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Sunburned – Political Diary – WSJ

September 9, 2011

Sunburned

President Obama’s speech last night laid out a new list of ways to “jolt” the economy and reduce unemployment. But the event was shadowed by the public implosion of one of his last big ideas for creating jobs.

Yesterday morning, solar company Solyndra, which declared bankruptcy last week, was raided by the FBI at their Fremont, Calif., factory. The raid, which came at the behest of the Department of Energy’s Inspector General, is the latest embarrassment for a company that received $535 million in federal loan guarantees as part of a green energy program.

The raid is part of a criminal investigation into whether the company had been duping the government all along — or at least knowingly stringing it along as business cratered. As recently as last year, President Obama and Vice President Joe Biden touted the company as a future powerhouse and said it would create 1,000 new green jobs, just for starters.

The boosterism has since raised eyebrows because the company’s biggest investor was billionaire George Kaiser, a major fundraising bundler for Mr. Obama’s last campaign. While the Energy Department has said the Solyndra loans weren’t a case of political favoritism, the raid renews questions about whether there is more to be learned. ABC News reported that the company also got unusually favorable financing terms on a loan from the Federal Financing Bank.

Whether the White House looks better for having been hoodwinked than for extending an extra hand to a billionaire political friend is a matter of debate. Rep. Henry Waxman, a Democrat from Los Angeles, released a July letter from the company claiming that it was on solid financial footing (when it was actually hanging on by a thread), and many in Washington took their word for it. The administration’s defenders have pointed out that plenty of sophisticated venture capitalists made the same mistake as the rubes in Washington, investing close to a billion dollars in the company. But much of that money was piggybacking on the power of the federal investment and all that the government guarantee was supposed to mean.

— Collin Levy

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