TARP Bailout Fraud: Where Did the Money Go?

Designed to Fail

Global Research
Stephen Lendman

On December 8, 2008, the Senate confirmed Neil Barofsky’s nomination as Troubled Asset Relief Program (TARP) watchdog. He assumed the post of SIGTARP (Special Inspector General for TARP).On July 20, 2009, he estimated the $700 billion bailout fund could balloon to $23.7 trillion. Obama administration secrecy conceals what’s essential to reveal. Over $9 trillion is known. Some analysts think true figures may be three times that amount. Only crooked bankers and corrupt bureaucrats know for sure.

 In February 2009, Barofsky submitted an initial report to Congress. In the past two months, he said, Washington handed out hundreds of billions of dollars (like confetti) to troubled financial institutions.

Where did the money go, he asked? What assurances exist that it’s not stolen or wasted?

TARP didn’t require recipients to report or internally track funds used. Accountability wasn’t mandated. Banks took full advantage. Instead of loans to stimulate recovery, they hoarded cash, acquired other financial institutions, paid off debt, speculated, and knew then and now there’s plenty more help for the asking.

Fraud prevention standards weren’t imposed. Barofsky doubts the program’s longterm success.

On March 29, 2011, he headlined a New York Times op-ed “Where the Bailout Went Wrong,” saying:

Two and a half years after legislation passed, Obama officials declared mission accomplished. “On my last day as the special inspector general….I regret to say that I strongly disagree.”

TARP and what followed struck out. It “failed to meet some of its  most important goals.” Main Street was sacrificed for  Wall Street.

Congress was told TARP funds would buy up to $700 billion of mortgages. Authorizing legislation (the Emergency Economic Stabilization Act – EESA) emphasized preserving homeownership.

Treasury officials promised help. EESA mandated it. Struggling homeowners got none. Legislative provisions were violated. Treasury changed the rules. Money went to banks with no accountability or mandate to extend credit.

“There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds.”

Instead of increased lending, it declined. As inspector general, Barofsky had no enforcement power. He could only recommend. Suggested policies fell on deaf ears. Treasury and Wall Street conspired to commit grand theft. Ordinary people were hung out to dry and scammed.

Helping homeowners was shelved. The Home Affordable Modification Program (HAMP) was introduced. Obama promised four million families help. The program was “a colossal failure.”

It was designed to fail. Its provisions included no accountability. Guidelines only were provided. Banks and other mortgage services ignored them. Foreclosures mounted. Millions of homeowners were defrauded. Nothing changed to this day.

One of HAMP’s most pernicious abuses was letting servicers “direct borrowers who were current on their mortgages to start skipping payments, telling them that that would allow them to qualify for a HAMP modification,” said Barofsky.

“Homeowners who might have been able to ride out the crisis instead ended up in long trial modifications, after which servicers would deny them a permanent modification and send them an enormous ‘deficiency’ bill.”

“Borrowers who might otherwise never have missed a payment found themselves hit with whopping bills that they couldn’t pay and now faced foreclosure. It was a disaster.”

Geithner bears full responsibility. Understating problems, he admitted solutions “won’t come close” to expectations. He refused to address glaring shortfalls. He abandoned Main Street for Wall Street. He’s complicit in grand theft. He and banker cronies belong in prison.

Banks know they can steal with impunity. They’re larger and more powerful now than when crisis conditions erupted. They can speculate recklessly. They’ll be bailed whenever they get in trouble.

Treasury “ignore(d) rather than support(ed) real” reforms. Its “broken promises” turned TARP and other programs into a giant Wall Street “giveaway.”

Its “mismanagement” and criminal complicity “damaged the credibility of the government….” Conditions are so out of control that future policy makers may be unable “to save the system the next time a crisis arises.”

Perhaps that’s TARP’s “most lasting, and unfortunate, legacy.”

Barofsky’s new book “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street” explains.

Writer/Roosevelt Institute fellow Matthew Stoller calls it “a very important” account of the financial crisis aftermath. In April 2010, Barofsky met a key adversary.

Herbert Allison formerly headed Merrill Lynch, TIAA-CREF and Fannie Mae. He came out of retirement to oversee TARP. He became Assistant Treasury Secretary for Financial Stability.

