Chu takes responsibility for a loan deal that put more taxpayer money at risk in Solyndra

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**Frazzled**

http://www.washingtonpost.com/politics/chu-takes-responsibility-for-a-loan-deal-that-put-more-taxpayer-money-at-risk-in-solyndra/2011/09/29/gIQArdYQ8K_story.html?hpid=z1

Chu takes responsibility for a loan deal that put more taxpayer money at risk in Solyndra
View Photo Gallery — Solyndra, a California solar company backed by a half-billion dollars in loan guarantees from the Obama administration, announced it was shutting its doors and laying off 1,100 employees.
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By Carol D. Leonnig and and Joe Stephens,
Energy Secretary Steven Chu acknowledged Thursday making the final decision to allow a struggling solar company to continue receiving taxpayer money after it had technically defaulted on a $535 million federal loan guaranteed by his agency.

Chu spokesman Damien LaVera said in a statement that the secretary approved the restructuring agreement for Solyndra because it gave the company “the best possible chance to succeed in a very competitive marketplace and put the company in a better position to repay the loan.”
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Executives from Solyndra, a failed California solar panel company, come to Washington to testify on how the firm went bankrupt despite a $535 million federal loan guarantee. They are expected to invoke their right against self incrimination. (Sept. 23)

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The collapse of California solar panel manufacturer Solyndra raises new questions about President Obama's push for alternative energy — and whether White House pressure played a role in a loan guarantee that has taxpayers on the hook for millions. (Sept. 16)

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Chu takes responsibility for loan deal that put more taxpayer money at risk in Solyndra
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Top Solyndra officials take the Fifth
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Also Thursday, a law enforcement official confirmed that the criminal probe of Solyndra is focused on whether the company and its officers misrepresented the firm’s finances to the government in seeking the loan or engaged in accounting fraud. The official spoke on the condition of anonymity because of the sensitivity of the probe.

On the political front, Chu’s admission came as some members of Congress were asking whether Chu went too far in trying to help the company before it went into bankruptcy, leaving taxpayers on the hook for the loan.

Chu, a Nobel laureate and physicist who came to the administration from academia, arrived in Washington with a mandate to push billions of dollars in stimulus funds into clean-energy companies and projects. With keen White House interest, Chu rode herd over an $80 billion showcase initiative that was supposed to spur a new “green” industry and economic growth.

Solyndra was the first company approved for a loan guarantee under the Obama administration; its application originated several years earlier during George W. Bush’s presidency. Early on, there were concerns about Solyndra’s finances, but the company was still endorsed by President Obama and received high-profile support from Chu. Both visited the firm at different press events. Chu flew to California to announce the loan approval at the groundbreaking for a $750 million factory that was built mostly with funds from the loan.

In announcing the Solyndra deal in March 2009, Chu boasted of the “speed at which the department can operate,” according to an agency news release.

“Secretary Chu initially set a target to have the first conditional commitments out by May . . . but today’s announcement significantly outpaces that aggressive timeline,” the release said.

In April 2010, the company’s auditors raised doubts about whether the company could continue as a “going concern” because of cash-flow problems. The following month, Obama visited the company to praise it as an “engine of growth.”

In late autumn of 2010, company executives confided to the Energy Department that they were running out of cash and could not make a required payment to a cash-reserve account. The company was supposed to begin making the first of $5 million payments to create a $30 million cash reserve on Dec. 1.

Solyndra officially defaulted on its loan that day. Chu approved a softening of the loan requirements so that the company could continue receiving loan installments.

“Ultimately, the choice was between imminent liquidation or giving the company and its workers a fighting chance to succeed,” LaVera said in the statement, first reported by Politico.

**biccat**

You need to do a little more editing on these copy-paste stories Fraz.

I'd love to hear the train of thought that went into allowing private investors to have priority over the government on the loan...especially when the government was first in time.

**Frazzled**

biccat wrote:You need to do a little more editing on these copy-paste stories Fraz.

I'd love to hear the train of thought that went into allowing private investors to have priority over the government on the loan...especially when the government was first in time.

