Wednesday, September 14, 2011

Great moments in the history of crony capitalism (an update)

A follow-up to the politically-connected solar firm, Solyndra, that received over $500 million in loan guarantees at near-zero interest rates (far below other similar projects that received tax-payer support) and which went bankrupt and which also had their offices raided by the FBI last week. We blogged about this initially, here.

From the Washington Times Washington Post:

The Obama White House tried to rush federal reviewers for a decision on a nearly half-billion-dollar loan to the solar-panel manufacturer Solyndra so Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory, newly obtained e-mails show.

The August 2009 e-mails, released to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.

“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”

White House officials said Tuesday that no one in the administration tried to influence the OMB decision on the loan. They stressed that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.

Solyndra was far from being a solid bet. From our original post:

But records show the advantageous terms came in spite of red flags about the risks of investing in Solyndra. In 2008, as the loan agreement was moving forward, an outside rating agency gave the deal with a B+ grade, a less than optimum score, according to records obtained by iWatch and ABC under the Freedom of Information Act. That same year, the records show, Dun & Bradstreet assigned the company's credit appraisal as "fair."

Analysts say there were warning signs about the deal from the start, when Obama's Department of Energy pitched its first energy loan guarantee as a symbol of the expanding green tech movement. Yet the administration repeatedly took steps that would seem to benefit Solyndra: the Department of Energy announced its loan commitment before all due diligence was completed -- later raising concerns from auditors; the president made a personal visit to tout the company's prospects; and the department agreed to grant Solyndra fast-track approval.

And this:

Questions have long persisted about why Obama chose Solyndra to be the first green energy company to benefit from the federal loans program. In May, iWatch and ABC reported that the Energy Department announced its commitment to back Solyndra without first receiving full marketing and legal reviews. That shortcut drew criticism from government auditors, who accused DOE of favoring some applicants, like Solyndra, over others.

And Obama's Office of Budget and Management viewed the deal as riskier to taxpayers than DOE had, iWatch found.

And as for that "active interest", that just might be George Kaiser, an Oklahoma billionaire and 2008 Obama campaign bundler who owned 39% of Solyndra's parent company.

But apparently this isn't at all late-breaking news:

The House (Energy and Commerce) committee has been investigating Solyndra’s dealings with the Energy Department for six months. In July , subcommittee members subpoenaed White House documents related to the guarantee.

Questions about the selection process were first raised in a July 2010 audit by the Government Accountability Office. It concluded that the Energy Department “lacked appropriate tools for assessing the progress” of the loan program and that the department treated applicants inconsistently, “favoring some applicants and disadvantaging others.”

House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Rep. Cliff Stearns (R-Fla.), chairman of that panel’s oversight and investigations subcommittee, said last week that the FBI raid confirmed their belief that the “darling” of Obama’s green-jobs program was a “bad bet” from the beginning.

“Solyndra was the hallmark of the President’s green jobs program and widely promoted by the administration as a stimulus success story, right up until its bankruptcy and FBI raid,” Upton and Stearns said in a statement on Tuesday. “Let’s learn the lessons of Solyndra before another dollar goes out the door.”

Rep. Henry A. Waxman (Calif.) and Rep. Diana DeGette (Colo.) — Democrats on the committee who had once defended the choice of Solyndra — last week also questioned whether they had been misled. In a letter, they wrote that Solyndra chief executive Brian Harrison “did not convey to us the perilous condition of the company, and the Committee should know why. ”

Over a half-billion dollars of tax-payer money to an Obama donor only to prove that solar energy just isn't yet competitive on the open market is an expensive way to learn a lesson in the free market let alone that of political ethics.


Kelly the little black dog said...

This is such a sad waste.

JBP said...

that is $500 Million, not $500 Billion...still a huge waste of money

Dean said...

ugh. Corrected. Thanks, JB P.

Hey, Kelly. Thanks for stopping by.

Harrison said...

Hey, but that photo op was IMPORTANT!

K T Cat said...