Says it all. The House committee report on Solyndra
Solyndra should serve as a cautionary tale on how political pressures and anAdministration’s desire to create political events to highlight its policies can result inpoor decision-making. The red flags about Solyndra’s financial condition and theturbulence in the solar market were there for DOE to see when it reviewed Solyndra’s application in 2009. DOE staff and OMB staff noted these concerns at the time the loan guarantee was under consideration. This report conclusively shows that DOE pushedforward with the guarantee despite these warnings because of the ObamaAdministration’s desire to use the Solyndra guarantee to highlight its stimulus.Unfortunately, Solyndra is not the only failed DOE loan guarantee issued withstimulus funding. Since Solyndra announced its bankruptcy in September 2011, twoother solar manufacturing companies that received loan guarantees under Section 1705have also filed for bankruptcy. Beacon Power Corporation, which received a $43.1million loan guarantee, filed for bankruptcy on October 30, 2011. Abound Solar receiveda $400 million loan guarantee in December 2010 and filed for bankruptcy in early July2012. Some of the other companies that received loan guarantees have made little progress with their projects. For example, Project Amp, which received a $1.4 billion partial loan guarantee does not yet have Power Purchase Agreement in place for its solarinstallations and therefore has yet to receive any funding under its loan guarantee.Administration officials regularly touted the jobs that would be created by theDOE Loan Guarantee Program. For example, in September 2010, then-LPO ExecutiveDirector Silver testified before the Senate Committee on Energy and Natural Resourcesthat the loan guarantee projects would create 13,000 construction jobs and 4,000operating jobs. With failures like Solyndra, Beacon, and Abound, it is clear that the Administration’s jobs predictions will never be met. The Administration’s advertisementof the Loan Guarantee Program as a job creator was always questionable, as the kinds ofprojects DOE was funding typically resulted in temporary construction jobs but very fewpermanent jobs. Even if the Loan Guarantee Program had produced the 4,000 jobs thatMr. Silver said it would in 2010 using the $2.5 billion provided the stimulus, those jobs came at a cost of $625,000 per job.The Loan Guarantee Program was clearly a poor fit for the stimulus — a pointapparently recognized by White House staff in October 2010, when senior White House officials drafted a Memorandum for the President, listing a number of problems with the administration of the Loan Guarantee Program. That memorandum cited a lack of projectsponsor “skin in the game,” and the fact that some of the DOE funding was going toprojects that would have likely gone forward even without the funding.963 That tension— trying to identify projects that needed the funding to go forward but that also were likely to repay the loan — was acknowledged by Vice President Biden’s Chief of StaffRon Klain, and the President’s own Director of the National Economic Council. Mr.Klain even noted Solyndra as an example of this tension, that funding companies that are engaged in newer and riskier technologies meant that there was a chance the loan would not be repaid. Dr. Summers, in an email to a Solyndra investor in December 2010, notedthat the Federal government was a “crappy vc,” or venture capitalist.964 Solyndra is a prime example of the perils that come when the Federal government plays investor, tries to keep a company and industry afloat with subsidies and attempts to pick the winners and losers in a particular marketplace. Policy and political pressures inevitably come into play to the detriment of taxpayers, as it did with Solyndra.