Government Waste

Solyndra: A Big Story for the Wrong Reasons

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Solyndra's Ben Bierman and Chris Gronet welcome benefactor Barack Obama.

A bankrupt green energy company will create both real and political problems for President Obama today, as the U.S. House of Representatives continues its investigation into how Fremont, California-based Solyndra LLC used its access to the president and his inner circle in order to secure and lose half a billion taxpayer dollars. 

Until last Thursday, the investigation into Solyndra had been coming only from the legislative branch of the federal government. In February, House Energy and Commerce Committee Chairman Fred Upton (R-Michigan ) opened a probe into a $535-million loan guarantee awarded to the maker of innovative solar panels by the Obama Department of Energy. That loan followed multiple visits to the White House by Solyndra officers and by George Kaiser, a Tulsa, Oklahoma billionaire and Obama fundraiser. Late in August Solyndra announced it would declare bankruptcy. 

Last week, following a cycle of negative news coverage and revelations about the company's close ties to the president, the executive branch response began with a raid on Solyndra's headquarters by the Federal Bureau of Investigation and the Department of Energy's Inspector General. News coverage highlighting DoE Inspector General Gregory Friedman's hawkishness about insufficient due diligence in making lending decisions suggests the Obama Administration's image management apparatus is making an effort to show the president takes the Solyndra scandal seriously.

Because of the depth and documentation of Obama's relationship with Solyndra, as well as new House revelations that White House officials pressed the Energy Department to expedite its lending to the troubled company, the effort to distance him from the scandal will almost certainly fail. Obama did a photo opp at Solyndra headquarters last year and has emphasized the company's cylindrical solar panels in his propaganda for green energy subsidies. Kaiser, whose Argonaut Ventures owned a 35 percent stake in Solyndra, bundled nearly $100,000 for Obama's 2008 campaign. Solyndra executives met with White House executives about 20 times. In the period before and just after the March 2009 loan guarantee (Solyndra eventually borrowed and blew through $527 million), Kaiser met with senior advisors Austan Goolsbee, Pete Rouse and Valerie Jarrett; chief of staff Rahm Emanuel, and others. 

FBI and Energy both report to the president. While suspicion of overt crime could have triggered the executive-branch investigation, the involvement of these two departments clouds what had been a straightforward congressional investigation. In addition to the risk that Obama appointees can steer investigators away from evidence harmful to the president, the involvement of a competing presidential investigation detracts from what has so far been very effective work by the House. 

Shortly after Solyndra announced its bankruptcy, I made the none-too-daring prediction that this scandal would prove to be durable. The figure of a half-billion dollars is easy to understand yet still incomprehensibly large. There is no distance between the president and the scandal. And the company name is memorably goofy enough that there's no need to add the lame suffix "-gate." 

Ron Bailey remarked earlier that Solyndra is already getting shoehorned into Republocrat he-said-she-said. Although it would be a shame if this lesson in the folly of subsidizing industry degenerated into simple point-scoring, it's also true that in this case it is because of competitive politics that we know about the scandal at all. Solyndra's dim financial prospects, its dubious technology and its unlikely survival as anything other than a ward of the state were known before the loan was approved. (In a Business Insider article, Bruce Krasting says the company's only valuable item may be its net operating loss.) Yet in the period after that loan, Solyndra continued to behave as a green-energy market leader, even attempting an initial public offering. Who knows how much longer the company could have gone on wasting public money, deluding investors and delaying formal bankruptcy, if not for Upton's investigation? 

It's also clear that "contextualizing" the Solyndra scandal in the way Bailey regretted (by noting that Republicans do it too) only makes the story more infuriating. While Solyndra will be useful as a campaign issue, the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into. Once this violation of common sense has taken place, the story can only end, as it appears to have ended here, in suffering and crime. That's not a corruption of the system. It's the natural way the system works. 

NEXT: California Mothers in Prison May be Going Home Soon

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    1. Good Morning, OM!

  1. “the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into.”

    Well duh, it’s not *my* money I’m risking to win the future.

    1. This right here is great TC. Knowing that you are neve much smarter than the market is one of the most important things an investor can learn.

      I will sell some winners tomorrow.

