When Wall Street Makes Crap Loans, It's a Crisis; When DOE's Steven Chu Does It, It's Green Energy.

Via Instapundit linking to The Fiscal Times comes documentation of just what an easy grader Department of Energy (DOE) Secretary Steven Chu really is. As you'll recall, a while back the Nobel laureate cum bureaucrat was asked by Rep. Paul Broun (R-Ga.) to grade his performance at DOE. Chu's humble response? "There’s always room for improvement, maybe an A-.”

The Fiscal Times' Edward Morrissey writes about the new Government Accountability Office report on the performance of DOE's loan-guarantee program which gave way to Solyndra and other debacles. Suffice it to say, GAO wasn't grading on a curve set by the performance of Obama's cabinet. Snippets:

The GAO looked at the handling of $30 billion outstanding in loan guarantees and future commitments and discovered that the DOE rarely follows its own written procedures for vetting and auditing applications.  In fact, in many cases, the Loan Guarantee Program (LGP) couldn’t even find the data managers needed to administer the loans properly...

In almost every case study investigated by the GAO, important steps got skipped in the reviews that determined whether loan applications would be granted.  In other cases, the documentation was so poor that the GAO couldn’t figure out what the LGP did...

The process had at least an 85 percent failure rate on its process check.  Most people would not associate that level of process accuracy with a grade of A-minus....

With $30 billion in taxpayer money at risk, the DOE under Steven Chu didn’t bother to conduct the reviews it claimed it would on applications for loan guarantees, didn’t keep records of what reviews they did accomplish, and signed off on loans with incomplete documentation and inadequate oversight of the risk.  The result -- perhaps $6.5 billion immediately at risk, according to CBS, and possibly most of the $30 billion.

Morrissey drives home the point that when it comes to lending standards and the vilification of private financial institutions processing mortgages that were either backed or bought up by government-sponsored enterprises, the Obama admin is firmly in the "do as we say, not as we do" camp:

What makes [DOE's] carelessness and irresponsibility so galling – apart from the fact that it involves $30 billion of taxpayer money, of course – is that this is the same administration that is so quick to screech about “irresponsible lending,” at least when others do it. 

Read the whole thing.

Tim Cavanaugh on Chu and Solyndra

Science Correspondent Ronald Bailey's incandescent takes on green energy.

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  • ||

    Working at the GAO has got to be even more dispiriting than working at the CBO. People on both sides at least try to game the CBO, because their official reports get listened to.

    The GAO, no one ever cares about.

  • shrike||

    The GAO gets to supervise Fed audits. That should turn some Ron Paul types on enough to get them to the office.

  • ||

    After consideration, if you compare the GAO to bitching on the Internet that doesn't accomplish anything, I suppose it's true that some people would do it for free.

  • ||

    $30 billion is a small price to pay for all of the Hope&Change;! that we get in return.

  • ||

    OT:

    Reminder - SCOTUS arguments on ObamaCare start Monday, March 26.

  • fish||

    Should we prepare Brackets?

  • ||

    What's the spread?

  • ||

    About $1T at this point.

  • Kwanzaa Cake||

    So essentially, we had no doc loans for green energy even after no doc mortgages predicatably blew up and revealed themselves to be awful ideas. TOP MEN.

  • Bobbsy||

    I have a buddy who half the time says things like this are just Repub. talking points but half the time agrees it is wasteful. Then if I mention the total sums of money spent on an area like green energy or education (maybe in a different conversation) and how wasteful, he'll say that's just because the problems involved are so huge they are hard to fix. Really? After wasting money on something for 50-60 years under dozens of administrations of both parties and it's still broke, we just need to throw more money at it?

  • Fatty Bolger||

    Of course. It's just like the drug war. It'll work eventually! Just need more money... more time... but especially more money...

  • The Government||

    Of course. The very fact that the money spent on these projects failed is proof that we did not spend enough!

  • Hadouken||

    You can't reason someone out of a position they didn't reason themselves into.

  • Socialistic Individual Sparky||

    Alt-Text: Ahhhh, Chu.