Actually that part's easy. Thats distress financing. No big deal. the problem of course is WHY THE ENERGY DEPARTMENT AS CREDITOR AND PART MANAGER WITH THREE SEATS ON THE BOARD WOULD PERMIT THAT.

**WarOne**

Three threads all in a short span Frazzled?

Anyway, the thread highlights a very concerning relationship of Solyndra to the federal government which in different forms and figures had given the failing solar company both financial and political support.

**biccat**

Frazzled wrote:
biccat wrote:You need to do a little more editing on these copy-paste stories Fraz.

I'd love to hear the train of thought that went into allowing private investors to have priority over the government on the loan...especially when the government was first in time.

Actually that part's easy. Thats distress financing. No big deal. the problem of course is WHY THE ENERGY DEPARTMENT AS CREDITOR AND PART MANAGER WITH THREE SEATS ON THE BOARD WOULD PERMIT THAT.

Yes...the question is why.

In totally unrelated news, apparently in the weeks before the loan was granted, a major Obama donor and Solyndra investor made several visits to the White House.

**WarOne**

Also, the loss of Solyndra has not destroyed the US attempt at going green:

http://techcrunch.com/2011/09/30/despite-solyndra-u-s-solar-up-69/

**dogma**

biccat wrote:
In totally unrelated news, apparently in the weeks before the loan was granted, a major Obama donor and Solyndra investor made several visits to the White House.

Clientelism is bad?

How would you ever decide between X contractor and Y contractor?

**schadenfreude**

I'm surprised it took this long for someone in the administration to fall on their sword.

**Frazzled**

schadenfreude wrote:I'm surprised it took this long for someone in the administration to fall on their sword.

Unless I missed something, no has yet, unless he resigned in the last two days.

Automatically Appended Next Post:

dogma wrote:
biccat wrote:
In totally unrelated news, apparently in the weeks before the loan was granted, a major Obama donor and Solyndra investor made several visits to the White House.

Clientelism is bad?

How would you ever decide between X contractor and Y contractor?

Horse gak. Loans should be decided on the merits, not who you know. Thats crony capitalism. It is neither efficient nor fair.
In the private sector, people would be fired over this. I know, I've seen it and lived it.

**biccat**

dogma wrote:
biccat wrote:
In totally unrelated news, apparently in the weeks before the loan was granted, a major Obama donor and Solyndra investor made several visits to the White House.

Clientelism is bad?

How would you ever decide between X contractor and Y contractor?

Uh...what?

You do realize that this wasn't an issue of "contractors," but rather of deciding what group was to receive loans. It's the Administration's position that Solyndra got the loan because they were the most qualified. It turns out, they were the most politically connected.

People used to get upset about this sort of thing.

**Melissia**

You mean just like they got upset about the exact same thing (except far more common) that happened with Cheney?

**biccat**

Melissia wrote:You mean just like they got upset about the exact same thing (except far more common) that happened with Cheney?

I wasn't aware that Dick Cheney ever gave loans to solar companies.

But unless I missed something, Dick Cheney is no longer the Vice President.

**Melissia**

biccat wrote:
Melissia wrote:You mean just like they got upset about the exact same thing (except far more common) that happened with Cheney?

I wasn't aware that Dick Cheney ever gave loans to solar companies.

But unless I missed something, Dick Cheney is no longer the Vice President.

Ah, the wonders of Biccat's highly selective memory.

You see Biccat, when a certain Dick Cheney was in office, all of his business friends were receiving lucrative government contracts despite the fact that they never had to compete for said contracts, they were notoriously wasteful, and often didn't even manage to do their jobs competently.

Politicians are funny like that. And by funny I mean tragic. And by tragic I mean for us, not for the politicians.

You're constantly trying to prove that somehow anyone who supports Obama is a hypocrite. Well, Biccat, right back at ya

**dogma**

Frazzled wrote:
Horse gak. Loans should be decided on the merits, not who you know. Thats crony capitalism. It is neither efficient nor fair.

Of course its fair, if you don't know someone in power its purely your own fault for not seeking, or otherwise obtaining, that connection. I believe the term is "networking", and I'm fairly certain its one of those skills that gets stressed when talking about pursuing employment (or business in general), and that there's an entire industry based on it.

