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Solyndra’s bankruptcy, and how the government was involved
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Kai Ryssdal: The company my brother works for filed for bankruptcy the other day. Not something that would ordinarily merit a mention, except for this: He works in the solar panel industry. And this is the second solar company he’s ridden into Chapter 11 in three years. Times are hard in the photovoltaic cell business.
Also, last time I talked to him, he said the place was crawling with FBI agents yesterday. It’s a company called Solyndra. We’ve got Marketplace’s Steve Henn on the line to explain. Hey Steve.
Steve Henn: Hey.
Ryssdal: So for the people who, until three days ago, had never heard of Solyndra, why is this company and its bankruptcy so controversial?
Henn: Well, in March of 2009, Solyndra was the first company to receive a loan from the Department of Energy to help create green jobs and new green industries. It got more than half-a-billion dollars. The Department of Energy actually bragged at the time that it had rushed this loan application through. And later it was revealed by the government accountability office that they had failed to do some of their due diligence before announcing the deal. This became a much bigger political issue once lenders started running into financial problems, and reporters at the Center for Public Integrity revealed that one of the company’s big financial backers was also a fundraiser for President Obama, a guy named George Kaiser.
Ryssdal: Which is, at the very least, an appearance of impropriety and investigations will figure that out. But businesses go bad in this country every single day, right?
Henn: No, that’s right. And failure doesn’t necessarily prove there was fraud or corruption. Solyndra has pretty innovative solar technology; they’re trying to crack the solar problem in a way no one else has. And that’s a risky bet. And so far, at least, there isn’t any public evidence that the White House, the Department of Energy or even Solyndra executives did anything illegal. But, you know, the Department of Energy’s inspector general has to be intensely curious if the company misled it — the government — about its financial situation, especially while it was trying to renegotiate some loans recently. And Republicans in Congress are looking for evidence that the White House somehow played favorites here.
Ryssdal: Yeah, so here’s another question, though: The government plays favorites in a way with tax policy and incentives and all of that — does it all the time — but when you get to these new technologies, is it smart necessarily for the Department of Energy, or any other branch of the government, to be involved in that kind of investment?
Henn: If you think back to March of 2009, when the Department of Energy announced this deal, there wasn’t a lot of other capital out there. The financial markets were broken. And so there was a conscious decision made by Congress and the Department of Energy and the administration that this was a time where it was appropriate to try and imitate venture capitalists and make big investments in growing the economy. Solyndra was a risky investment; it’s not necessarily a corrupt one, it may not have even been a stupid one. The market shifted under the company’s feet. They got clobbered by cheap imports from China and firms in the U.S. that figured out how to make solar panels a lot more cheaply. So should Solyndra executives have seen that coming? Maybe. Should the D.O.E. have seen that coming? You know, there are analysts out there who say yes. But it’s important to remember, private investors poured money into this company too, and just like the government, they lost it.
Ryssdal: Marketplace’s Steve Henn on the fate of Solyndra, the recently bankrupt solar company. Steve, thanks a lot.
Henn: Sure thing.