Good news: Solyndra violated terms of Energy Dep’t loan — but loan was restructured anyway
posted at 8:40 pm on September 29, 2011 by Allahpundit
Why not? If we’re going to reward failure, we might as well stick with it to the bitter end. Good money after bad:
The U.S. Department of Energy learned in December that Solyndra was violating its federal loan deal, but the agency changed the loan terms to allow the solar company to continue receiving taxpayer funds, federal officials confirmed Wednesday…
The company was unable on Dec. 1 to make its first $5 million payment into a special reserve fund, which was required under the loan terms and designed to help protect taxpayers.
Congressional investigators have questioned why the Obama administration agreed to help the company in late 2010 when it was warned that the firm was at risk of collapse. Internal e-mails show federal reviewers initially estimated they could save the taxpayers as much as $168 million by letting the company go under in December 2010, rather than resuscitating it and allowing it to draw down more federal money.
This was the same loan restructuring, mind you, in which the Department of Energy agreed to subordinate their claim as creditors to that of private investors who ended up plowing another $75 million into Solyndra. (A decision which, mind you, might have been illegal.) The Journal has more on how Solyndra violated the terms of the loan, but I want to highlight this bit tucked away at the bottom of the story almost as an aside. News is breaking tonight that the FBI is investigating the company for possible accounting fraud in how it represented its financials to the feds, but (a) we already suspected that the FBI was looking into that and (b) it’s unclear to me why our best and brightest couldn’t figure out that Solyndra was lying given what they already knew about the business. Quote:
There are also questions about whether the Obama administration should have known about Solyndra’s problems even before the loan guarantee was made. In a previously undisclosed Sept. 9 report, the Congressional Research Service said that by the time of the September 2009 guarantee one of the company’s key advantages—the fact it didn’t use high-priced polysilicon as competitors did—had disappeared.
Polysilicon cost more than $400 per kilogram in 2008 but dropped to slightly more than $50 per kilogram in September 2009, the report said.
The company’s competitive advantage over Chinese solar companies had evaporated more than a year before they sought the loan restructuring and more than six months before Obama showed up at the plant for his green-energy photo op and yet, somehow, here we are. But look on the bright side: They got an awesome new factory out of the deal, replete with robots that whistle Disney tunes and “spa-like showers with liquid-crystal displays of the water temperature.” Why they needed extra production space when no one was buying their overpriced solar units, I simply don’t know, but having already once procured a half-billion-dollar federal loan, who can blame them for thinking there’d be more taxpayer money to keep them afloat if need be?