Free Markets, Free People

Solyndra – Administration warned it would fail in September, 2011. And, it did

In the old “what did they know and when did they know it” game concerning Solyndra, the failed solar company backed by half a billion dollars of federally guaranteed loans, it appears the administration was warned repeatedly that it would fail.

Even after Obama took office on Jan. 20, 2009, analysts in the Energy Department and in the Office of Management and Budget were repeatedly questioning the wisdom of the loan. In one exchange, an Energy official wrote of "a major outstanding issue" — namely, that Solyndra’s numbers showed it would run out of cash in September 2011.

There was also concern about the high-risk nature of the project. Internally, the Office of Management and Budget wrote that "the risk rating for the project sponsor [Solyndra] … seems high." Outside analysts had warned for months that the company might not be a sound investment.

And the reason?

Fairly simple, really:

"It’s very difficult to perceive a company with a model that says, well, I can build something for six dollars and sell it for three dollars," Lynch said. "Those numbers don’t generally work. You don’t want to lose three dollars for every unit you make."

But apparently not enough to warn off what was something that the administration badly wanted to back – “green” jobs.  The problem of course is they weren’t viable green jobs.   The company failed Econ 101 analysis, yet that didn’t stop our central planners from pushing ahead with the loan guarantees.

And all the info to determine this wasn’t a good risk was there:

In 2008, Solyndra, then just three years old, pushed ahead with its application for government backing to build a new plant to produce its unique solar panels. An outside rating agency, Fitch, gave Solyndra a B+ credit rating that August. Two months earlier, in June 2008, Dun & Bradstreet issued a credit appraisal of the company. Its assessment: "Fair."

Those are not top-of-the-line scores, Fitch Ratings spokeswoman Cindy Stoller told the Center for Public Integrity’s iWatch News, which has been investigating the deal in partnership with ABC News since March. She could not discuss the Solyndra review specifically, but said of a B+ rating: "It’s a non-investment grade rating." She provided a company ratings definition, showing that B+ falls between a "highly speculative" B and "speculative" BB.

Anyone with a 5th grade education would know enough to go “not where we should sink our money”.  But sink it they did.

What do we get back from the administration when questioned about all of this?

Asked about those ratings, and how significantly the department viewed the risk, Energy officials said Monday the department conducted "extensive due diligence" on the application, which included consideration of the Fitch rating.

"We believed the rating, which is used to inform our analysis of potential risks associated with the loan, was appropriate for the size, scale and innovative nature of the project and was consistent with the ratings of other innovative start-up companies," said Damien LaVera, an Energy Department spokesman.

"The Department conducted exhaustive reviews of Solyndra’s technology and business model prior to approving their loan guarantee application," LaVera said. "Sophisticated, professional private investors, who put more than $1 billion of their own money behind Solyndra, came to the same conclusion as the Department: that Solyndra was an extremely promising company with innovative technology and a very good investment."

Well, if that’s the case, then the analysts at the DoE are utterly incompetent.  My guess is they came up with the analysis their bosses wanted, not that which actually told the truth about the situation.

Again, instead of letting the market do its job, the administration continued to ignore the warning signs and intrude, backing a company that was bound to fail and in the end, throwing a half billion taxpayer dollars down the drain.

And there’s this:

The White House has argued that any effort to finance start-up businesses in a relatively new field like solar energy is bound to include risky ventures that could fail. They reject the notion being pushed by Republicans that Solyndra was chosen for political reasons. One of the largest private investors in the deal, Oklahoma billionaire George Kaiser, was also a prominent fundraiser for Obama’s 2008 presidential campaign.

And, Solyndra’s CEO was a large contributor as well.

However, the big concern?

"This deal is NOT ready for prime time," one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

"If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY," wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009. The "West Wing" is the portion of the White House complex that holds the offices of the president and his top staffers.

Yup, protect the White House.  And they didn’t even have the wits to back out when they could have, instead doubling down in the face of horrific numbers.  Sound familiar?

You’re in good hands, folks — can’t you just feel it?

~McQ

Twitter: @McQandO

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16 Responses to Solyndra – Administration warned it would fail in September, 2011. And, it did

  • Since when did the Federal government enter the venture capital business anyway?

  • Due diligence for this administration means that they verified that the money would get into the hands of dem and unions.

  • Their first BS comment on it the other day was that the Bush Administration had approved it.    Yeah, I guess not so much.  Blame Bush.
     
    And let’s not worry about how the investors get their stake back before the taxpayers, and let’s not worry that one of the investors is a big time contribution bundler for Obama.
     
    Not to worry this group of Progressive Cargo Culters, that’s all that they required for reality.  They had a piece of paper with the word study, a piece of paper with the word plan, and FINALLY, they had control of the cargo gods to deliver the cash.

  • Limbaugh…who really has a very astute analytical mind…said some time back there was no business there.
    That pretty much describes the Green Industry fraud.  Take away the subsidies, and you got nutin

  • It was incredibly painful to watch the DOE officials in front of the Congressional investigation.
    It seems nobody knows who made the decision to give the loan guarantee, either they didn’t work there at the time, or they were just too stupid to know (or they were lying under oath).
    What was obvious was that nobody is actually in control of our government.  It’s running on auto-pilot.  This may explain why Obama continues to blame Bush.

    • No, there’s a difference, no one who will ADMIT TO BEING RESPONSIBLE is actually in control of our government.  You watch where the bucks for Solyndra and Obamo Furioso end up going, they’ll end up floating in space with everyone involved pretending they don’t know what they are, and that Bush put them there.

      • Well, it has been pointed out that Solyndra applied for loans during the Bush admin. But they were turned down. It seems the left has been attempting to push the idea it all started under Bush, when it was Obama who ok’ed the loans.

    • I found it most enjoyable, personally.  But then, I watch people lie under oath all the time.  I always enjoy giving them the opportunity.

  • Then there is this:

    http://www.thedailybeast.com/articles/2011/09/15/lightsquared-did-white-house-pressure-general-shelton-to-help-donor.html

    http://hotair.com/archives/2011/09/15/bombshell-general-accused-wh-of-pressuring-him-to-change-testimony-for-democratic-donor/

    This is gonna be a fun election cycle. Solyndra, F&F, and now this. What next?

    Obama’s polls are already underwater across the board. Even the Democrat leaning polls that seriously oversample Dems. The economy continues to flatline, or worse, and international affairs is more interesting by the day. On top of that we see more and more signs of Chicago corruption.

  • Yesterday’s creepy/hilarious AttackWatch and the “LOVE ME” speech reflect a rapidly unraveling narcissist.

    I am thinking that Obama should adopt Cheap Trick‘s classic as his campaign song.

    I want you to want me…  I need you to need me…  I’d love you to love me…  I’m begging you to beg me…  (apologizes to those who memorize lyrics)
    President Cheap Trick.  That works on soooo many levels.

  • Blame Bush UPI –
    “White House spokesman Jay Carney, in statements to reports, said accelerating the process for Solyndra was part of an effort “to get an answer to make a scheduling decision.”
    He suggested much of the original process, meanwhile, was from policies left over from the administration of George W. Bush.

  • I often say that electing democrats is foolish because, even if you agree with them philosophically (seek professional help immediately!), they are simply not competent: they insist that the world just doesn’t work in the way that it clearly does.  So, disasters like this are inevitable.

    But their intentions are good!  That counts!  Right?  Right?