have been the same or we, the taxpayers, would just keep handing them money.

Wish I could get a $5M gov't loan so that I could go bankrupt on a nice island somewhere.


RE: Investment?
By autoboy on 9/14/2011 5:50:48 PM , Rating: 6
The government was acting like a Venture Capitalist in this case. This company took 1.5 Billion in investment total, and scammed a lot of private venture capitalists as well. You won't hear about those VCs because that's how the economy is supposed to work. VCs are designed to make risky investments as they expect at least a 10X return on their investment. VC's mostly risk the money of wealthy individuals who can afford to lose money on risky investments. Tax rich people more of their money, and they have less to invest in risky deals like solar companies, or Google, or YouTube. Tax them more, ruin the economy, and then the government has to pick up the slack because nobody wants to risk what they have left.

All actions have an equal and opposite reaction. Class warfare causes the wealthy to hold onto their cash for fear of losing it. This causes a downturn in the economy because companies can't get the capital they need to operate, and then the government decides it needs a stimulus to make up for the lack of investment capital so they tax and spend and cause more people to save their money. We've entered a nasty downward spiral. The only thing that will fix it is to loosen their hold on their capital. You can do that by confiscating it or you can loosen their wallets by creating a favorable investment economy. Confiscating it is a one time thing. Eventually you run out of other people's money.

All VC deals are risky so I am not surprised that a lot of people warned them it could be a bad deal. That's the nature of a risky investment. Their credit rating was a B+ which is pretty bad (not even investment grade) but it's pretty normal for a startup to have a bad credit rating. But, in this case it was the government who was doing the investing with your tax $s. I don't think all the hype the right makes about people warning it was a bad investment is warranted. As a VC deal, it was probably normal, as a lot of other VCs were also giving them money.

People on this board have mentioned GM. Those companies at least were less risky than this deal, and a lot more jobs were at stake than 1000. But, people have completely ignored the times the government actually makes $ on their VC deals. You've all heard about Tesla Motors. They also got $500 million and have been successful enough to go public on the stock exchange. I don't know how much the government made on that deal, but not all deals are like this solar deal. Some do succeed. But, IMO the government should never be in the VC business in the first place. It's a complete mess.


RE: Investment?
By Paj on 9/15/2011 7:54:19 AM , Rating: 2
Very well written analysis, and I agree with you.


RE: Investment?
By torpor on 9/15/2011 10:13:13 AM , Rating: 2
+6 needed here. Good concise explanation of where policy is going wrong right now.


RE: Investment?
By Gondor on 9/14/2011 5:00:02 PM , Rating: 2
Article says this was a loan. Aren't loans accompanied by some sort of guarantee (especially loans by the government) ? Bank guarantee or some other kind of collateral.


RE: Investment?
By FITCamaro on 9/14/2011 9:48:40 PM , Rating: 2
If you go bankrupt your debts are wiped out and contracts are null and void. That's the reason for bankruptcy.


RE: Investment?
By johnsmith9875 on 9/15/2011 2:29:13 PM , Rating: 2
Not if its Chapter 7. Some bankruptcies are just deferred loan payback agreements....you pay it back for life.


RE: Investment?
By dark matter on 9/16/2011 2:16:26 AM , Rating: 2
Who pays the loan back? The employee's?

Since when??


RE: Investment?
By dark matter on 9/16/2011 2:16:26 AM , Rating: 2
Who pays the loan back? The employee's?

Since when??


RE: Investment?
By MonkeyPaw on 9/14/2011 5:50:20 PM , Rating: 2
Hey, in his defense, it's hard to keep track of a few hundred million when you're spending 800 billion on "stimulus." This is precisely why I don't see how more government is the answer for anything. Sure, the government has far reaching power, but just look at how easy it is to misplace 1/2 billion dollars. Isn't it funny how we view it as government money and not the people's money? We are so detached, and the stupid politics only drives us away from how our nation is run.


RE: Investment?
By FITCamaro on 9/14/2011 9:51:06 PM , Rating: 2
Actually they don't according to the Constitution.