“Have you thought at all about what you’ll be doing next,” he asked. “Out there in the market, there are consequences for some of the things you’re saying and the way you’re saying them.”

$3.5 Billion in Federal Stimulus Funds Used for Installing "Smart Meters"

Seattle Times
Sarah Kuta

Smart meter movement stirs rowdy debate in Texas

Thelma Taormina keeps a pistol at her Houston-area home to protect against intruders. But one of the last times she used it, she said, was to run off a persistent utility company worker who was trying to replace her old electricity meter with a new digital unit.

Thelma Taormina keeps a pistol at her Houston-area home to protect against intruders. But one of the last times she used it, she said, was to run off a persistent utility company worker who was trying to replace her old electricity meter with a new digital unit.

"This is Texas." she declared at a recent public hearing on the new meters. "We have rights to choose what appliances we want in our home."

A nationwide effort to upgrade local power systems with modern equipment has run into growing resistance in Texas, where suspicion of government and fear of electronic snooping have made a humble household device the center of a politically charged showdown over personal liberty.

Some angry residents are building steel cages around their electric meters, threatening installers who show up with new ones and brandishing Texas flags at boisterous hearings about the utility conversion. At a recent hearing at the state Capitol in Austin, protesters insisted everyone present recite the Pledge of Allegiance before the meeting could begin.

"It's Gestapo. You can't do this," said Shar Wall of Houston, who attended the Public Utility Commission meeting wearing a large red "Texas Conservative" pin. "I'm a redneck Texas girl and I won't put up with it."

Utilities began replacing old-style electricity meters across the country about seven years ago as part of an effort to better manage demand on an increasingly strained power grid. New "smart meters" transmit and receive data remotely as electricity is used. Utility officials say they can use the real-time information to help prevent grid overloads during extreme temperatures. The devices would also promote conservation, such as cycling air conditioners on and off during peak demand periods.

In 2009, President Barack Obama devoted $3.5 billion in federal stimulus funds to help utility companies make the upgrade.

The conversion has triggered opposition in a number of states. Some residents have questioned the health impact of the radio waves the devices emit or the possibility that hackers could get confidential data from the transmissions.

Officials have downplayed the hazards, but several states, including California, Vermont, Maine and Nevada, have allowed residents to opt out of the new system. In most cases, residents would have to pay extra to have a utility employee come to their house to read their old meter.

Texas utilities have installed nearly 6 million smart meters, or 87 percent of their goal, since the state passed authorizing legislation in 2005. But as the project moves toward completion by 2016, the opposition is getting louder. It also carries the distinct flavor of an ultraconservative state that relishes its history as an independent republic before joining the United States.

State utility commission hearings on the meters have featured as many references to the Founding Fathers, the Revolutionary War and the Constitution as to the technical demands on the power system.

At a recent session, a staff presentation included a slide saying the new meters "are not meant to spy on you." Waiting to testify, activist David Akin replied, "Yes they are!"

Some say the meters would allow the police or other government agencies to tell when a person was awake and what they were doing in violation of the Fourth Amendment.

"I'm not going to let somebody else control what I do in my house," said Ginger Russell, who recently replaced her "No Smart Meters" sign with a steel cage around her home's analog meter in the East Texas town of Magnolia.

Those emphasizing privacy concerns cite a report issued by the U.S. Department of Energy in January that said many companies had not done enough to protect the smart meters from hackers. Some studies have also added to the health concerns. A branch of the World Health Organization last year called radio-frequency radiation from cellphones, utility meters and other devices a "possible carcinogen."

However, the Federal Communications Commission has rated the smart meters as safe, saying they are considered unlikely to cause bodily tissue heating or electric shock. The radio frequency radiation levels are much lower than those emitted by cellphones, supporters say.

Utility commission officials say the security concerns are being addressed and that the overwhelming majority of Texans accept the new meters. The commission will consider this fall whether to allow Texas residents to opt out.

"We believe this new technology is a direction that benefits consumers from an energy efficiency standpoint," said Leticia Lowe, spokeswoman for CenterPoint Energy, which serves the Houston area. She added, "We're moving forward with an industry that hadn't changed in over 100 years."

