Bankruptcy. FBI raids. General ignominy. For the benighted solar energy company and stimulus loan recipient, Solyndra, the next stop in its vale of tears will be a hearing this Wednesday in Washington held by a House Energy and Commerce subcommittee.
For the Record, 12:46 p.m. Sept. 12: An earlier version of this online article stated that Solyndra got a $535-billion loan guarantee from the Energy Department in 2010. The correct number is $535 million, as was also mentioned in the article.
If most hearings are a surefire cure for insomnia, Wednesday’s Solyndra session promises to be a standing-room-only humdinger. The witness list includes the deputy director of the White House Office of Management and Budget, Jeffrey Zients; the head of the Energy Department’s loan programs, Jonathan Silver; Solyndra chief executive Brian Harrison; and the company’s chief financial officer, W.G. Bill Stover.
The administration’s critics couldn’t have asked for a better gift than the Solyndra scandal. Many Republicans have argued that federal backing of clean energy technology is a waste of money and a clear example of government picking business winners and losers. (The committee, however, does not oppose tax breaks to fossil fuel companies that critics say subsidize that sector.)
Led by Rep. Fred Upton (R-Mich.), the Energy and Commerce Committee drew up a list of priorities in January that included close scrutiny of the administration’s clean energy programs. In February, the committee launched an investigation of the $535-million loan guarantee Solyndra got from the Energy Department in 2010, based on concerns that the loan may have been granted because of Solyndra’s financial ties to a major Democratic fundraiser, George Kaiser.
“We smelled a rat from the onset,” Upton said. “As the highly celebrated first stimulus loan guarantee awarded by the DOE, the $535 million loan for Solyndra was suspect from day one. Our investigation to protect American taxpayers has revealed that in the rush to get stimulus cash out the door, despite repeated claims by the administration to the contrary, some bets were bad from the beginning.”
Kaiser has denied that he is personally invested in Solyndra or participated in talks for the federal loan. The Energy Department has said that Solyndra applied for the loan under the Bush administration. The FBI declined to comment on the raid and investigation.
President Obama visited a Solyndra plant in May 2010 to herald it as “leading the way toward a brighter and more prosperous future,” just after a market analyst issued a report raising questions about whether the company was “a going concern.”
Solyndra’s subsequent history seemed to be one stumble after another. It shelved an IPO in June 2010. It replaced its chief executive and founder, Chris Gronet, a month later. It canceled a plant expansion and closed an older facility last fall, and by January, more market analysts questioned the company’s viability. By late August, the company had filed for bankruptcy and laid off 1,100 employees. Last week, the FBI raided its offices as part of a joint investigation it is conducting with the Energy Department’s Inspector General’s office.
Among the problems Solyndra faced was the fact that it was rolling out a pricier new technology at a time when Chinese manufacturers had driven down the prices of solar equipment sharply. The Chinese have gotten the leg up in the solar market in large part due to vast government subsidies. But Solyndra’s disintegration has only helped to turn up the Republican rallying cry to cut state subsidies to clean technology. The fact that the loan was part of the administration’s stimulus package has also fed the Republican argument that the whole federal effort to goose the economy was a failure.
On Monday, Republican National Committee Chairman Reince Priebus used the Solyndra implosion to dismiss Obama’s latest effort to prod the economy.
“With the president traveling the country touting his Stimulus II plan, it is important to understand the lessons from his first stimulus,” said Priebus in a statement. “A year ago, he made Solyndra the supposed poster child for stimulus success. After laying off 1,100 workers, wasting over $500 million in loan guarantees and becoming the subject of an FBI investigation, Solyndra is now the prime example of stimulus failure.”