Solyndra Scandal Gets Even Worse for Obama Administration

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Obama enjoying his Green Jobs delusions

Two weeks ago, the solar panel manufacturer Solyndra, heavily subsidized by the Feds, went bankrupt sticking taxpayers with $535 million in loan guarantees. My prescient colleague Tim Cavanaugh notes earlier today:

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. …

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." 

And durable it is. The Washington Post is reporting on the front page today that a collection of internal emails shows that the White House pushed the Office of Management and Budget to ignore its standard vetting procedures and sign off on the project:

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 Silicon Valley company, a centerpiece in President Obama's initiative to develop clean energy technologies, had been tentatively approved for the loan by the Energy Department but was awaiting a final financial review by the Office of Management and Budget. …

Solyndra was a favorite of the administration until two weeks ago, when the company abruptly shuttered its factory and filed for bankruptcy court protection, leaving 1,100 people out of work and taxpayers on the hook for the loans. Last week, FBI agents searched the company's Silicon Valley headquarters in a raid that Miller said appeared linked to the loan guarantee.

In one e-mail, an assistant to Rahm Emanuel, then White House chief of staff, wrote on Aug. 31, 2009, to OMB about the upcoming Biden announcement on Solyndra and asked whether "there is anything we can help speed along on OMB side."

An OMB staff member responded: "I would prefer that this announcement be postponed. .?.?. This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right."

In another message, a White House staff member wrote that officials were "walking a fine line with Solyndra needing to begin notifying investors to fly in" for the groundbreaking. It stressed that "this OMB piece" of the review was not final and pointed out that if word of the groundbreaking leaked to the public prematurely, that would "leave us in an awkward place."

The e-mails also raise questions about whether the administration should have foreseen financial trouble. In August 2009, e-mail exchanges between Energy Department staff members pointed out that a credit-rating agency predicted that the project would run out of cash in September 2011. Solyndra shut its doors on the final day of August.

Notice that last line—Solyndra went bankrupt right on time. 

Solyndra is turning out to be a textbook case of how crony capitalism operates (and fails). 

See other Reason commentary on this case herehere, and here

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  1. Front page Washington Post. Bravo. Is it just me or is the media much more willing to be critical of Obama and cover his various scandals?

    1. I think the Democrats are planning on using Solyndra to get Obama off of the ticket. Yesterday was their final straw.

      1. I am wondering the same thing. Front page?

      2. A sitting president that’s not on the ticket? I don’t think so.

        1. Go tell that to LBJ. It can happen.

          1. And the Democrat who won the nomination that year lost.

            1. If Robert Kennedy wasn’t assassinated I don’t think that would have been the case.

            2. Even being challenged in the primaries tends to be bad for a sitting president.

              Every time it’s happened in recent history, the incumbent has lost.

              1. Ted Kennedy put up a decent challenge against Carter in ’80.

                1. Yeah, and Carter lost.

                  1. Yeah, if your own party is moving against you, you’re pretty much toast by that point.

              2. Even being challenged in the primaries tends to be bad for a sitting president.

                But is that correlation, or causation?

                By challenged, I assume you mean, “had a credible challenger,” since there are always fringe candidates.

                1. Yes, “had a credible challenger” was what I was driving at.

                  I’d say that a serious challenge has some affect in harming the incumbent’s image.

                  On the other hand, the fact that there is a serious challenge might mean that the incumbents image is already tarnished pretty badly.

                  So I guess it’s mostly correlation.

        2. You may need to rethink it. 23 Democratic Senators are looking at being dragged down by an unpopular president. They aren’t going to go down quietly.

          1. They likely won’t publicly call for any resignations or refusals to run in 2012, but what they may be forced to do is lurch Clintonially to the right, especially on fiscal issues.

            1. I like the pseudo-word “Clintonially”. It’s positively Colbertarian.

              1. That’s got some truthiness in it.

            2. But Obama can’t do that. First, he has the Left breathing down his throat in a way Clinton never did. And second, he is just not as skilled of a politician. He really can’t pull it off. No one will believe him.

              1. He doesn’t have to pull anything off at all. He just needs to have the people who program his teleprompter pull it off. And then the people pulling his strings need to have him propose and sign the right legislation. Obama is simply a marionette.

                1. Actually, I doubt Obama will move much to the right, as he should’ve done that some time ago to save his ass. I was talking about people running for Congress.