      1. sed “s:neve:neva”

        1. you non-slash-using contrarian.

  2. While Solyndra will be useful as a campaign issue, the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into.

    The Statists will counter with the argument that government is, at least, “seeding” promising technologies that will relaunch the country into a new Golden Age of progress and taxable revenue, just like the government did back in…

    1. Never forget Tang!

        1. Scratch ‘n’ Sniff!

  3. Sadly this hasn’t deterred the green tech crowd. On the contrary, this only makes them even more hostile to capitalism. Over on the HuffPo the consensus in the comment section was that the government needs to nationalize green energy a la the Manhattan Project.

    1. Re: A Serious Man,

      Over on the HuffPo the consensus in the comment section was that the government needs to nationalize green energy a la the Manhattan Project.

      You can’t really expect any better from the economics-illiterate boobs. Yesterday, Bob Beckel (one of the host of The Five, or Four Neo-cons And A Baby) said that Solyndra went south because “we let the rest of the world overtake us in the race for what will be the future of technological advancement!”

      Nothing to do with mismanagement, bad business model, lack of markets… Nah.

  4. The best part is that there are companies out there that are competing in the market and receiving private investment without having to kiss someone’s shinny ass. I don’t believe solar panels can compete with traditional technologies, but at least some don’t suck up taxpayer money into a black hole.

    http://www.nanosolar.com/

    1. I love the “without subsidies” part but of course the customer will still reap subsidies. Also, I’m not a fan of the buzzword “nano”….

      1. Not to get too pedantically “no true scotsman” but they are connected with the fraunhoefer labs, which of course is a big german government subsidy. NONETHELESS, the technology looks actually good and maybe even a consumer sucess is the REAL market (unlike solyndra).

        1. If other nations want to subsidize America, who’s going to complain?

    2. Shinny ass?!

      “Raaaaacist!!”

      1. I think he was looking for the “k” key! Which would make it a perfectly appropriate PC and non-threatening insult.

  5. We are all solar tycoons now.

    1. Hold on, let me get my monocle

      1. “Monocle”! That’s funny!

        1. Don’t laugh. The monocle is a great device for concentrating solar energy.

  6. And the company name is memorably goofy enough that there’s no need to add the lame suffix “-gate.”

    50,000 search results for “Solyndragate” can’t be wrong. Well, they can be wrong, but they can’t be stopped. There’ll be a million by next Tuesday.

    “Solyndra” pisses me off more than “-gate” does. ’90s-ass grapheme-juggling stripper/drug names bought from company-naming companies are as ugly as…the drugged strippers names like that rightfully belong to.
    Solyndra dances to “Pour Some Sugar on Me,” because mama did.

    1. Solargate? Sungate? Kaisergate?

    2. u mad bro?

      It’s just a name.

      1. It’s just a name.

        Maybe so, but now ? is famous!*

        *At H&R, anyway.**

        ** For a day.

    3. It’s all about the synergies man

    4. I love “Solyndra” because it makes their employees solyndrites.

  7. Off-topic: Pauly Krugnuts says fuck you to everyone hurt by 9/11.

    1. I’m not going to allow comments on this post, for obvious reasons.

      Huh?

    2. Maybe the only column where I’ve been even close to agreeing with Krugnutz!

  8. Halliburton!

    Enron!

    The Carlyle Group!

    Why, the media will cover Solyndra with the same ferocity displayed in covering Sandy Berger’s National Archives misadventure!

    Remember how aggressive and non-stop the Media was a few months back when Al Gore admitted that ethanol is BS and only supported it in 2000 just for votes?

    And on a completely unrelated matter, can anyone tell me when the media stopped caring about “our standing in the world” or when championing books casting a negative light on the CiC became icky?

    Solyndra? Yeah, it’s important and all. But isn’t it more pressing that we comb through Sarah Palin’s emails to find dangling modifiers?

    1. Kind of like the Newscorp phone snooping was of infinitely more import and significance that the BAFT directed strawman gun purchasing pipleline to Mexico or the Atlanta school teachers cheating issue.

      We have to keep things in their proper perspective, you know.

