Print 60 comment(s) - last by Kurz.. on Sep 17 at 7:54 AM

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. 

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By lightfoot on 9/14/2011 3:44:24 PM , Rating: 5
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 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
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?

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
Seeing as how the government pretty much exclusively relies on taxing the private sector for it's "profits".


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.

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

Most Popular ArticlesSmartphone Screen Protectors – What To Look For
September 21, 2016, 9:33 AM
UN Meeting to Tackle Antimicrobial Resistance
September 21, 2016, 9:52 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Update: Problem-Free Galaxy Note7s CPSC Approved
September 22, 2016, 5:30 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki