RNC sees gold in Solyndra
posted at 2:05 pm on September 13, 2011 by Ed Morrissey
The RNC thinks the Solyndra scandal can do what three years of failed economic policies have not — erode Barack Obama’s personal favorability ratings with voters. As I write in my column for The Week, those ratings have remained high for good reason even as his job approval ratings plummet. We have had no personal scandals coming from the Oval Office, and people appreciate the dedication Obama has for his family — which will always buy good will with voters — and neither have his close aides. We have had many controversies in the Obama administration, but nothing that threatened to directly impugn Obama’s integrity … until now:
The Obama administration chose Solyndra as its poster child for this effort. The White House fast-tracked approval for taxpayer-backed loan guarantees. The company received $535 million from the Treasury’s Federal Financing Bank in order to build a new manufacturing facility. Obama himself appearanced at Solyndra touting his green-jobs initiative, while Solyndra insisted as late as this summer that their financial status was strong.
Suddenly, though, Solyndra collapsed, seemingly without warning. Its employees — more than a thousand of them — showed up to work on the last day of August to discover that the company had shut its doors. And just as suddenly, we began to find out that the collapse was not unforeseen after all. Despite the assurances of Solyndra executives to members of Congress, the company’s stock price had fallen drastically over the past two years as questions arose about Solyndra’s competitiveness and financial strength. And its taxpayer-backed expansion didn’t create many new jobs, as Congress noticed in February.
It takes more than a bad bet to make a scandal — but Solyndra has connections all the way to Obama himself. When Solyndra initially applied for taxpayer subsidies, auditors at the Department of Energy questioned Solyndra’s stability. So why did the Obama administration fast-track Solyndra’s application? One reason might be that one of the chief investors in Solyndra is George Kaiser — who also was one of Obama’s campaign bundlers in 2008, raising more than $50,000. Solyndra executives made more than 20 visits to the White House between March 2009 and April 2011. Was it a coincidence that Solyndra ended up with an interest rate from the feds at one-fourth the going rate for green-jobs projects? …
The RNC sees electoral gold in Solyndra. On Monday, the RNC launched an effort to shine a bright light on the president’s connections to Solyndra, which isn’t difficult to do, especially after ABC reported that DoE officials sat in on Solyndra’s board meetings for months before the collapse. Despite having this unprecedented access, the Obama administration did nothing to alert Congress that Solyndra would fail, and in fact, failed to respond when Solyndra executives misrepresented the status of the company to members of Congress.
More has come to light this week in the Solyndra scandal, and more of the media has taken notice of it than just ABC, which has led the news outlets in covering the story. The New York Times’ ClimateWire provides more detail on how Solyndra managed to get its application for government assistance past skeptical auditors:
Solyndra got its first approval from DOE in August 2007, when it scored 88 out of 100 in a technical review. It submitted a full application in August 2008, the memo says.
After President Obama’s election, the Solyndra application made it to an approval committee. But the committee found too many holes, such as the absence of an independent market analysis, to approve it.
DOE hired a consultant to write that analysis, which it received on March 6, 2009. The application proceeded. Eleven days later, it arrived at a more senior approval board that included Energy Secretary Steven Chu. …
The last hurdle was Solyndra’s “credit subsidy cost”: essentially, a measure of how risky the loan was. DOE had given the Office of Management and Budget a figure, according to the Republican memo, but OMB felt DOE had underestimated the riskiness of the loan.
OMB recommended adjustments, which DOE accepted, and the loan guarantee was finalized on Sep. 2, 2009.
This morning, though, Bloomberg says that the DoE was warned in March 2010 by Pricewaterhouse Cooper that Solyndra would collapse — a warning which the Obama administration ignored:
Solyndra LLC’s workers making solar-power panels in a California factory subsidized by U.S. taxpayers showed “the promise of clean energy isn’t just an article of faith,” President Barack Obama said on a visit to the company in May 2010.
Two months before Obama’s visit, accounting firm PricewaterhouseCoopers LLP warned that Solyndra, the recipient of $535 million in federal loan guarantees, had financial troubles deep enough to “raise substantial doubt about its ability to continue as a going concern.”
