Free Markets, Free People

loans


Solyndra applied for a 2nd loan

The Daily Caller is reporting that Solyndra, famed for going belly up and putting the taxpayers on the hook for half a billion dollars, applied for an additional DOE loan for $469 million.

Failed solar panel maker Solyndra’s Securities and Exchange Commission filings show that seven months after the Obama administration’s Department of Energy approved a $535 million federal loan guarantee, Solyndra applied for a second one valued at $469 million.

“On September 11, 2009, we applied for a second loan guarantee from the DOE, in the amount of approximately $469 million, to partially fund Phase II,” Solyndra wrote in a report it filed with the SEC on December 18, 2009. “If we are unable to obtain the DOE guaranteed loan in whole or in part, we intend to fund any financing shortfall with some combination of the proceeds of this offering, cash flows from operations, debt financing and additional equity financing.”

This application went in right after it received the original $535 million from the DOE. So, the question is, what happened to that application? Well, so far, it seems that no one can say.

It’s unclear if the now-bankrupt and scandal-embroiled green energy company actually received a second loan. Department of Energy officials did not immediately respond to The Daily Caller’s request for comment, and the company’s SEC filing left the question open.

So, did Solyndra get that second loan or not? Are we on the hook for more than a billion dollars? It seems like if the answer was "no", the DOE or Obama Administration would be fairly keen on letting us know that.

I’m really curious about this now.

(H/T: Ace)

~
Dale Franks
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GM to pay 400 million in bonuses without loans being paid back … where’s the left on this?

Giving the left the benefit of the doubt, maybe they didn’t know about this.  Because I’m sure, just as they blasted Wall Street for paying bonuses after receiving bailout money and TARP funds, they’d be keen to be consistent and do the same to GM.

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company’s rapid turnaround after it was rescued by the government.

The payments, disclosed Monday in company documents, are similar to bonuses announced last week for white-collar employees. The bonuses to 76,000 American workers will probably total more than $400 million — an amount that suggests executives have increasing confidence in the automaker’s comeback.

But the comeback was and is still financed by taxpayers money and borrowing.  What in the world is GM doing paying out bonuses when it still owes at least $40 billion in loans?  That $400 million would be a nice chunk toward that payback, wouldn’t it?

But the bonuses drew criticism from an opponent of the auto industry bailout in Washington who said GM should repay its entire $49.5 billion loan before offering bonuses.

"Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out," said Republican Sen. Charles Grassley of Iowa. "It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker."

Yeah, kind of hard to argue otherwise, isn’t it?  And no, for you that believed all the hype, GM hasn’t paid back its loans despite the commercials it made claiming it had.  It isn’t even close to paying them off.

That said, I’m sure, once the story gets out that the left will be just as consistent in slamming GM for paying bonuses without repaying its loans as it was with taking Wall Street (properly I might add) for precisely the same reason.  (HT: Maggie’s Notebook).

Oh, and by the way:

Ford Motor Co. announced plans last month to pay its 40,600 U.S. factory workers $5,000 each, the first such checks since 1999. The Dearborn, Mich., company, which avoided bankruptcy and did not get a government bailout, made $6.6 billion last year.

Ford also plans to pay performance bonuses to white-collar workers in lieu of raises, but it would not reveal the amounts.

Good for them and congratulations.

~McQ


Barney Frank wants another chance to destroy the housing market

If you live in Frank’s district, this is the only reason you need to vote for Sean Bielat, his GOP opponent.  I.e. Frank is about to remake Fannie Mae and Freddie Mac in his own image.  That after the two institutions that he fought so hard to support with your tax dollars and attempted to keep Congressional oversight to a minimum, tanked and almost took the economy with them.

The Washington Post has a mostly sympathetic piece (poor Barney, he only wanted to use your money to help the poor put a roof over their heads) which, if you read carefully between the lines, at least hints at most of the story.  And the rest of the story ends with us pumping $160 billion and counting into the two institutions after the government took them over.