            3. As unpopular and ridiculous as Obama is, even he will win in 2012 when the R’s nominate a big gubmint social conservative, driving libertarian-leaners and Tea Partiers to vote 3rd party or write in.

              1. I think Hillary is a real possibility. If she defects and runs a primary challange as the “Well look, we tried your guy now lets get back to business” liberal then she would be able to beat most of the R candidates. I think when the first poll with her name in it comes out that would be the water over the dam.

                1. I think Bill is a real possibility.

                2. It’s a clear sign that the sitting president is going to get a scandal that will finally stick. First the “drip, drip, drip,” a few more email should begin to do the trick and the pressure to lose this guy and run Hillary will be heavy duty. We deserve to get someone in office that has some sort of political common sense, and he has none whatsoever. He’s become a political liability and when it’s this severe, the party won’t want him around.

              2. “As unpopular and ridiculous as Obama is, even he will win in 2012 when the R’s nominate a big gubmint social conservative, driving libertarian-leaners and Tea Partiers to vote 3rd party or write in.”

                Kristen, IF that happens I agree with you. Especially if that asshole former U.S. Senator from Pennsylvania wins the nomination. But I am not so sure that will happen this year. The mood of the Republican Party is VERY different this year. It isn’t the 1990’s anymore. Most Republicans are more focussed on fiscal issues this year.

                1. I’m always amused that many people who claim to be “focused on fiscal issues” really have just as much of a social issue litmus test as anybody else, even more so.

                  There are some people who really care only about fiscal issues and don’t care either way about social issues, but they’re generally not the people bitching about a party’s social issue stances.

                  1. What doesn’t sway me much are social issues that are mere rhetorical fodder. The national GOP does little to force people to worship Jesus; the national Democrats actually like the WoD. Etc.

      3. If the Dems force the first black president off the ticket they can forget about having a chance in the general election.

        The “switch” could be done if Obama goes along willingly, but it would be tricky.

  2. Obama is going to get burned on this. Which is great, cuz then he’ll lose in 2012 to successor Rick Perry, who is totally NOT a crony capitalist. *wink*

    1. …the circle will be unbroken…

      1. Oh well. As Heinlein says, the difference between bad and worse is a lot greater than that between good and better. At this, just ordinary old bad cronyism would be a tremendous improvement.

    2. Everybody knows Perry is corrupt, so at least voting for him won’t get you dissappointed.

      1. He’s OUR crony-capitalist.

    3. So if Ron Paul were to run third party — throwing the race to Obama — we’d get four more years of divided government.
      Hmmmm.

      1. With the 2009 Stimulus as the base-line budget.

      2. And the bureaucracy reporting to Barak Obama and implementing Obamacare.

      3. The last election was split 53% for Obama, 46% for McCain, and all the remaining candidates split the remaining 1%. And you think Ron Paul running as a third-party candidate is going to throw the race? I like the guy too, but we might as well wish that the Easter Bunny and Tooth Fairy would run third party; they’ve got a better public image.

        1. The Yellow Ross of Texas pulled 18% in 1992. I guarantee you Ron Paul pulls at least half that running third party — and though some will be young/new voters, most will come from what has traditionally been Team Red.
          And then Perry or Romney is fucked.
          Bwah hah hah hah!

          1. And if that’s an LP run, 9% eliminates a shitload of ballot hassles and expenses for them in 2014/2016, paving the way for Gary Johnson/Rand Paul. And libertopia is right around the corner!
            Jeeves, cancel our flight to Somalia!

      4. and don’t forget the EPA.

        1. Ya’ll really think Lord Perry will be that much better than Lord Obama?
          Heh heh. Suckers.

          1. in terms of the EPA, Perry would (hedging here) probably be better. I certainly can’t imagine him (but maybe Romney) pushing a green agenda. But power begets power, so who knows?

          2. Perry runs the TCEQ, which openly criticizes and fights the EPA. The TCEQ sends out press releases like “EPA Rule Eliminates Texas Jobs”.

      5. He should really just blackmail the GOP leadership into giving him the nod — at his age, there isn’t much to lose.

  3. “…e-mail exchanges between Energy Department staff members pointed out that a credit-rating agency predicted that the project would run out of cash in September 2011. “

    This all happened because a non governmental credit agency predicted it. This is all a self fulfilling prophecy due to private rating agencies having a profit motive. We need to nationalize all rating agencies so they can be as effective as the OMB.

    1. Do you have a newsletter I can subscribe to?

    2. I would like to subscribe to your newsletter

    3. And don’t forget about all those oil subsidies that made it impossible for Solyndra to compete with traditionally energy!

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

    This is the biggest scandal since Watergategate.

    1. I’m seeing a freaking video in your comment!
      Reasonable, huzzah!

      1. And now I’m back on FireFox and it’s gone!
        I’m glad I’m not high right now. I would be freaked out.

      2. Yeah, I particularly like that feature, though you have to watch out for the NSFW vids and pics.

  5. Here’s a link to the hearing: http://www.c-span.org/Events/L…..7424118-1/

  6. Here’s a thought: the ATF supplying weapons to Mexican drug cartels gets barely a peep from the WaPo, even when a federal agent gets capped because of it and never mind all the Mexicans this helped kill. That one goes all the way up to the top of DOJ. But Solyndra goes bankrupt and all of a sudden the WaPo can do some reporting?

    I guess this makes it official: money is more important to the left than lives. Haven’t they been spreading that meme about us heartless libertarians for years? Projection, how does it work?

    1. hmm… maybe the left just hates corporations more than people. And crony capitalism certainly doesn’t look good for the party that “represents the little guy.”

      1. Another theory is that they were hoping that the result of the Fast and Furious scandal would be a simple amplification of the “Guns are bad.” meme. But the fact that gun dealers were cooperating with authorities makes things inconvienient.

    2. This is an easier story. Just like how “cash in the freezer” was a detail that killed Rep. Jefferson. Complicated corruption? Too hard! Cash in the freezer? Funny detail!

    3. F&F isn’t a case of deliberate wrongdoing to create a crisis that can be exploited to advance a political agenda, it’s merely a “botched” operation.

      1. Shepherd guns to high-ranking DoJ informants in drug cartels in Mexico without informing Mexican officials or even informing ATF officials working in Mexico.
      2. ????
      3. Conviction and imprisonment of bad guys.

  7. a textbook case of how crony capitalism operates (and fails).

    There was no failure here; pockets were filled.

    1. Yep – someone, or a bunch of someones, got away with a cool half bil.

      1. Well that’s the question, isn’t it? Who were the lenders?

    2. Politically, there was a failure.

      “C’est pire qu’un crime, c’est une faute.”

  8. a credit-rating agency predicted that the project would run out of cash in September 2011.

    This prediction was made before the loan guarantee and the extra infusion of $500MM.

    So they managed to burn half a billion dollars, and still went bankrupt on schedule.

    Where the hell did that half a billion go? That’s nearly $42 million a month in burn rate in excess of what the rating agency saw.

    1. Hookers, booze, coke, Ipads, company cars, private planes, exploratory trips to Bermuda, you know the drill.

      1. They probably just wasted the rest.

      2. They stimulated the hell out of the Californian prostitute industry, if ya know what I mean/

      3. Does this mean we can change “broken windows” to “broken solar panels?”

    2. Offshore accounts in one of the Caribbean tax havens?

    3. Rating agencies are at the top of the administration’s enemies list.

    4. Really, this must have been one of the most incompetent companies I’ve ever heard of. How is that even possible?

      1. Well, most money-laundering fronts don’t perform so well, from a strictly GAAP measure.

        1. Yeah, but if government’s involved, it’s no longer fraud!

      2. Are you kidding? This was brilliant.

        Take a silly idea (building solar panels to compete against petroleum and electricity), get some private investors and a half-billion of government money. Pay yourself a gigantic salary few a couple years – then declare bankruptcy when reality catches up.

        1. “Take a silly idea (building solar panels to compete against petroleum and electricity)”

          It’s worse than that:
          Build a lavish fab facility in the most expensive labor market in the world, knowing your product can be easily produced by semi-skilled workers in China.
          What a plan!

    5. R C Dean – how did you get 42 mil per month over the ratings agency baseline?

      In August 2009, e-mail exchanges between Energy Department staff members pointed out that a credit-rating agency predicted that the project would run out of cash in September 2011.

      August 2009 to September 2011 is 25 months. If the August email question was mid or late August, you can start September 2009 and call it 24 even months. 535 million divided by 24 is 22.29 million additional cash burn per month. What am I missing?

      1. This also works out to be only about 20k extra per employee per month. I’m not saying that it wasn’t a massive amount of waste, but a company w/ 1000 employees can easily burn through half a billion $.

        1. Even with bay area costs, only an extra 20k per month per employee should still be an extra 100% of what their loaded rate should be. I think double passes the detection of error threshold by a good ways.

