Obama touts Solyndra as having been a “good bet” as new e-mails reveal it, er, wasn’t a good bet
posted at 5:27 pm on October 3, 2011 by Allahpundit
His defense, essentially, is that some loans are bound to go bust. Banks face the same hard reality, of course, and unlike the Energy Department’s green-loans program, they’re not limited to lending to risky clean-energy businesses. In that case, I wonder how many busted loans he’s prepared to tolerate in the name of trying to jumpstart allegedly worthy projects. Just this morning, the Times came out with a new story about a DOE loan (this one thankfully a bit smaller than Solyndra’s) to a geothermal firm in Nevada that’s now struggling with debt after a series of technological setbacks. The DOE apparently knew all about that those difficulties last year but still agreed to partly guarantee a $98.5 million loan to the firm in September 2010. And wouldn’t you know it, the firm has a lot of powerful supporters on both sides of the aisle in Nevada politics, led by Harry Reid.
How many more?
“No I don’t,” the president said when asked directly if he regretted the $535 billion federal loan guarantee in 2009. “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.”…
“[The loan] went through the regular review process and people felt like this was a good bet,” he added.
True, some DOE people apparently did think it was a good bet, including the Nobel-winner at the very top who might be a great physicist but might not be such a swift investor with your money. How good a bet was it really, though? Well, according to new e-mails released today, apparently it was so good that among those questioning the wisdom of the Energy Department’s green-loans program in 2009 was … one of Solyndra’s own investors.
The new documents show a private investor in Solyndra questioning why the federal government, back in September 2009, agreed to put up so much money — $535 million — to help the company expand given the questions about its financial future.
“One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million,” the investor, Brad Jones, an executive at Redpoint Ventures, wrote in December 2009 to Lawrence H. Summers, then the president’s chief economic advisor, referring to Solyndra. “While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”…
“The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much,” Mr. Jones wrote…
“I relate well to your view that gov is a crappy vc,” Mr. Summers wrote, using a shorthand for venture capitalist. “But suppose we think there are all kinds of externalities to renewable investments,” Mr. Summers continued. “What should we do?”
Incidentally, the e-mails released today were part of a memorandum circulated by Democrats, not Republicans. We’ve reached the point of damage control with this scandal where Obama’s party is now providing evidence of government incompetence as a defense to the more damning charge of possible cronyism using taxpayer dollars. The White House and DOE weren’t corrupt, throwing money into a sinkhole to help out a big donor, you see. They were just … really stupid. And some people at OMB, at least, seemed to know it:
A March 2010 exchange between two officials of the Office of Management and Budget (OMB) reveals deep skepticism about the Department of Energy staffers in charge of the loan program.
“DOE’s ‘system’ for monitoring loans is quite problematic (barely any review of materials submitted, no synthesis for program management, inherent conflicts in origination team members monitoring the deals they structured, etc) and does not seem to be a program priority,” one OMB staffer emailed on March 1, 2010…
An OMB official seemed to think Solyndra may be the tip of the iceberg. “(W)hat’s terrifying is that after looking at some of the ones that came next, this one started to look better,” the official emailed. “Bad days are coming.”…
Wrote another: “I am increasingly worried that [Obama’s] visit [to Solyndra in May 2010] could prove embarrassing to the Administration in the not too distant future, given 1) what we just heard today from DOE that Solyndra is delaying their IPO at least until the end of the year, and 2) what the auditors said about Solyndra making it through the year absent new financing.”
Another OMB official joked(?) a month before Obama’s visit that he hoped the company didn’t default before The One showed up. That’s how rickety their business was at the time, and yet somehow the company still received a restructuring of its DOE loan — which may end up costing taxpayers as much as $168 million — later that year. But then, none of this comes as a surprise: We already knew that OMB officials were rushed by the White House to sign off on the Solyndra loan in time for The One’s big photo op at the plant. And it was an OMB official who warned in January of this year, shortly after the loan was restructured, that O would have an awfully hard time explaining why the administration had doubled down on what already looked a lot like a bad loan by giving them a second chance on more favorable terms. OMB seems to have had a lot< of reservations about this green-loan program generally, not just Solyndra's specifically. And yet, as recently as Friday, a whole new bunch of green loans worth $5 billion were pushed out the door right before the program’s congressional authorization expired. Like I said up top: How many more will go bust?
Update: One other e-mail I forgot to mention. How come this guy could figure out that a big photo op at Solyndra was a very bad idea given the company’s looming financial implosion but the best and the brightest in the White House couldn’t?
“A number of us are concerned that the president is visiting Solyndra,” Steve Westly, managing partner of Westly Group, wrote in an e-mail to Obama senior adviser Valerie Jarrett on May 24, 2010, a day before the president’s well publicized trip to Solyndra. “[T]here is an increasing concern about the company because their auditors, Coopers and Lybrand, have issued a ‘going concern’ letter … Many of us believe the company’s cost structure will make it difficult for them to survive long term.”
Westly went on to ask Jarrett if he could check with the Energy Department to make sure its officials were comfortable with Solyndra’s finances.
“I just want to help protect the president from anything that could result in negative or unfair press,” Westly wrote. “If it’s too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”
Seven months of financial flailing later, despite having violated the terms of its original federal loan, Solyndra got its restructuring from the DOE.