Official involved in Solyndra loan guarantee resigns
The director of the controversial Energy Department program that guaranteed a $535-million loan to the now-bankrupt solar equipment maker Solyndra stepped down Thursday, hours after President Obama defended the program at a news conference.
Obama asserted that the loan guarantees helped new technology companies compete with heavily subsidized rivals in Europe and China.
The Energy Department, meanwhile, said Jonathan Silver had told Secretary Steven Chu earlier in the year that he planned to leave when it became clear the program would be finished with its loan guarantees by the end of September.
“In early July, shortly after the fiscal year 2011 budget was completed by Congress and it became clear that no significant new funds were included for the loan program, Jonathan Silver informed me that he intended to return to the private sector shortly after Sept. 30,” Chu said in a statement.
Silver took his post in November 2009, soon after the program approved the loan guarantee to Solyndra, its first since the initiative began in 2006. By late 2010, Solyndra was faltering. Earlier this year, the company asked the Energy Department to restructure the terms of its loan guarantee. By early September, it had closed its doors, laid off almost all of its 1,100 workers, filed for Chapter 11 bankruptcy protection and become the focus of FBI and congressional investigations.
During congressional hearings, Silver took much of the heat for the program’s support of Solyndra and its subsequent decision to restructure the loan guarantee in a way that placed the federal government behind other investors in recouping its money in case of bankruptcy. Some congressional Republicans demanded Silver’s resignation.
The administration was quick to say Thursday that Silver’s resignation was not in response to congressional demands.
Reps. Fred Upton (R-Mich.) and Cliff Stearns (R-Fla.) — the leaders of the congressional investigation into the Solyndra deal — said Silver’s departure did not repair the damaged program or return taxpayer money to the government.
“Mr. Silver’s resignation does not solve the problem,” they said in a statement. “We are in the midst of the Solyndra investigation and just days removed from Mr. Silver’s mad rush to finalize the last $4.7 billion in loans before the statutory deadline.”
Obama said the program, started under the George W. Bush administration but beefed up with funds from the stimulus act, was meant to provide nascent clean technology companies with the kind of help that Chinese and European enterprises get from their governments. Subsidies by the Chinese government helped lead to a crash in prices for solar equipment, which contributed to the bankruptcy of several American solar companies, including Solyndra.
“The Loan Guarantee Program is designed to meet a particular need in the marketplace, which is — a lot of these small startups, they can get angel investors and they can get several million dollars to get a company going,” Obama said at a news conference Thursday. “But it’s very hard for them to then scale up, particularly if these are new cutting-edge technologies. It’s hard for them to find private investors. And part of what’s happening is China and Europe, other countries, are putting enormous subsidies into these companies.”
In defending the program, Obama took a swipe at Stearns, who told NPR recently, “We can’t compete with China to make solar panels and wind turbines.”
“I’m not going to surrender to other countries’ technological leads that could end up determining whether or not we’re building a strong middle class in this country,” Obama said. “And there are going to be times where it doesn’t work out. But I’m not going to cave to the competition when they are heavily subsidizing all these industries.”
Silver is leaving to join the moderate Democratic-leaning think tank Third Way. Under Silver, the guarantee program backed loans “supporting 38 projects that are expected to create or save more than 60,000 jobs — including 44,000 that have already materialized,” the Energy Department said.
Solyndra, so far, is the only recipient to fail.
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