Officials hope to approve more loan guarantees
Thursday, September 15, 2011
WASHINGTON (AP) — The Obama administration is moving to finalize as many as 15 loan guarantees for renewable energy companies before the stimulus program ends on Sept. 30, and Republicans are questioning whether that could lead to more failures like Solyndra Inc., a company that filed for bankruptcy and may leave taxpayers on the hook for a half-billion-dollar loan.
The loan guarantees essentially make it easier for the companies to get financing as the government guarantees repayment in the event of default. In Solyndra’s case, the loan came from the government itself, but private banks often provide the financing.
A spokesman for the Energy Department said the department won’t take any shortcuts during the approval process.
“We will only close the deals that are ready to close on Sept. 30,” said spokesman Damien LaVera.
A congressional subcommittee is examining the loan guarantee program. It released documents Wednesday that appeared to show senior staff at the White House Office of Management and Budget chafing about having to conduct “rushed approvals” of a loan guarantee for Solyndra, a California manufacturer of solar panels. The company is also the subject of an FBI investigation.
Republican members of the committee said the emails raised questions about whether the loan was rushed to accommodate a groundbreaking ceremony in September 2009 that featured Vice President Joe Biden and Energy Secretary Steven Chu.
“We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around,” said one of the emails from an unidentified OMB aide to Biden’s office.
In another email exchange obtained by the committee, an Energy Department official asked a staff member at OMB if “there is anything we can speed along on the OMB side.” Again, neither official was identified.
“I would prefer that this announcement be postponed,” the OMB official replied. “This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.”
White House spokesman Jay Carney said the emails don’t suggest that the White House was pushing for the loan to be made.
“What the emails make clear is there was urgency to make a decision on a scheduling matter,” Carney told reporters at the White House. “It is a big proposition to move the president or to put on an event and that sort of thing so people were simply looking for answers about whether or not people could move forward.”
“It had nothing to — and there is no evidence to the contrary — nothing to do with anything besides the need to get an answer to make a scheduling decision,” he said.
Solyndra once was the showcase for President Barack Obama’s efforts to increase investment in renewable energy and to generate jobs. But the marketplace for its products changed dramatically over the past year. Chinese companies have flooded the market with inexpensive solar energy panels, and Europe’s economy weakened demand from customers. The result has been an unprecedented drop in solar cell prices this year. Two other solar panel manufacturers also filed for bankruptcy in the past month.
Administration officials stressed that private investors thought so highly of Solyndra’s prospects that they put more than $1 billion of their own money into the company.
But Republicans on the panel said there appeared to be a rush in approving financing for Solyndra, and they expressed concern that a similar rush may be taking place now with agreements that would have the federal government guaranteeing an additional $10 billion in loans if all the guarantees are approved before Sept. 30.
“In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winner and loser in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat,” said GOP Rep. Fred Upton, chairman of the House Energy and Commerce Committee.
Jonathan Silver, executive director of the Energy Department’s Loan Programs Office, said the loan guarantee program is needed to give U.S. companies the kind of low-cost financing that other nations are providing their renewable energy industries. For example, the China Development Bank is providing tens of billions of dollars in credit to that country’s largest solar panel manufacturers.
“This isn’t picking winners and losers,” Silver said. “It is helping ensure that we have winners here at all.”
Democrats said failure to invest in the U.S. solar industry would amount to an economic death sentence that would allow other nations to dominate a growing business.
“If you live in reality, you know the world cannot continue its dependence on fossil fuels and that we are in danger of losing this industry to our competitors, especially China,” said Rep. Henry Waxman, D-Calif.
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