Author: Alex Zeldin
President Obama will soon have to defend what may be the first scandal in his administration. Solyndra, a manufacturer of solar energy panels based in Fremont, California, received $535 million of federal loans, only to file for bankruptcy in September of this year. Politics aside, the Obama administration should learn the appropriate lessons from this incident and move forward knowing that any loan involving tax payer dollars should be subject to intense scrutiny, as it appears the Obama administration’s lack of due-diligence allowed the scandal to happen.
Some may wonder what the big deal is regarding Solyndra’s fall from grace. This certainly isn’t the first time a company received a loan only to later file for bankruptcy. Banks have experienced this phenomenon for years. $535 million is spent every two days to fund the war in Afghanistan. When compared to other government expenses, losing that much money is not unprecedented or uncommon. But the fact that billionaire George Kaiser, a top Obama fundraiser, had a large stake in the company poses the question whether the loan was a politically motivated move and not subjected to the same scrutiny and fact-checking as it should have been.
David Freddoso, of the “Washington Examiner,” reported that in 2008, before the loan was granted and Obama was sworn into office, PricewaterhouseCoopers’ (PwC) audit showed that Solyndra suffered losses of $558 million in its five years of existence. The audit further revealed that Solyndra “has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raises substantial doubt about its ability to continue as a going concern.”
Nevertheless, a loan was granted. President Obama made this a part of his Green Jobs Initiative and the company created 1,100 jobs as a result. But fast-forward two years and all 1,100 workers have been laid off and are collectively suing Solyndra for losses.
This appears to be the Obama Administration’s fault. In July 2005, The Bush Administration signed the Energy Policy Act of 2005 into law. Part of this bi-partisan act created the Department of Energy’s Section 1703 loan guarantee program for green energy companies. Solyndra filed for a federal loan in December of 2006 and was put through the due-diligence process thereafter.
During the last days of the Bush Administration in January of 2009, this loan was put on hold. ABC investigative reporter Brian Ross discovered during this time that numerous advisers raised caution flags and told the president that they needed more time to review Solyndra, as they had numerous concerns. Despite the prior administration’s concerns, when President Obama was sworn into office, the new administration fast-tracked the loan.
This certainly smells political in nature. President Obama wanted to assure Americans he was committed to a green economy, and loaning money to a solar company is certainly a way to do so. But given PricewaterhouseCoopers’ audit and the Bush Administration’s hesitation to grant a loan, fast-tracking that loan was certainly a poor idea.
In the coming months as the FBI continues to investigate the situation, many things will become clear about what happened at Solyndra. More light will be shed on who is responsible for issuing a loan to Solyndra given its red flags. President Obama will try to deflect, saying this wasn’t him, that it’s the guys below him, and that his responsibility was to find Bin Laden, pass Health Care Reform, and lead a nation through two wars. Whether this will hold water is to be seen. Those who lost the most in this situation were the taxpayers and the workers at Solyndra. Both will decide whether it will impact the coming election next November.
The fact that Solyndra received a huge loan where other solar companies did not raises concern that the administration wanted to support one of its top fundraisers. If this is the case, then President Obama will have a very hard time defending his actions unless his administration can provide a good reason for why Solyndra was fit to receive a loan. Until then critics will be right to question him for it.
Alex Zeldin is a senior AHVA major. He can be reached at zeldin@oxy.edu
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