MICHAEL BARONE: SOLYNDRA: OBAMA Tainted by Loan Guarantees to Solar Firms
Obama Tainted by Loan Guarantees to Solar Firms
By Michael Barone
One factor favoring President Obama’s re-election, according to a recent article by political scientist Alan Lichtman, is the absence of scandal in his administration.
Lichtman may have spoken too soon.
The reason can be capsulized in a single word: Solyndra.
That’s the name of a company that manufactured solar panels in Fremont, Calif. (which voted 71 percent for Obama in 2008).
Solyndra was the first company to receive a loan guarantee from the Department of Energy as part of the 2009 stimulus package. This wasn’t small potatoes. The loan guarantee was for $535 million.
It was, Vice President Biden said, “exactly what the Recovery Act was all about.” Energy Secretary Steven Chu, a Nobel Prize winner, said it would help “spark a new revolution that will put Americans to work.” It was part of the Obama administration’s program to create so-called “green jobs,” which we were told were the key to future economic growth.
The beauty part is that a loan guarantee doesn’t require the federal government to shell out cash unless and until the recipient defaults on the loan. If the company’s business plan works out, the loan costs the government virtually nothing.
Obama paid a visit to Solyndra on a trip to California in May 2010. “It is here that companies like Solyndra are leading the way toward a brighter, more prosperous future,” he said. Hailing the green jobs loan guarantee program, he went on, “We can see the positive impacts right here at Solyndra.”
The White House even prepared a video about the company. The Solyndra personnel sound articulate and intelligent, and seem to be really nice guys.
Unfortunately, there were other things going on at Solyndra for those with eyes to see. As my Washington Examiner colleague David Freddoso reported, an audit of the company performed by PriceWaterhouseCoopers two months before Obama’s visit noted that the firm had accumulated losses of $558 million in its five years of existence.
The auditor noted that Solyndra “has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raises substantial doubt about its ability to continue as a going concern.”