The Obama administration stood by Solyndra through the auditor’s warning, the abandonment of a planned initial public offering and a last-ditch refinancing where taxpayers took a back seat to new investors. That unwavering commitment has come under increasing scrutiny since the company’s travails culminated in its filing for bankruptcy protection on Sept. 6 and a raid on its headquarters by the Federal Bureau of Investigation two days later.
“People including our government put blinders on and did not want to believe in the obvious,” Jonathan Dorsheimer, an analyst in Boston for Canaccord Genuity Inc. of Vancouver, said in an interview with Bloomberg Government. “The fact that the government chose Solyndra as their white horse is mind- boggling.”
And that wasn’t the only warning, says the Center for Public Integrity:
First signs came in 2008, as Solyndra, then just three years old, pushed ahead with its application for government backing to build a new plant to produce its unique solar panels. An outside rating agency, Fitch, gave Solyndra a B+ credit rating that August. Two months earlier, in June 2008, Dun & Bradstreet issued a credit appraisal of the company. Its assessment: “Fair.”
Those are not top of the line scores. Fitch Ratings spokeswoman Cindy Stoller said she could not discuss the Solyndra review specifically, but said of a B+ rating: “It’s a non-investment grade rating.” She provided a company ratings definition, showing that B+ falls between a “highly speculative” B and “speculative” BB. …
In June 2010, a month after Obama’s visit, Solyndra canceled its IPO . To outsiders, that was clear evidence the company continued to stand on shaky ground.
Soon, its top investors – and the Department of Energy – would rescue it once more.
In February 2011, Kaiser and other investors raised $75 million to push the company forward. At the same time, the DOE refinanced its loan to push back the payoff date. Already, that loan carried a rock bottom interest rate of 1 to 2 percent . Now, the government was giving Solyndra room to breathe.
When Congress came knocking, Solyndra insisted that it was stable, a perception that the Obama administration apparently did nothing to correct despite the DoE’s attendance of Solyndra board meetings:
“Less than two months ago, Mr. Harrison met with us and other Committee members to assure us that Solyndra was in a strong financial position and in no danger of failing,” DeGette and Henry Waxman (D-Calif.) wrote to Republicans  leading the investigation.
“At that time, he said the company was projected to double its revenues in 2011, there was ‘strong demand in the United States’ for its shipments, and the company was expected to double the megawatts of panel production shipped this year. These assurances appear to contrast starkly with his company’s decision to file for bankruptcy last week.”
They closed: “Any thorough examination of the Solyndra loan guarantee should include the opportunity to ask Mr. Harrison about his representations. He did not convey to us the perilous condition of the company and the Committee should know why.”
Well, an even better question would be why the DoE and Secretary Stephen Chu didn’t inform Congress of Solyndra’s financial straits. Harrison has to answer for his own alleged misrepresentations, but the DoE is explicitly accountable to Congress. This looks like an attempt to hide Solyndra’s teetering position at just the time Congress was beginning to question how the firm ended up with more than a half-billion dollars in taxpayer backing.
Small wonder, then, that the RNC sees an opportunity to tie Obama directly to corruption in the Solyndra collapse. However, Reason’s Ronald Bailey offers a little physician-heal-thyself wisdom to the GOP:
In a turn-about-is-fair-play mode, Team Blue flunkies are now crowing that the Bush administration also favored the Solyndra subsidies and that a private investment firm, Madrone Capital Partners, associated with the Walton (Walmart) family also lost money on the deal. The Waltons apparently contribute to Team Red candidates.
Puhleeze! Bluesters and Redsters, y’all are missing the obvious and crucial main point: The federal government had no business subsidizing Solyndra (or any other firm) in the first place. Until you both understand that point, please be quiet.
Did the Bush administration favor Solyndra subsidies? The initial application was approved in August 2008, but no guarantees were issued until the Obama administration took office. Think Progress argues that the Bush DoE promoted the Solyndra application the day before Bush left office “[i]n an effort to show it has done something to support renewable energy” without explaining why that would matter in the least. Bush had nothing to gain, and neither did Republicans, after the shellacking of 2008. Even in their timeline, no money at all changed hands until September 2009 — after auditors had warned the Obama administration about the risk of failure at Solyndra.