        2. IIRC, the company spent nearly that much on lobbyists to Congress. IOW, they borrowed >$500M, then turned around and plowed it into lobbyists. Beats me *how*, or where they got more money to actually run the factory.

  9. a credit-rating agency predicted that the project would run out of cash in September 2011.

    Which meant they needed more money.

    duh

    1. Obviously another failure of capitalism!

    2. They would have gone even more bankrupt if we hadn’t spent the money.

  10. The e-mails also raise questions about whether the administration should have foreseen financial trouble.

    You mean the financial geniuses in the Administration? Those guys? The very same? Them? Ellos?

    1. What didn’t they know, and when didn’t they know it?

      1. Damn near everything, all the time?

        Another case where the defense “We’re too stupid to be crooked” will be trotted out, to the applause of the crowd.

        1. I believe that “I’m too stupid to be crooked” is also something that Rick Perry’s going for now.

  11. 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 rule of government contracting: Even a lousy photo-op ends up costing half a billion when the government does it.

  12. Why isn’t the leaked video of Solyndra’s sales pitch to the Obama administration getting any coverage?

    http://www.youtube.com/watch?v…..page#t=14s

  13. “The Washington Post is reporting on the front page today that a collection of internal emails shows that the White House pushed the Office of Management and Budget to ignore its standard vetting procedures and sign off on the project:”

    Not to worry.

    They will come up with rationalization to explain how it was really all Bush’s fault.

    As is every other aspect of life under the Obama administration.

    1. Actually, this was already tried. Bush gave Solyndra loans too.

      1. Um, no. Not based on what I read. Solyndra applied for the loans during the Bush Administration, but the Bush Administration nixed the loans, based on concerns about the company’s balance sheet. Bush DENIED Solyndra’s application. And even after Obama came into office, there were people expressing concerns about making the loans.

        1. But thanks for playing, Proprietrist!
          Take this lovely solar panel as a parting gift!

        1. Holy shit. Now I have to take back the question I asked for 8 years, “Jebus fucking christ. Can anyone possibly be any dumber than Bush?”

          1. What once was rhetorical is real again!

  14. Shortly after Solyndra announced its bankruptcy, I made the none-too-daring prediction that this scandal would prove to be durable.

    It’s the gift that keeps on giving!

    Just like syphilis.

    1. That’s the herp you’re thinking about.

      Syphilis is curable.

  15. “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.”

    Now that’s what I call accountability!

    1. See, above, re “Too stupid to be crooked”.

    2. “last week also questioned whether they had been misled.”

      Hey, you can’t mislead those folks!
      They questioned me for hours before buying controlling interest in the north anchorage of a suspension bridge.

  16. Teapot Dome, redux.

    1. What no one ever seems to mention about Teapot Dome is that the reason it came to be publicly known was because Warren G Harding had found out about it, had Justice start an investigation into the officials involved and announced it to the press.

      1. Harding:

        “I have no trouble with my enemies. I can take care of my enemies in a fight. But my friends, my goddamned friends, they’re the ones who keep me walking the floor at nights!”

        1. The more I read about old Warren the more I like him.

  17. But, but … most honest, most open, most transparent, most … ah, fuck it.

  18. I’m surprised that there is no coverage of the new ‘snitch’ website AttackWatch. Hard to believe but the teleprompter reader even has Nixon beat in the paranoia stakes!

    1. The children won’t believe it but the old ones can remember the before times when dissent was the highest form of patriotism.

  19. And when you lose California:
    “…fewer than half (46 percent) of California voters approve of his performance as president – a figure that’s dropped eight percentage points in three months,…”
    http://www.sfgate.com/cgi-bin/……DTL&tsp=1

  20. So if this is the doing of Bush, then one can also assume that had Solyndra been successful, Bush would have gotten the praise then.

    1. See above. This is not the doing of Bush. The Bush Administration denied the loans because they could see the company was a bad risk.

      1. I suspect that NotSure’s point is that if this were the doing of Bush and it had succeeded Obama would have cheerfully taken all of the credit.

        What’s the old saying, victory has many fathers but defeat is an orphan.

  21. I feel bad for those hard working Solyndra execs who are now probably struggling to get by like so many of us Americans who are out of work. Obama was just looking out for the little guy. You libertarians just want to stick it to little guy so your rich pals can get even richer. It’s a sad, sad day when a President can’t reach down and give those at the bottom a hand up. The Solyndra execs are in my prayers. I just hope maybe they can find something at Burger King or Kroeger until they can get on their feet again. God Bless America!