  • ||

    bless you.

  • ||

    It's surprising the candidates, in their ruthless quest for government agencies to eliminate, have not reached a "bipartisan" compromise to eliminate GAO.

  • adam||

    GAO is very useful for both parties. They send them out to dig up dirt on the other side's programs.

  • ||

    That's some curve.

  • Realist||

    I don't care what prize he won. He is either an idiot or has no integrity..or both.

  • Raston Bot||

    I guess domestic manufacturing loans were a much easier sell than research grants.

    But somehow Bush got the AIDS loans turned into grants.

  • ||

    The predictable tu quque reflex of the partisan shill.

    Only one thing wrong with it: We're not the tu you seem to think we are.

  • Obi Wan ||

    These are not the TEAMdroids you are looking for...

  • ||

    The process had at least an 85 percent failure rate on its process check.

    When I worked for a bank, an 8.5% (i.e. one tenth what GAO found)error rate in documentation for my loans would have been a firing offence. So would a 3% delinquency rate.

  • Mouth Breather||

    I'm not so sure that the 85% figure is worth getting that excited about. Have you ever filled out forms to submit to the government? It wouldn't surprise me if the failures were things like minor errors (e.g. "did not round to the nearest thousand dollars). Now, I think these federal loan programs shouldn't exist in the first place, but I still sympathize with the lowly worker bees who have to actually assemble these applications at whatever Crony Capitalist company they work for.

  • ||

    It's really depressing that someone as smart as Steven Chu would become a bureaucrat, of all fucking things.

  • Fatty Bolger||

    But he's such a good one! A-!

  • ||

    Actually, it is not at all surprising. Many academics think that their "studies" will make them better at a job than actual administrative experience - you know, like a Harvard Law graduate who thinks he knows enough to run a country.

    Also, an achievement in the field such as economics does not confer actual business smarts.

  • ||

    He went from discovering stuff about subatomic particles to throwing dirty money at Obama's cronies. That is profoundly depressing.

  • ||

    But, but, he's really smart, which means that if America will only follow his and his fellow scientists' instructions and plans to the letter, then everything will be hunky-dory.

    I mean, they're Top Men and he's got a fucking Nobel Prize. Do you have a Nobel? Huh? HUH?

  • ||

    Do you have a Nobel? Huh? HUH?

    3 so far. It's like trying to get out of a CD club with those guys.

  • ||

    Actually, it is not at all surprising. Many academics think that their "studies" will make them better at a job …

    About a year ago I had to deal with a “green” company started by a professor at MIT. The product was essentially a data logger that uploaded “green” energy statistics to a web site. It was obvious to me that the designer had absolutely no experience in actually designing and bringing a product to market. A few simple mouse clicks on the web page would make everything go away. The data logger was replaced 4 times as the firmware was so buggy that a simple syntax error setting the network connections would render the device completely useless. In my experience really smart people with no experience tend to be fools.

  • Scruffy Nerfherder||

    It's a huge ego trip. A scientist becomes Top Dog at the DOE. All of the power to do good is extremely tempting for someone who probably already thinks they know more than everyone else.

  • Mouth Breather||

    Steve Chu might actually know more than anyone else (on an individual basis). But that doesn't mean he knows enough, or that anyone could ever know enough.

  • Jeffersonian||

    He knows a lot about subatomic particles. I still wouldn't trust him to change my car's oil.

  • ||

    Amazing how much it sounds like the book 'Philip Dru: Administrator'.

  • Canman||

    When Wall Street Makes Crap Loans, It's a Crisis; When DOE's Steven Chu Does It, It's Green Energy.

    But with a big enough government, they can both be saved.

  • romulus augustus||

    That's why he gets a pass on this. Someone this smart is obviously too busy to supervise his underlings who made the bad loans. It is only bank CEOs, far dumber and more craven types, who are expected to police the
    activities of their far-flung banking enterprises.

  • Doktor Kapitalism||

    An A- is like a C in Asian.

  • ||

    "In other news, Chu's parents have disowned him."