RE: Investment?
By Reclaimer77 on 9/14/2011 6:08:06 PM , Rating: 1
quote:
The problem with Democrats like Obama is that they don't know the difference between an investment and a hand out.


That or they get it backwards. See it's a terrible "handout" when we give tax breaks or subsidies to industries like oil, which everyone relies on and generates millions in profits and taxes.

But it's an "investment" throwing tax money away on garbage like this lol.


RE: Investment?
By TSS on 9/14/2011 7:10:30 PM , Rating: 1
Subsidies and tax breaks aren't investments. They are handouts. Especially when given to companies that don't even come close to needing them.

Loans are investments. Why? Because you, as a lender, can turn a profit. Subsidies and tax breaks NEVER turn a profit for the government. They help the company turn extra profits which they can then spend on increasing revenue.

This was an investment. Just a really stupid one. But the market runs on lots of stupid people making stupid decisions so the smart people get their money.

In this case, the smart people would be those that shorted this company recently because they already knew 2 years ago it would fail this month.


RE: Investment?
By Reclaimer77 on 9/14/2011 7:27:02 PM , Rating: 2
Do you have ANY idea of what you are talking about?

quote:
They help the company turn extra profits which they can then spend on increasing revenue.


Which leads to, come on you know this one right? It starts with a "G" and rhymes with "oath". GROWTH.

I would love to see you back up your assertion that private sector growth "never" leads to profit for the government. Seeing as how the government pretty much exclusively relies on taxing the private sector for it's "profits".


RE: Investment?
By Firebat5 on 9/14/2011 11:30:57 PM , Rating: 4
quote:
Seeing as how the government pretty much exclusively relies on taxing the private sector for it's "profits".


+1

Government has no money except what it first takes from the private sector. Even if they print money, they are simply taking money from the private sector via inflation.


RE: Investment?
By Paj on 9/15/2011 8:00:11 AM , Rating: 1
lol wut?


RE: Investment?
By Kurz on 9/15/2011 10:06:23 AM , Rating: 4
Government is an insitution that its very survivial depends on the Value of the Curreny and the taxes it can get.

Its only so big because it fed on the private sector.
The people own the money because we are the ones who bring value to it. We are the source of the prosperity for the country not the Government.


RE: Investment?
By dark matter on 9/16/2011 2:18:24 AM , Rating: 2
The people != banks = whom are the true owners of money.


RE: Investment?
By Paj on 9/16/2011 10:39:19 AM , Rating: 2
What about bonds?


RE: Investment?
By Kurz on 9/17/2011 7:53:23 AM , Rating: 2
Government Bonds are another way to acquire funds.


RE: Investment?
By Da W on 9/15/2011 8:38:12 AM , Rating: 2
I don't think republicans fared much better historicaly. Expensive hand out is a "democracy" problem.


RE: Investment?
By johnsmith9875 on 9/15/2011 2:23:39 PM , Rating: 2
The government has been handing out loans by the tens of billions to the nuclear industry and nobody has griped. They have been horrible money losers for the government, though the profits have been privatized so big energy really enjoys all that free tax money.


Foolishness
By Beenthere on 9/14/2011 4:03:46 PM , Rating: 2
...except the car companies paid back their loans. The war on terror is forever so get use to it.

That $500 million could feed a lot of unemployed people or repair a lot of roads.

Giving Bama a pass on these deals is totally foolish. He's a liar and a scammer - like most politicians. The only question is when he'll be convicted and sent to prison like other dirtbag criminal politicians.




RE: Foolishness
By retrospooty on 9/14/2011 4:21:02 PM , Rating: 5
"The only question is when he'll be convicted and sent to prison like other dirtbag criminal politicians. "

To be fair, they are all criminals... We'd have to do that to pretty much everyone in Congress, Reps and Dems.

Wait... We may just be n to something.


RE: Foolishness
By fic2 on 9/14/2011 4:29:02 PM , Rating: 5
The car companies used money borrowed from the gov't to pay back the gov't - i.e. they got a new credit card to pay off the old credit card. They might actually pay back the loans, but don't think that it has happened yet.


