How absurd is the Obama DOE’s explanation for violating the federal law against prioritizing private lenders ahead of taxpayers (i.e., sliding the president’s Solyndra cronies ahead of the public)? As Andrew’s post demonstrates, it is laugh out loud absurd — or at least it would be if the scheme were not so outrageous.
Let’s put aside for the moment that, by the administration’s “reasoning,” the public could be robbed on every loan by simply “renegotiating” it 10 seconds after it was finalized. What is truly priceless is the administration’s claim that the law had to be ignored because “investors are unlikely to make an equity investment in a distressed company on commercially acceptable terms” if they’re not given this protection, and therefore to execute the law faithfully (that little thing the executive branch is supposed to do) would “preclude the use of a common restructuring strategy.”
First, there is nothing “common” about these loans at all. They amount to the administration using public money to prop up an industry (not to mention a startling number of campaign contributors) that wouldn’t need the propping if it were viable. In the private market, it is fine for distressed companies to attract investors by the common strategy of restructuring loans on favorable terms — but even there, a company could not run roughshod over the contractual rights of other lenders.
Here, by contrast, we are dealing with a situation in which many of the companies will naturally be distressed. If the ventures were viable, investors could avail themselves of private lenders and wouldn’t require taxpayer help. That is, the green energy investor already gets a huge break: access to low-interest credit guarantees he wouldn’t get in common business arrangements. The government, in defiance of the market’s common functioning, has already picked him as a winner even though his business is apt to be a loser. Even if there weren’t a statute prohibiting it, why would we want public officials, at the public’s expense, to give him the windfall of a “common restructuring strategy” available to investors who take risks from which government intervention has spared him.
Second, remember when President Bush ignored the letter of FISA to monitor enemy communications in wartime? Unlike wading into “green energy” venture capitalism, that episode involved an actual obligation of government (national security) and a constitutional power of the president (foreign intelligence gathering) that the highest federal surveillance court had said Congress could not diminish by statute. Yet congressional Democrats, the media, Eric Holder and the rest of the Lawyer Left, howled — with some even calling for Bush’s impeachment. Now they’re apparently ready to give Obama that “blank check” they used to tell us presidents had to be denied lest our Constitution’s delicate checks and balances be destroyed. Funny that we haven’t heard many Holder lectures about the vaunted “rule of law” when it comes to Solyndra.