In the meantime, CenterPoint has directed its employees to leave immediately when a resident rejects a smart meter. The company says contract installers are encountering tough resistance in some neighborhoods.

"We're concerned about the safety of utility workers and other public service personnel legitimately doing their jobs," said CenterPoint spokesman Floyd LeBlanc.

Taormina, 55, says she's keeping her pistol handy just in case. The first smart meter installer who came to her house last summer wouldn't leave until she got the weapon out, she said.

"If someone comes on my property and assaults me - that's the idea of having a weapon is to equalize my little self against somebody that's bigger than me," she said.

Investigator who cleared Obama in scandal is his campaign donor

Examiner
Jim Kouri

The financial institution executive who was in charge of the “independent probe" that ended up absolving the Obama Administration for wasting billions of taxpayers' dollars spent on green energy schemes was neither bi-partisan or non-partisan, but a big contributor to the Obama reelection campaign, according to a report by a Washington, D.C., public-interest group that investigates corruption.

According to a report on Friday, Herbert Allison’s role as a special investigator of the Department of Energy's stimulus-funded loan program that is sparking curiosity. Not long after Allison determined that billions in taxpayer dollars invested in Obama-favored “green” technology companies were at nominal risk, "he made campaign donations -- big ones -- to the Democratic National Committee and the president’s re-election efforts," officials at theNational Legal and Policy Center claim.

In addition, according to officials at Judicial Watch, this situation raises doubts about the integrity of Wall Street maven Allison's investigation, "which centered on nearly $3 billion in loans that the Obama Department of Energy (DOE) doled out for experimental alternative energy projects."

Among the loans was an alleged fly-by-night California company named Solyndra, that was bankrolled by another Obama donor and fundraiser (bundler) George Kaiser, wasted more than half a billion dollars before finally going bankrupt.

In early 2012, a federal audit confirmed that “serious concerns” expressed by U.S. Treasury officials involving the risky $535 million Solyndra infusion were ignored as the deal was fast-tracked by top White House officials.

As a result, Judicial Watch filed a lawsuit against the Department of Energy to obtain records regarding the Solyndra loan because "the administration has blown off a public records request that dates back to early September 2011."

The Treasury Department Inspector General's report, “Consultation on Solyndra Loan Guarantee Was Rushed,” revealed that Department of Energy cut out the Treasury Department officials from issues regarding Solyndra, ignoring the agency’s advice and limiting its opportunity to review the high-priced, high-risk financing of what critics called "an Obama green pipe dream."

Incredibly, the so-called in-depth investigation that is now known to have been conducted by Obama’s donor found no wrongdoing on the part of the administration.

"The donor/watchdog scandal was uncovered this week by a mainstream media outlet, which in and of itself is incredible considering the love fest that exists between most news organizations and the commander-in-chief. Puff pieces dominate coverage of the administration -- in major newspapers as well as television networks -- so this is a rare treat," stated the Judicial Watch blog entry.

The veteran Wall Street executive Herbert Allison, who was handpicked by the Obama administration to investigate the Obama administration's disastrous green energy loan losses, contributed $52,000 to re-elect Obama in the months after he completed the in-depth probe.

It’s all documented in federal campaign records reviewed by the national wire service that broke the story. The cash started pouring in just two weeks after Allison testified before Congress about his report, which exonerated the administration and was heavily touted by the White House.

"It started with a $2,500 donation to the Obama campaign in late March, the story reveals. In May he plopped down another $15,000 for the Obama Victory Fund, a joint group that supports the president’s reelection and the Democratic National Committee. In the following two months, Allison generously deposited another $40,000 into the coffers of the Obama/DNC account. In the news story he defends the integrity of his probe and assures he did not make the decision to back a presidential candidate until after his work was finished," according to the National Legal and Policy Center.

According to Allison's thumbnail bio, he served as Assistant Secretary of the Treasury for Financial Stability of the United States having been confirmed by the Senate on June 19, 2009. He left the Treasury Department in September 2010. As part of his duties he also oversaw the Troubled Asset Relief Program (TARP), the $700 billion fund to purchase assets and equity from financial institutions in order to strengthen the financial sector of the economy.