      1. That’ BATF not BAFT

  9. So, a bribe of a hundred grand is enough to stick the taxpayers with half a billion dollars in bad loans?

    Hell, that’s an incredible ROI for people who have no scruples. Beats drugs all to hell.

    -jcr

    1. Don’t forget your dignity. Hundred grand plus your dignity.

      1. You can buy a lot of dignity for half a billion dollars.

        Goldman Sachs got billions of taxpayer money and I doubt if any of the 5 star hotels and private clubs turn any of Goldman’s board of directors away.

        1. Goldman Sachs got billions of taxpayer money and I doubt if any of the 5 star hotels and private clubs turn any of Goldman’s board of directors away.

          ** to Goldman Sachs director **

          Of course, Sir. But we must insist you enter through via delivery dock. We’re certain you understand.

          1. ** to Five-Star Desk Clerk **

            “Through via”? That does it, Luigi. I’m demoting you to Four-Star!

  10. Why do these left wingers at huffington post, Tony etc. not put their money where their mouthes are ?

    If these things are a sure bet for the future, why do they not pool their capital and fund these ventures ? The people that support these things overwhelmingly proclaim that they are generally better than the rest of the population, so it cannot be a lack of money that is preventing them.

    1. I equate it to my CA friend who always seems to need twenty bucks when we go out somewhere, but wants to lecture me on economics as well.

      1. I give your friend the benefit of the doubt and assume he is a student struggling for money.

        Karl Marx on the other had could not even provide for his own family, yet to this day people still believe he had the answers to the global economy.

        1. Economy of scale, biotches!

        2. He had the answer as to how to provide for his family –
          From each (someone else) according to his ability
          To each (him and his family) according to his need

      2. Only 20 Obama-bucks? Are you going out for soylent green crackers?

  11. Worse and worse: New e-mails show White House rushed OMB to approve Solyndra loan
    …The August 2009 e-mails, released toThe 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 the e-mails, which were provided by Republican congressional investigators?

    One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.”

    “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 August 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.”?

    The White House pressure may have had a “tangible impact” on OMB’s risk assessment of the loan, the congressional investigators concluded.

    In one e-mail, an OMB staff member questioned whether the review team was using the best model for determining the financial risk to taxpayers in evaluating the Solyndra deal.

    “[G]iven the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model,” the staffer wrote….

  12. alt-text should be “Rise from the Dead! RISE!!!”

    1. LOL. That’s a Satanic altar if I ever saw one.

  13. “While Solyndra will be useful as a campaign issue, the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into”

    In short, the correct takeaway is that government directed industrial policy never works.

  14. While Solyndra will be useful as a campaign issue, the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into.

    Solyndra received over $1 Billion in VC cash.

    1. Was this before or after they became a favorite of the government and the government favored yellow and blue technology over no yellow and blue technology through regulations?

    2. VC cash? Son, Charlie don’t subsidize!

    3. ANd how much would they get now?

      Right asshole, Obama “put your money into companies that private investors are unwilling to put their own money into.”

      ARE, fuckwit, not WERE, ARE.

      FIND ME A VC WILLING TO PUT MONEY INTO IT NOW YOU STUPID PEDANTIC FUCK.

  15. “Once this violation of common sense has taken place, the story can only end, as it appears to have ended here, in suffering and crime. That’s not a corruption of the system. It’s the natural way the system works.”

    Government supporting companies is the corruption of the system. Government support is determined by politics not by the economics of the enterprise. The excuse for government investment is that the market will not support the enterprise, but if market will not support it then it likely is a failure already.

  16. Would it be cynical to wonder if the executive branch “investigation” was just an excuse to get access to the facility to discover and hide any truly damning evidence? After Gunwalker, I don’t think there’s really anything I would put past DoJ, and there was never anything I would put past DHS.

  17. Kaiser met with senior advisors Austan Goolsbee, Pete Rouse and Valerie Jarrett; chief of staff Rahm Emanuel, and others.

    That reads like a Who’s Who of corrupt/incompetent Chicagoans.

    The sad thing is it will trigger a return to corrupt Texans in the White House. America refuses to learn.

  18. This loan amounts to only 1% of my jobs plan, AJA.

    When all my half a billion dancing is through, I run to you.

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