  22. My bet this is this is forgotten all about in weeks if not days. Media is full bore on the Republican/Tea Party primaries. One of them will do something (else) stupid and this will be gone.

    And/or, it will get played as a noble (Nobel?) effort by Obama to move the country in the right direction with solar energy and jobs.

    I can hear Obama’s stump speech on this now. “Solyndra did fail, but it is necessary for us to take these brave initiatives for the USA to win the future and to help such noble efforts to compete against traditional energy who enjoys all kinds of subsidies, etc. etc.” This will be said to thunderous applause.

  23. This is a nice example of what you get when a politician has convinced himself that he’s the smartest man in the room. Of course he can toss half a billion taxpayer dollars at a business just because he likes it and it will come out great; he’s not a mere ordinary citizen!

    It reminds me of an ancient joke I heard about Henry Kissinger. Henry was riding in an airplane with an elderly priest and a hippie (I told you it was an ancient joke). The pilot comes back into the passenger compartment and announces that the plane is going down, and there are only three parachutes on the plane and he’s taking one of them. The pilot jumps out the door.

    Kissinger stands up and announces, “I must take one of ze parachutes. I am ze smartest man in the vorld and I am vital to vorld peace.” Then he jumps.

    The elderly priest says to the hippie, “You take the other parachute, my son. I have lived a full life and will be happy in the arms of our Lord.”

    The hippie grins and says, “Hey Father, it’s cool. The world’s smartest man just jumped out of the plane with my backpack on.”

  24. Where are all the sock puppets defending this “loan?” Hmmm… Maybe they have not received their talking points yet.

    1. LOL I was wondering that too. Maybe Daily Kos hasn’t published a diary on it yet.

    2. Given my place of employment, I’ve already heard a few:

      1. Obama was duped

      2. Bush did it too

      3. If we passed cap and trade this wouldn’t have happened

      4. It’s China’s fault for making cheaper panels

      1. I’ve gone above and beyond the call of duty and waded through that leech-infested abyss of Statism which shall not be named and taken away the following:

        Derp, it was W’s fault for creating the 1703 loan guarantee program.

        Derp, the price of silicone fell.

        Derp, China.

        Derp, the market was bad.

        Derp, Republican/Tea Party/Koch spin.

        Derp, private investors invested in the Solyndra investment (including the “conservative” Walton family [completely ignoring the difference between privately held funds and TAX MONEY!]).

        Derp, Big Oil torpedoed Solyndra by convincing their cronies at the DOE (who approved the original loan and restructured the loan once) to refuse to restructure their loan twice.

        The talking points are out. Reason’s idiots and sockpuppets are just behind the curve.

  25. This move by BHO was pretty Bush league.

  26. Next time, leave investing to investors. I’m tired of being forced to guarantee loans to deadbeats.

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

    Solyndra-gate! Sounds cool.

    …a credit-rating agency predicted that the project would run out of cash in September 2011. Solyndra shut its doors on the final day of August.

    Notice that last line — Solyndra went bankrupt right on time.

    Hey, at least they weren’t embezzling the funds then, right?

  28. Solyndra is the tip of the iceberg. The controversy here is that DOE lied about doing due diligence and passed Solyndra through while intentionally delaying others that competed with DOE’s officers business interests. The DOE could have safely diversified its bets with 40 small america business applicants but they blew the money on a few inside special interest applicants who paid lobby money while freezing out those small American businesses and jobs. Subpeona’s will show that Lachlan Seward, of the DOE, ordered staff and consultant’s to change their review criteria and findings in order to manipulate winners and losers.

    Look into the ones that didn’t get in because they didn’t bribe the right people.

    The site: http://corruptiondoe.weebly.com has the real truth about Solyndra and beyond…

    It shows that: – Only campaign contributors received funding from the DOE ATVM and Loan programs and competitors to those interests were frozen out. – Key White House staff were informed of the misdeeds but they covered them up. – A criminally illegal protection investor money racket was being run by individuals in, and around, the DOE funding programs, Detroit and Goldman Sachs. – Detroit ordered all competing efforts killed off or permanently delayed. – Tesla is involved in the same influence-buying scam and financials fudging here Everybody knows about the site, above. Hundreds of thousands of people have seen it. Nobody can ignore the facts here. This was all pay-to-play.

    (OK to Forward this)

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