RE: Foolishness
By Dorkyman on 9/16/2011 7:22:16 PM , Rating: 2
As I recall GM made a big deal about "paying back" a few months ago. But they were silent on the fact that the US was stuck with billions of dollars worth of stock that was in the pits. If the stock was sold now the loss would be many billions.

Plus, GM got a sweetheart deal from the US about carrying forward losses to offset profits. That deal alone is worth billions.

Who wins? The unions that Messiah anxiously needs to protect (they are a major campaign contributor). Who loses? The American taxpayer.

2012 can't come soon enough for me.


RE: Foolishness
By MrBlastman on 9/14/2011 4:43:48 PM , Rating: 2
Sadly, when you get that far up the ladder and near the top (or at the top), the good old Patomac Two-Step seems to work nearly every time. :-|


RE: Foolishness
By Reclaimer77 on 9/14/2011 6:05:27 PM , Rating: 2
quote:
the good old Patomac Two-Step seems to work nearly every time. :-|


I'm sorry, Mr. President, I don't dance.
-Jack Ryan-


RE: Foolishness
By Samus on 9/14/2011 9:47:10 PM , Rating: 2
The cheapest car in that picture of their parking lot is a tie between a WRX STi and a Lexus IS300. I'll just leave the luxury German auto's alone.

And your telling me there wasn't some sort of corruption there? I wonder how many 6-figure employee's they had. 7-figure? No kidding the FBI is investigating. Amazing they blew through 1.5+ Billion dollars in under TWO years, without actually manufacturing very many products.


RE: Foolishness
By adiposity on 9/15/2011 12:46:13 PM , Rating: 2
quote:
The cheapest car in that picture of their parking lot is a tie between a WRX STi and a Lexus IS300. I'll just leave the luxury German auto's alone.


My friend worked at Solyndra and drove a 1990 Lincoln of color he likes to call "oxidized grey." Of course, he quit about a year ago, when he saw the writing on the wall.


RE: Foolishness
By lolmuly on 9/14/11, Rating: 0
RE: Foolishness
By borismkv on 9/14/2011 5:28:30 PM , Rating: 2
Bank loans, yes. Government loans, usually not. Just consider the people who rack up hundreds of thousands in student loans. There's never any guarantee that it can be paid back at the start. The government assumes the investment will pay off and if it doesn't they just garnish wages and ruin credit (As well as deny any attempts to obtain government clearance)


RE: Foolishness
By borismkv on 9/14/2011 5:28:52 PM , Rating: 2
damn it...replied in the wrong spot :(


RE: Foolishness
By FITCamaro on 9/14/2011 9:41:51 PM , Rating: 1
As another said, they didn't pay back the money. They just took out a different loan to pay back the first one. Plus they will never pay back the money given to them before they went bankrupt.


RE: Foolishness
By Paj on 9/15/2011 8:03:11 AM , Rating: 2
quote:
The war on terror is forever so get use to it.


Especially when you keep arming them!


RE: Foolishness
By johnsmith9875 on 9/15/2011 2:25:30 PM , Rating: 2
This is not a government problem, this is a simple case of corporate theft. Hopefully a CEO and his cronies will soon see the interior walls of a supermax prison, but I doubt it.

Steal $50, go to jail for 20 years.
Steal 50 million, go to jail for 20 days.


RE: Foolishness
By The Raven on 9/15/2011 5:11:27 PM , Rating: 2
Although you might want to frown upon the people at Solyndra like the guy who robs a bank, it is not the same thing.

The difference is that the bank has a vault with the money locked up and the robber has a bomb.

The gov't was HANDING out the money... and Solyndra was unarmed.

The failure is the gov't's. Let's focus here.


Unthinkable?
By masamasa on 9/14/2011 4:38:47 PM , Rating: 2
How about transparent honesty in government? Every government stinks, some just a lot more than others. What irks me the most though is that we, the taxpayers, are left footing the bill and their constant solution is raise taxes.