Labor Department spends stimulus funds for ads during Olbermann, Maddow shows

Washington Times
Jim McElhatton

Contract shows no new jobs were created

The Labor Department paid out hundreds of thousands of dollars in federal stimulus funds to a public relations firm to run more than 100 commercials touting the Obama administration’s “green training” job efforts on two MSNBC cable shows, records show.

The commercials ran on MSNBC on shows hosted by Rachel Maddow and Keith Olbermann in 2009, but the contract didn’t report any jobs created, according to records reviewed recently by The Washington Times.

Spending reports under the federal Recovery Act show $495,000 paid to McNeely Pigott & Fox Public Relations LLC, which the Labor Department hired to raise awareness “among employers and influencers about the [Job Corps] program’s existing and new training initiatives in high growth and environmentally friendly career areas” as well as spreading the word to prospective Job Corps enrollees.

The firm ultimately negotiated ad buys for “two approved spots” airing 14 times per week for two months on “Countdown With Keith Olbermann” and “The Rachel Maddow Show,” according to a project report, which listed the number zero under a section of the report asking how many jobs had been created through the stimulus contract.

David Williams, president of the nonprofit watchdog Taxpayers Protection Alliance, called the contract “questionable” because it created no jobs and because of the placement of the ads on shows viewed as friendly to the administration’s policies.

“Hiring a PR firm does not create jobs, and this was obviously meant for selling a particular political agenda,” Mr. Williams said. “The placement really reeks of a political ad rather than a job ad, and taxpayers see through this.

“Taxpayers would be a lot happier at the end of the day to see a completed road rather than a bunch of ads on cable television,” he said.

The public relations firm did not respond to inquiries from The Times about who directed the ads to appear on MSNBC, but Labor Department officials defended the expenditures, saying the decision to place the ads on the network — now NBC News — had nothing to do with politics.

In a joint email statement to The Times from two Labor Department spokesmen, David Roberts and Michael Volpe, officials said the money was used for outreach efforts to raise awareness among potential employers about the Job Corps’ green training in career areas, including automotive, advanced manufacturing and solar-panel installation.

Mr. Roberts and Mr. Volpe also said Labor Department research showed that advertisements would reach the target demographic of business owners and managers interested in hiring “green-trained” employees through a programming list that initially also included shows hosted by CNN’s Larry King and public television’s Jim Lehrer as well as the two MSNBC programs where the ads eventually appeared.

Public television was eliminated because advertising rates were too high, Labor officials said, and Larry King was dropped because MSNBC held the potential to reach more viewers, officials said. Officials gave no indication whether their research indicated if Fox News, ESPN or other cable outlets were considered for the Job Corps ads.

The Labor Department said that as measured in “gross impressions per spot,” the two MSNBC shows — Mr. Olbermann is no longer with the network — were twice as effective compared with running ads on Mr. King’s show, which also is no longer on the air.

Mr. Obama signed the $829 billion stimulus into law in February 2009 with the promise it would sustain 3.5 million jobs. But at its peak it likely was responsible for far fewer, according to estimates by the Congressional Budget Office.

The president has since said the economy was in a deeper slump than he had predicted coming into office, and the White House says the stimulus’s combination of spending and tax cuts helped bolster state and local governments and keep the downturn from becoming a depression.

Republicans, though, argue that the price tag was too large and say much of the spending went to fund Mr. Obama’s political agenda, such as green energy programs, rather than to shovel-ready roads, bridges and other infrastructure projects.

Goldman Secret Greek Loan Used American TARP Money

Money News

Greece’s secret loan from Goldman Sachs Group Inc. was a costly mistake from the start.

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

“The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview.

Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University, Alabama’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.

Goldman Sachs DNA

“Like the municipalities, Greece is just another example of a poorly governed client that got taken apart,” Satyajit Das, a risk consultant and author of “Extreme Money: Masters of the Universe and the Cult of Risk,” said in a phone interview. “These trades are structured not to be unwound, and Goldman is ruthless about ensuring that its interests aren’t compromised -- it’s part of the DNA of that organization.”