Back when it all started, Frank identified cash cows in the two institutions which would allow him to fulfill his personal agenda:

Fannie and Freddie were in the business of buying and guaranteeing mortgage loans from private lenders, which in turn could take the money and make even more loans to prospective homebuyers or developers looking to build apartment buildings.

Democrats, led by one of Frank’s closest allies, Rep. Henry B. Gonzalez (D-Tex.), wanted to require the two companies to spend a specific percentage of their funds on affordable housing. Under the proposed legislation, the companies were to buy home loans made to lower- and middle-class people and loans going to fund development of affordable rental housing.

This represented a rich new vein of money.

But even as Democrats were looking to expand Fannie and Freddie’s mission, a small group of Republicans, led by Rep. Jim Leach of Iowa, urged the government to pay more attention to the dangers posed by the firms.

Let’s see – “rich vein of money” or oversight and caution?  “Rich vein of money” of course.  So Leach’s warning were pushed aside:

The companies had been growing ever larger. Yet compared with their rivals in the banking industry, they were putting aside relatively little capital to cover potential losses. Leach proposed a tough new regulator that would restrain Fannie and Freddie.

Nah.  So onward we went, huge sums of money flowing out the door, very little oversight, with a political agenda driving the bus instead of financial sanity.  That was in 1992.  In 2003, the warnings were still coming and getting louder:

By late 2003, the firms had taken on more than $4 trillion in debt, rivaling that of the entire federal government. Yet Frank, who had by then become the top Democrat on the influential House Financial Services Committee, still wasn’t focused on the risks. He had his sights set on what else they could do to promote for affordable housing, particularly low-cost rental housing.

At a hearing called by Republicans, who controlled the committee, Frank made clear that he was reluctant to tighten oversight because it could limit the ability of Fannie and Freddie to help people get a roof over their heads.

The companies, he urged colleagues, "are two of the very important tools that we have" and had to do what "the market in and of itself will not do. "They were "not endangering the fiscal health of this country," he continued.

But, of course, they were and did endanger the fiscal health of the country.  Denial was his only weapon and he used it constantly – because his personal political agenda was apparently worth the risk – at least to him.  He even said once he wanted to “roll the dice” a little more, perfectly willing to risk the fiscal future of the country to push his political agenda.

And you all know the rest of the story. 

Fannie and Freddie proceeded to load up on securities backed by risky mortgages, such as subprime loans and no-document loans. The firms asserted that they were aggressively fulfilling their affordable housing mission, and some risky mortgages were indeed going to borrowers who couldn’t otherwise afford a home.

But many of the loans were going to people who could have afforded traditional mortgages, and the companies were bulking up on the risky loans purely in pursuit of even larger profits.

When the housing market crashed, the unprecedented surge in mortgage defaults blew a hole in the firms’ finances.

The Democrats and Frank want to deny this part of the story or pretend it is an insignificant part of it or that what happened to Freddie and Fannie were a result of Wall Street’s shenanigans. 

Not really.  The prime buyer and bundler of the sub-prime mortgages were those two institutions.   And, as the article notes, Freddie and Fannie believed they were “aggressively fulfilling their affordable housing mission” as legislatively enabled by Barney Frank and Congress.

And what has he managed to get for his effort?

For all his efforts, Frank readily acknowledges that there are more people needing decent housing than there were when he started in Congress. And with millions of others losing their homes to foreclosure, Frank asks to be judged by how much worse things would have been without him.

"In the political world, you get measured on the ultimate results," he said. "I think we’ve prevented things from getting as bad as they otherwise might have been."

Really?  Have you looked around you Mr. Frank?  This ranks right up there with the unmeasurable “saved jobs” nonsense pushed by the administration in the midst of 9.6% unemployment.  And now Frank is going to get another chance to shape the housing market’s future?

Time to put him into retirement before he can again try to do what he did last time.  Another reality of the “political world” is you should only get one chance and if you screw it up as badly as Frank did, you should join the ranks of the unemployed.

~McQ