Thursday, September 29, 2011
Solyndra Latest: Obama Silent As More Sordid Details Emerge
Solyndra Latest: Obama Silent As More Sordid Details Emerge
By Guy Benson
Of the many words that have spilled from our president's mouth over the last four weeks, not one single utterance has addressed the burgeoning scandal plaguing his administration: Solyndra. In short, the Obama administration expedited approval for half-a-billion dollars in federal loan guarantees to a politically-connected "green energy" firm, despite warnings from the Bush administration and its own number-crunchers that it would be a terrible investment. The company went bankrupt this month, laying off hundreds of employees, and likely leaving taxpayers on the hook for a massive loss. As Solyndra's finances unraveled, the company's executives and their White House backers wore brave public faces and assured Congress that everything was fine. Meanwhile, they restructured the loan to ensure that private investors (including a major Obama donor named George Kaiser) would be made whole first, before taxpayers, if the company went under -- which they knew to be a fait accompli. The Left has declared the entire mess an irrelevant non-event. Obama is treating it as such with his silence.
Unfortuately for him, the Solyndra information drip hasn't dried up. Earlier in the week, we discovered that the president himself was briefed on the hazards of the green-energy loan program before it was enthusiastically green-lighted. We've known for a few weeks that on top of its broken business model, Solyndra was spending recklessly on extravagant goodies and services. How extravagant? New details paint quite a picture:
The glass-and-metal building that Solyndra LLC began erecting alongside Interstate 880 in Fremont, California, in September 2009 was something the Silicon Valley area hadn’t seen in years: a new factory. It wasn’t just any factory. When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms.
Commercial real-estate agents in the region wondered why a new factory was being built in the Silicon Valley region, the epicenter of some of the priciest real estate in the country, where most new construction consists of office space.
But wait, there's more. Not only did Solyndra receive a massive taxpayer-funded windfall thanks to a fast-tracked political decision that flew in the face of federal bookkeepers, the company also received a favorable (and convenient!) ruling from the IRS:
Solyndra not only received a $500 million loan guarantee, it also got a favorable ruling from the IRS. According to "California Watch" -- a unit of the Center For Investigative Reporting -- the IRS decision gave Solyndra's customers a 10-percent tax deduction and it was later increased to 30 percent. And the timing of the ruling, just weeks before getting the stimulus loan, raises questions about whether the White House pulled strings for Solyndra, at other agencies.
When the time came to decide whether to refinance Solyndra's loan to prevent an immediate implosion (as the White House was telling the public and Congress that everything was going swimmingly), the president's political people again ignored the initial counsel of their in-house budget actuaries:
“The DOE then faced a difficult choice,” Silver told the committee.“(A) to refuse the restructuring terms . . . ensuring the company would close, or (B) to allow the restructuring, giving it and its more than 1,000 workers a fighting chance and the government a higher chance of recovery” of taxpayer money. The Energy Department pushed for the restructuring despite preliminary warnings from OMB staff members that restructuring Solyndra could cost taxpayers $168 million more than liquidation.
The Energy Department's argument eventually won out, and taxpayers got hosed. Again. In yet another damaging revelation -- this is getting exhausting -- the Wall Street Journal reports that Solyndra actually violated the terms of its loan guarantee agreement in 2010 by defaulting on required payments (!):
Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter. The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments. Solyndra's cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.
This is stunning. First, the White House rammed through this loan agreement for political reasons, breezily disregarding all of the preliminary red flags. Next, even after Solyndra defaulted on the loan and violated the existing agreement (bright crimson red flags), the administration once again ignored its Budget Office's advice, and permitted the company to restructure the loan -- the terms of which had already been violated. This decision helped ensure that people like George Kaiser would be shielded from the worst consequences of Solyndra's inevitable downfall. As the investigation continues, taxpayers may wonder if the White House has at least learned its lesson. Don't count on it:
Two days before a looming deadline, the U.S. Energy Department finalized two loan guarantees for solar power plants in Nevada and Arizona. One deal, a $737 million loan guarantee for Solar Reserve LLC, paves the way for construction of the 110-megawatt Crescent Dunes Solar Energy facility, which will use an array of mirrors to focus the sun's heat and power a steam generator. A second $337 million loan guarantee announced Wednesday will back Sempra Energy's (SRE) Mesquite Solar I project in Arizona, about 45 miles west of Phoenix. That 150-megawatt facility will use U.S.-made solar panels that convert sunlight into electricity.
According to Solar Reserve's website, one of its investors is Argonaut Private Equity, which also backed the Solyndra deal. Argonaut is an investment arm of the family foundation of George Kaiser, a political supporter of President Barack Obama. In the past, administration officials have denied that Kaiser's connection to the White House played any role in the Solyndra deal.
Granted, these new grant might be sounder investments than Solyndra turned out to be. We'll see, although we won't take the White House's word for it -- for obvious reasons. But the fact that the Obama adminstration awarded another series of huge-dollar taxpayer loans to a "green energy" company funded by George Kaiser in the immediate wake of the Solyndra row is extraordinarily brazen. Sorry, liberals. This isn't over.
Posted by Brett at 12:48 PM