Government needs an overhaul. It needs to be re-examined, rethought, and needs to introduce a new strategy to eliminate waste, corruption, and the other negatives.




RE: Unthinkable?
By Breathless on 9/14/2011 5:23:23 PM , Rating: 4
Its called term limits... Short ones.
Smaller pay... much smaller. MUCH smaller.

Problem solved.


RE: Unthinkable?
By 91TTZ on 9/16/2011 2:54:02 PM , Rating: 2
Smaller pay? They don't make much money at all for someone in that position.

By the time that you're powerful enough to get into the Senate you're probably raking in millions per year as an executive of a company. And then they become a senator and make only $174,000 a year, which isn't going to pay their bills.

If anything, they need a pay raise so they don't resort to accepting money from lobbyists. And lobbyists should be prohibited by law from giving gifts/compensation to politicians.


RE: Unthinkable?
By Kurz on 9/15/2011 10:20:57 AM , Rating: 2
You are asking Corrupt, Lying, Politicans that care only about the race to be transparent. When their job is to hide information about themselves to the public.


RE: Unthinkable?
By johnsmith9875 on 9/15/2011 2:26:04 PM , Rating: 2
The only corruption in this case is in private enterprise.


RE: Unthinkable?
By Kurz on 9/17/2011 7:54:50 AM , Rating: 2
>.> Who gave out the money in the first place?
The government knew it was a risky investment....


Meh...
By mcnabney on 9/14/2011 3:38:55 PM , Rating: 2
It was two years ago. We just finished bailing out GM, Chrysler, and a slew of banks. I am curious if there was any fraud in misrepresenting future contracts which might have suggested a solid future. Throw it on the pile. What is $500M, a couple weeks in Iraq?




RE: Meh...
By borismkv on 9/14/2011 3:58:45 PM , Rating: 2
More like 2 days. Assuming the cost of the Iraq war has been 100 Billion a year.


RE: Meh...
By Paj on 9/15/2011 8:09:55 AM , Rating: 2
Headline should read '$500 Billion Wasted on War in Iraq; White House was Warned'


RE: Meh...
By johnsmith9875 on 9/15/2011 2:26:48 PM , Rating: 2
War is very profitable for private industry. The kickbacks to congress guarantee we will never ever leave iraq.


RE: Meh...
By Paj on 9/16/2011 10:46:06 AM , Rating: 2
That'd be why the US is rolling in dough then.


sounds bad...
By Ytsejamer1 on 9/14/2011 3:42:39 PM , Rating: 1
$500m is a good chunk of change to be careless with. While this of course reflects poorly on the WH and administration officials, let's keep in mind we're still giving $4-$8b (BILLION) per year in subsidies to oil companies, roughly $70b in tax breaks to corporations and wealthy individuals who pay a lower tax rate than most of the population (or if you're GE, you pay nothing!), etc.

Not to make this overly political...but my point is that we waste a ton more where it shouldn't be. I'd rather throw money at upstart companies who are trying to get the renewable energy industry going. But bad companies are always bad bets and this certainly doesn't help anyone's view of the current administration...mine included.




RE: sounds bad...
By MrBlastman on 9/14/2011 4:40:43 PM , Rating: 2
The dimwittedness of this all goes beyond the Obama or even the Bush administration. It goes all the way to the heart of our political system and the parties within it. The flagrant way they throw money at a "problem" or a "cause" without ever thinking it through is putrescent.

They do this all through political motivations and not intellectual or logical though. The shortsightedness of it all is amazing, yet, we the voting public allow it to continue every time we cast our almighty, blood-earned vote.

The thing that bugs me the most is how we toss money at things such as Solar Power because as some politicians argue, it is the "future" towards our energy freedom, yet completely fail to understand the technology. Some things bother me to the extreme, such as reliance on lead-acid battery technology for energy storage when there are far better mechanical storage solutions (which are much less wasteful too) or even trying to make space-based power a reality.

No, we do none of these and instead reward companies for following the status-quo, or doing just slightly "better," when in reality, companies like this one figure out they can get the free money and try to bilk us for as much and as long as they can.


