Obama Says he Has No Regrets on Wasting $535M on Failed Solar Startup
October 4, 2011 8:15 AM
comment(s) - last by
That's right Mr. President, keep loaning the money, everything is going GREAT!
(Source: Getty Images)
President says high-risk loan was "felt like... a good bet"
This article contains
, which is the opinion of the author.
President Barack Obama has endured scathing criticism in recent weeks for
loaning $535M USD to failed solar startup Solyndra
. The loan came as part of a $40B USD "green" technology stimulus effort. But on September 1, 2011 Solyndra filed Chapter 11 bankruptcy, leaving its 1,000+ employees looking for work and leaving the government staring at an un-recoupable loss.
I. Interview: Obama says "No" regrets on wasting $500M USD
In recent weeks Republicans have lashed out at President Obama for the lost money. They argue it's indicative of the President's overall budget incompetence. They've launched a probe into the loan and the Department of Energy's overall loan infrastructure. States Rep. Michael Burgess (R-Texas), a member of the House Energy panel’s investigative subcommittee, "We need to hear from Secretary Chu and [White House Office of Management and Budget Director Jack] Lew to fill in some of the blanks. The buck has to stop someplace, and presumably it stops with the heads of those agencies."
But the POTUS is holding his ground. In
"Good Morning America", also broadcast online on
Monday, anchor George Stephanopoulos asked President Obama if he regretted the 2009 loan guarantees . He replies, "No I don't. Because if you look at the overall portfolio of loan guarantees that had been provided, overall it’s doing well. And what we always understood is that not every single business is going to succeed in clean energy."
President Obama's administration is accused of rushing the loan guarantee in order to allow it to be announced at the September 2009 groundbreaking of the company's new factory. By February the loan was already under investigation. Still, the President stood firmly behind Solyndra, visiting their California headquarters in early 2010 and touting them as a green energy "leader".
Some emails that have been released indicate some administration members had expressed concerns about the company's financial health -- concerns that were ultimately overruled.
Obama implied America has to
get more China-like
when it comes to loans, in order to compete with the Asian rival. He states. "If we want to compete with China, which is pouring hundreds of billions of dollars in this space, if we want to compete with other countries that are heavily subsidizing industries of the future, we have got to make sure that our guys, here in the United States of America, at least have a shot."
II. Editorial: Business as Usual in Washington, D.C.
To be fair, as bad as the Solyndra loss looks, the previous Bush administration spent many times that essentially paying off the losses of the American International Group (
), which it built up from taking on risky investments pre-recession. AIG received over $127B USD [
] and sent over $100B USD overseas to banks it owed money to.
Thus perhaps the Solyndra debacle is more of a testament to how things are run in Washington no matter which party is in charge, rather than a sign that President Obama is somehow exceptional or different, for better or worse. Both parties talk about balancing the budget, but it's a matter of public record that in recent years both parties have overspent, committing to risky investments and troubled assets.
That's not to say what the Obama administration did here was right by conservative fiscal standards. As the old saying goes, two wrongs don't make a right. But if there's someone who offers an alternative to this kind of spending they're likely not in Washington, D.C. -- or at least likely not very popular there among either party.
These kinds of wastes are particularly sad, as they come at a time when proud American science projects are being shuttered due of lack of funds. America recently
closed the world's second largest particle accelerator
, because the government claimed it couldn't find $100M USD out of the $3.4T USD budget to pay for the accelerator's annual operating costs. The AIG funding could have paid for over 1,000 years of operation. The Solyndra funds could have extended the life of the accelerator 5 years.
One thing's for sure when it comes to Solyndra, though -- President Obama isn't going to say sorry for what happened.
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RE: At least he's honest for once...
10/4/2011 10:18:29 AM
Correct. Private banks don't hit homeruns with every loan they issue. Although whether the risk is absorbed in interest remains to be seen. Wasn't that part of the housing market collapse, interest too low on high risk mortgages?
RE: At least he's honest for once...
10/4/2011 11:18:22 AM
No, the problem with the mortgage crisis was the sheer volume of mortgages that had little equity and no insurance was greater than the reserves held in the banks.
The government absorbed the risk and propped up the banks long enough to allow them to undertake in the single largest transfer of real world assets into the hands of financial institutions ever. The money is mostly all still there, it's just tied up in physical assets for the time being.
That's the thing about banking, if the government is on your side, you can't lose. The government could have just as easily stopped the first domino from falling (Lehman Brothers), but deliberately chose not to as it was a powerful signal to the remaining banks that they had no choice but to co-operate.
RE: At least he's honest for once...
10/4/2011 11:18:38 AM
Interest was artificially low, when the rates started to rise nobody could pay them. But that is purely a case for poor loan criteria. It generally isn't a good idea to loan someone the money for a 400k dollar house when they only make a measley 35k. The general premise was a "get rich quick" scheme. If you bought the house and made just 1-2 payments and then proceeded to flip it (sell it to someone else for 10-15% more than you paid) then overall you could make a tidy profit. The problem is the people who did this for 2-3 years and go out while it was still good made out like bandits. All the idiots who jumped on that band wagon later on and kept at it like crack addicts still held homes they couldn't pay for when everything imploded. General rule of thumb, if "everyone is starting to do it" then the jig is up and it is time to run like hell in the opposite direction. I remember my co-workers getting their realtor licenses in droves just to speed the process up and cut out middlemen so they could flip more homes quicker. To my amusement they all got burned when shit hit the fan.
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