Solyndra, the California energy company gone bust, was so cash strapped in December, 2010 that they defaulted on a loan payment to the government. That didn't bother the Obama Administration, though. In fact, DOE officials amended the loan agreement, allowing Solyndra to draw another $67 million, and subordinated the taxpayer's credit position to that of private investors.
There was an abundance of information and reasons why the Solyndra loan should never have been approved in 2009. But, the Obama White House rejected all the obvious warning signs preferring to pass out half a trillion dollars like party favors and to create campaign photo-ops.
The White House says this wasn't stupid. "That's just the way business works," according to the President's spokesman, Jay Carney.
The next time Obama shows he understands how ANYTHING in business works, it will be the first time.
The White House still defends the $535 billion loan guarantee to Solyndra as an investment in "cutting edge technology." A less varnished assessment would conclude that it was a government investment in opulence designed to failed from the beginning.
The glitzy made-for-Hollywood 300,000 square foot plant, characterized by workers as the "Taj Mahal," had vastly greater manufacturing capacity than Solyndra ever commanded in market share and came with "robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms."
The Administration doubled down on stupid by not recognizing that failure was imminent by the end of 2010. In addition, the Energy Act of 2005 specifically prohibits subordination of the taxpayer's credit position – an apparently violation of federal law.
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The DOE says it renegotiated the loan agreement and allowed Solyndra to draw down the additional $67 million because the government officials "thought it gave Solyndra a fighting chance to survive and the taxpayers their best chance to recover their loan."
What the DOE doesn't say is that the subordination of the taxpayer's position and the additional $67 million created an illusion of better financial condition than was reality. In other words, the DOE helped put a better-than-actual appearance on Solyndra, who then went to the private markets to raise additional investment capital. That prompted allegations that government officials may be guilty of fraud according to Andrew McCarthy, a former Assistant U.S. Attorney.
The Solyndra scandal has already prompted five high level investigations. What Obama thought would be government funded campaign props is likely to turn into a re-election season nightmare.
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