  • Raston Bot||

    Tiger Mom would've jumped all over his arse for that.

  • Number 2||

    Please! Solyndra was tricked by a predatory lender into taking out government loans it could not afford, right? I mean, isn't that the only reason people go bankrupt?

  • Jeffersonian||

    Wouldn't that make Chu the predatory lender?

  • johnl||

    Doesn't DOE have to skip rational checks? Otherwise, they couldn't make any loans at all. If a project had a business case that penciled out with solid documentation, they would get apital some other way. The program exists to fund sure losers.

  • ||

    Good point.

    Although, many of the greenies funded by Chu had actually raised quite a bit of their own money in the private markets. Definitely including Solyndra.

    What Chu was doing with Solyndra and its other well-capitalized brethren was klepto-corporatism: using government money to enrich either the company's owners, or its creditors. Those companies already had access to capital. Whant Chu did was reduce the cost of their capital (enriching the owners) by protecting the creditors with a government guarantee (enriching the creditors if the company goes under).

  • Neu Mejican (~_ರ)||

    If a project had a business case that penciled out with solid documentation, they would get apital some other way. The program exists to fund sure losers.

    This is close, it seems. These kinds of investment programs are intended for higher risk projects that would not pass muster for other funding sources, but that provide benefit in R&D even if they go south. Some of the research dollars that Carter threw at energy projects that were too expensive at the time are now being implemented as gas-prices make them competitive.

    Government investments are not equivalent to those of banks, nor should they be. imho.

  • ||

    These kinds of investment programs are intended for higher risk projects that would not pass muster for other funding sources, but that provide benefit in R&D even if they go south.

    I will respectfully disagree. These projects are primarily engineering (applied science). The reason these projects can’t get significant private funding is they are not economically plausible from engineering point of view. They are losers for some very fundamental reasons.

    Some of the research dollars that Carter threw at energy projects that were too expensive at the time are now being implemented as gas-prices make them competitive.

    What energy projects would you be referring to?

  • ||

    Neu Mejican, right and wrong. It's true that the government may be the only good source for high risk research projects that "don't pencil out" but which hold promise for long term broad benefits to the nation as a whole. Think NACA (that's NACA not NASA). But if the government is going to make a loan to commercialize a product, even a new cutting edge product, it should "pencil out" and the loan should promise a return commensurate with its risk - look at the relative risks and potential returns between the VC's and DOE in Solyndra and it was obvious DOE was being "cheated" - the risk between them was relatively comparable but their potential returns were not anywhere close to comparable.

  • Rapstallion||

    But he's a scientist!

  • ||

    The American government has spent a few $trillion supporting directly and indirectly financial institutions that made bad loans.

  • pierred||

    As I watched this POS testify before a congressional committee, it was abundantly apparent that he is just a bright tool who merely does what he's told by an Obama Czar.

  • Jeffersonian||

    It's like if the political machine in Chicago had its own Royal Society.

  • ||

    Chu is an object lesson in the fact that a stack of ivory-tower credentials doesn't qualify you to recognize a scam. His handlers better keep him far away from casinos and scientologists.

    -jcr

  • Eduard van Haalen||

    See a loan that's oversized
    See an A minus for a prize
    A grade for Chu

    Sleight of hand and low interest rate
    On a bed of debt they make me wait
    And I wait without Chu

    With or without Chu
    With or without Chu

    These loan details, they make me snore
    You gave it all but I want more
    And I'm waiting for Chu

    With or without Chu
    With or without Chu
    I can't live with or without Chu

    My hands are tied, money I lose
    She got me with nothing to win
    I guess its time to snooze

  • ÁrƄoles de la Ƅarranca||

    Where do they find people like this Chu guy -- it's like he's from another planet or something. He suffers from a severe lack of perspective. Tunnel vision. Wears blinders.

  • ||

    Chu lied to protect the "green" con agenda and he should be prosecuted for the aste of hundreds of billions of taxpayer dollars. Obama is the worst leader in America's history and should be brought to trial for his part in the great "green" scam...

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