You are correct though that it isn't necessarily efficient, but I didn't claim that loans should be accorded based solely on knowledge of person X, only that its perfectly legitimate factor to consider when making a decision. If you know person X, and not person Y, so long as person X isn't known to be a bad person knowledge them eliminates the risk inherent in not knowing.

Frazzled wrote:
In the private sector, people would be fired over this. I know, I've seen it and lived it.

That's nice, but I don't see why its relevant since we're talking about government, where people are also fired over this type of behavior. Not all the time of course, but the same applies to the private sector.

**Frazzled**

Melissia wrote:You mean just like they got upset about the exact same thing (except far more common) that happened with Cheney?

Melissia ixnay on the Cheneynay lestey you'll gettey a shotgun blast in the faceay...

**dogma**

biccat wrote:
You do realize that this wasn't an issue of "contractors," but rather of deciding what group was to receive loans. It's the Administration's position that Solyndra got the loan because they were the most qualified. It turns out, they were the most politically connected.

Yes, I'm well aware, I wasn't specifically using the word "contractor" to comment on Solyndra, but making a more general point on clientelism and the way it factors into government decision making,

In any case, the fact that they were politically connected does not preclude them from being qualified (in this instance being the "most qualified" is irrelevant).

biccat wrote:
People used to get upset about this sort of thing.

About a government official being visited by a member of a private sector company that wanted to take advantage of a government program?

**biccat**

Melissia wrote:You see Biccat, when a certain Dick Cheney was in office, all of his business friends were receiving lucrative government contracts despite the fact that they never had to compete for said contracts, they were notoriously wasteful, and often didn't even manage to do their jobs competently.

What, you mean Halliburton? Because Halliburton is a special company, they usually get no-bid contracts because there isn't anyone to bid against them.

The accusations against Cheney were largely political and not based in fact. Much like 99% of what comes out of a Democrat's mouth.

Melissia wrote:Politicians are funny like that. And by funny I mean tragic. And by tragic I mean for us, not for the politicians.

Despite your attack on Cheney above, you're actually not defending the Obama administration on this? Since you've been a loyal water-carrier for the DNC, shouldn't you at least mount a token defense of the President?

Melissia wrote:You're constantly trying to prove that somehow anyone who supports Obama is a hypocrite.

That's because they are, at least when they're not being malicious.

**Melissia**

biccat wrote:The accusations against Cheney were largely political and not based in fact.

You keep telling yourself that Biccat.

biccat wrote:Despite your attack on Cheney above, you're actually not defending the Obama administration on this? Since you've been a loyal water-carrier for the DNC, shouldn't you at least mount a token defense of the President?

I'm not a "loyal water-carrier". I believed Obama would produce the best results after being severely disappointed with the failures of the republican party in regards to regulation (which caused our current economic crisis), so I voted for him. And because I dislike the Tea Party movement, and said movement-- which is frequently homophobic, sometimes racist, and oftentimes Islamophobic-- is having an unfortunately large impact on the Republican party, I don't really have much of a choice. There's no reasonable third party candidate that I can vote for, nevermind finding one whose beliefs match with mine.

Out of lack of choice, I continue to hope Obama will try his best to make the country a better place in spite of the efforts of the Republican party, whose only objective in the last few years has been simply to be anti-Obama.

biccat wrote:That's because they are, at least when they're not being malicious.

Pot, meet kettle.

**Frazzled**

What other companies should have been able to bid on the Halliburton contracts Melissia? Do you know whether or not these companies were able to bid on the intiial contracts or are you just assuming thats a no? You do know that post election Cheney had no stock in Halliburton right? You do know that Halliburton (at that time, it has no G contracts for several years now) was a name maker in G contracts prior to Evil Cheney, for a variety of countries right?

**Melissia**

Frazzled wrote:What other companies should have been able to bid on the Halliburton contracts Melissia?

Certain private prison companies come to mind. You should probably remember when Cheney got indicted over the corruption he exhibited in blocking investigations into certain prisons which he had a financial stake in (it was even on fox news, for those who are wondering if it's just liberal media bias).

**dogma**

biccat wrote:
The accusations against Cheney were largely political and not based in fact. Much like 99% of what comes out of a Democrat's mouth.

