Obama was asked at a press conference Thursday about the bankruptcy of Solyndra, a California-based solar panel manufacturer that received a $535 million loan guarantee from the Energy Department in 2009.
“We knew from the start that the loan guarantee program was going to entail some risk by definition,” Obama said, adding that the “overall portfolio has been successful.”
“There were going to be some companies that did not work out; Solyndra was one of them,” he said.
Obama reiterated his defense of the Energy Department’s decision to green-light the Solyndra loan guarantee, even amid concerns from some administration officials about the financial state of the company.
“All I can say is that the Department of Energy made these decisions based on their best judgment about what makes sense,” Obama said.
The president dismissed a series of emails that show administration officials disagreed about the Solyndra loan guarantee in the months after the administration approved financing for the company.
“Of course there were going to be some debates internally when you have something as complicated as this,” Obama said.
Sure. Here’s a brief rundown of some of the concerns raised by Office of Management and Budget staff as to whether the Solyndra loan guarantee ‘made sense’:
“This deal is NOT ready for prime time.”
“The issue of working capital remains unresolved . . . [Solyndra] seems to agree that the model runs out of cash in Sept. 2011 even in the base case without any stress . . . how can we advance a project that hasn’t funded working capital requirements and that generates a working capital shortfall of $50 [million] when working capital assumptions are entered into the model?”
“Given the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model.”
“I am increasingly worried that this visit could prove embarrassing to the Administration in the not too distant future, given 1) what we just heard today from DOE that Solyndra is delaying their IPO at least until the end of the year, and 2) what the auditors said about Solyndra making it through the year absent new financing.”
“What’s terrifying is that after looking at some of the ones that came next, this one [Solyndra] started to look better…Bad days are coming.”
“While the company may avoid default with a restructuring, there is also a good chance it will not.”
The president also said the program was necessary to compete with countries like China that offer massive government subsidies to “clean” energy programs. Of course, it also doesn’t help that China generally avoids high-risk solar technology like the kind in which Solyndra specialized. Furthermore, I sincerely doubt that the Chinese government would put up with this.