RE: sounds bad...
By Reclaimer77 on 9/14/11, Rating: 0
RE: sounds bad...
By autoboy on 9/14/2011 5:20:21 PM , Rating: 3
The subsidies you speak of are simply way of saying tax incentives, and the tax breaks the oil companies get are the same tax breaks that all companies who manufacture equipment get. Are you saying that we should treat oil companies differently than all other companies who manufacture heavy equipment? Like they are special because you think they are evil so they are the only companies in the US that DON'T get to write off heavy equipment? Not only is that morally wrong, but it's also probably unconstitutional so no matter how much you cry about it, you can't treat one group of people differently than another. Thanks for regurgitating talking points without understanding them one bit.

Agree we need to get rid of all the corporate welfare, but the left seems to be even less interested in it than the right. The reason these companies get tax breaks, is because our tax code is a political tool for politicians. Right now I've only heard Republicans and Libertarians attempt to change the tax code to a system that won't allow politicians to use it for political favors. Right now there is a BLACK Republican (yeah repubs are all racist right?) running for President who is proposing an uncorruptable 9-9-9 plan for taxes. 9% corporate, 9% income, and 9% federal sales tax. Keep this tax code, make it so there are no exemptions, and nobody can use it for political posturing.


GM & Wall Street Bailout anyone?
By krazyderek on 9/14/2011 4:11:18 PM , Rating: 3
It's obviously much more responsible to invest in companies after they've gone bankrupt and proven they have no place in the market.




Alternative Energy investment....
By Tyndel on 9/15/2011 4:21:18 AM , Rating: 2
I wonder how many nuclear power plants could have been built with 1.4 trillion dollars. How many construction jobs and tech jobs created how much extra power could have been sold to Mexico and Canada. How much cheaper electricity would have been so small businesses barely getting by could breathe a little and heating and cooling wouldn't put a strain on the grid. How much more viable would electric cars be(maybe we wouldn't have to pay people to buy them?). Maybe our farmers would grow corn to eat again and prices of food would go down at the grocery store. Maybe we could update our 50-70s designed reactors oh my bad we would rather burn coal and stay uneducated.... nukes bad.

Its a shame we spent so much money and didn't even get a product back. Heck we would have gotten more jobs created just building a wall on our boarders then what we got and we would have been able to say look we purchased this with our tax/debt dollars.

Up the tariffs on imports please cause we are tired of giving companies gov dollars to build factories in China.




for $500M we got..
By rvd2008 on 9/15/2011 10:11:11 AM , Rating: 2
nice and shiny office




Next Big Scam
By btc909 on 9/15/2011 11:31:20 AM , Rating: 2
And I thought the next big scam was going to be Solar Panel Manufactures. Oh well, another one will come along. Maybe commercial space flight.




By johnsmith9875 on 9/15/2011 2:22:43 PM , Rating: 2
Than government. Obviously the money was stolen / wasted, and not by unions, not by lazy government workers, but by the rich CEO and executives you people all worship like gods.

THEFT, thank goodness the FBI kicked down the door and took control. The government is one investor that you don't want to mess with, unlike regular VC people who have little recourse other than lawsuits.




Ron Paul or bust
By The Raven on 9/15/2011 5:35:03 PM , Rating: 2
quote:
Representative Diana DeGette (D-CO) responded by saying that solar energy is not an issue of Democratic or Republican, but rather the security of American energy innovation in the future.

You could change this to any other issue with either of these two moron driven political parties with the same effect...

After wasting billions on Iraq (and other foreign entanglements), I could just see (or have seen ) republican X using the same deflection technique...
quote:
Representative X (R-CO) responded by saying that Iraq is not an issue of Democratic or Republican, but rather the security of American people in the future.


Want real change? For my part, Ron Paul gets my vote as a republican or I am voting libertarian. I hope many others do the same.




Curious
By borismkv on 9/16/2011 1:02:22 PM , Rating: 2
I'm kinda curious to see how much of the funding beyond the money given by the government was raised *after* Obama's marketing spree for this type of investment.




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