So what does that mean regarding your accusations about Solyndra? Which, as far as I can tell, are based on essentially the same sort of evidence.

biccat wrote:

Melissia wrote:You're constantly trying to prove that somehow anyone who supports Obama is a hypocrite.

That's because they are, at least when they're not being malicious.

You know, the demonstration of hypocrisy requires you to actually demonstrate that the accused hypocrite does not hold beliefs that they have claimed to have. Which is why claiming that all members of group X are hypocrites is generally not wise.

Unless of course you're attempting to be political, in which case your post is very amusing.

**Rented Tritium**

Corrupt no-bids are not the realm of one party or another. They're a PERVASIVE problem that's only getting bigger with privatization getting so popular. Halliburton really is the only company that does some of the stuff they got no-bids for, so that kind of put us in a bad spot. The issue though is that when they did things wrong and we KNEW it, we let them slide rather than pressure them in any way to improve their process.

Even if someone is the only vendor, you should still have bargaining chips to improve their performance written into the contract. Sole-source contracts really are the right call in many situations, but you need to monitor them even MORE closely than you do competitive contracts. Being sole-source makes a company lazy.

**biccat**

Melissia wrote:I'm not a "loyal water-carrier". I believed Obama would produce the best results after being severely disappointed with the failures of the republican party in regards to regulation (which caused our current economic crisis), so I voted for him.

And I'll note that you're still not defending them on this.

Was the Administration wrong to loan money to Solyndra?

As always, blanket insults and personal attacks removed.

**Melissia**

biccat wrote:And I'll note that you're still not defending them on this

And you would be correct.

biccat wrote:As always, blanket insults and personal attacks removed.

No, your blanket insults were not removed. They're still up there.

**Rented Tritium**

I'll admit to being pretty liberal and defensive of this administration and I think it was clearly pretty misguided to lend to these guys, not just in hindsight, but given the information they had AT THE TIME. That's the worst part. It's not a matter of lolwhops we made a booboo. They had everything they needed to not make a stupid decision.

**dogma**

Frazzled wrote:
You do know that post election Cheney had no stock in Halliburton right?

I'm fairly certain he has a large number of stock option, at least he definitely did while in office.

Automatically Appended Next Post:

Rented Tritium wrote: Halliburton really is the only company that does some of the stuff they got no-bids for, so that kind of put us in a bad spot. .

KBR is also a fairly unique company.

**Frazzled**

Melissia wrote:
Frazzled wrote:What other companies should have been able to bid on the Halliburton contracts Melissia?
Certain private prison companies come to mind. You should probably remember when Cheney got indicted over the corruption he exhibited in blocking investigations into certain prisons which he had a financial stake in (it was even on fox news, for those who are wondering if it's just liberal media bias).

Prison companies? Seriously? I would have thought you'd have a decent list of competitors at hand. For future reference, when making this argument, citing companies like Fluor and Jacobs would be more efficacious.

Automatically Appended Next Post:

Rented Tritium wrote:Corrupt no-bids are not the realm of one party or another. They're a PERVASIVE problem that's only getting bigger with privatization getting so popular. Halliburton really is the only company that does some of the stuff they got no-bids for, so that kind of put us in a bad spot. The issue though is that when they did things wrong and we KNEW it, we let them slide rather than pressure them in any way to improve their process.

Even if someone is the only vendor, you should still have bargaining chips to improve their performance written into the contract. Sole-source contracts really are the right call in many situations, but you need to monitor them even MORE closely than you do competitive contracts. Being sole-source makes a company lazy.

Now here is a man who speaks the truth.

**Melissia**

Frazzled wrote:Prison companies?

You asked for an example and I gave one... geeze.

**Frazzled**

Melissia wrote:
Frazzled wrote:Prison companies?
You asked for an example and I gave one... geeze.

Yea but its a horrifically bad one.

If someone asks for comps, you'll have a substantially better case if you can present effective comps. Good sources for comps are bloomberg, rating agency reports, industry papers, and private reviews.

(edited for sounding more harsh than intended).

**Melissia**

I don't expect to change anyone's mind over the internet, frazzled.