A gain of 600 million euros represents about 12 percent of the $6.35 billion in revenue Goldman Sachs reported for trading and principal investments in 2001, a business segment that includes the bank’s fixed-income, currencies and commodities division, which arranged the trade and posted record sales that year. The unit, then run by Lloyd C. Blankfein, 57, now the New York-based bank’s chairman and chief executive officer, also went on to post record quarterly revenue the following year.

‘Extremely Profitable’

The Goldman Sachs transaction swapped debt issued by Greece in dollars and yen for euros using an historical exchange rate, a mechanism that implied a reduction in debt, Sardelis said. It also used an off-market interest-rate swap to repay the loan. Those swaps allow counterparties to exchange two forms of interest payment, such as fixed or floating rates, referenced to a notional amount of debt.

Judge denies bid by government for Solyndra trustee

FBI sought contract information

Seldom photographed
Mary F. Walrath ruled
against a more
transparent procedure

Washington Times
Jim Mcelhatton

WILMINGTON, Del. — Customer contracts figure prominently in the FBI’s criminal investigation of solar panel maker Solyndra LLC, which went bankrupt despite receipt of more than a half-billion dollars in federal loans, according to testimony on Monday.

A top company official testified in U.S. Bankruptcy Court in Delaware that the FBI’s search warrant affidavit specifically sought information about company contracts.

The official, Ben Schwartz, a vice president and lawyer at Solyndra, was testifying because the U.S. Office of the Trustee said he had refused to answer questions about contracts. His refusal, government lawyers argued, proved that a trustee should be appointed to take over the company.

But U.S. Bankruptcy Court Judge Mary F. Walrath refused, saying there was no indication of any fraud or mismanagement at the company.

Mr. Schwartz’s testimony sheds new light on the federal investigation of Solyndra. The company’s former chief executive officer, Brian Harrison, and current Chief Financial Officer W.G. Stover both cited their Fifth Amendment rights in refusing to testify about the company’s collapse at a recent congressional hearing.

In a recent legal filing, the trustee's office cited the executive’s refusal to testify, difficulty in getting information about contracts, and Mr. Stover’s current position at the company as factors in their seeking a trustee.

But lawyers for Solyndra argued that there’s been no proof of any fraud or mismanagement and that the Department of Energy had representatives attend company board meetings for months before the bankruptcy.

Mr. Schwartz testified that he was surprised the FBI raided the company days after the bankruptcy filing last month. He said Solyndra had a good relationship with the Energy Department, which had awarded the company more than $500 million in government loans. He also said the DOE had access to the same financial information given to regular board members.

“An FBI raid is not something I would have thought was necessary,” he said.

Mr. Schwartz also said contracts were specifically “called out” in the FBI’s warrant. He said the FBI had copied the company’s electronic database so agents would have access to anything at the company that was in electronic format. He did not indicate what other information was included in the affidavit.
He said he discussed contract matters with outside lawyers as well as company officials, but noted those discussions were confidential under attorney-client privilege.

Last month, Solyndra officials refused to discuss the company’s contracts at a private meeting with a bankruptcy analyst for the Justice Department. The decision fueled the push to have a trustee take over the failed company.

SOLYNDRAGATE: Huge Email Dump Implicates Obama And Rahm In Bankruptcy Scandal

Business Insider
Grace Wyler

The White House released a bunch of emails related to the Solyndra bankruptcy scandal to Congressional investigators today, in what has become a regular Friday evening email dump.
The emails, obtained by several news organizations, implicate the most senior levels of the Obama administration in the scandal, which has tainted the White House since the solar company went bankrupt last month, leaving taxpayers on the hook for a $534 billion federal loan.

Here are the highlights:

One email, obtained by the Washington Post, suggests that Obama and/or his chief of staff Rahm Emanuel was actively involved in trying to get Solyndra's loan application approved in time for a September 2009 press conference.

“Ron said this morning that the POTUS definitely wants to do this (or Rahm definitely wants the POTUS to do this?),” one White House staffer told an Obama scheduler on Aug. 17, 2009, referring to Ron Klain, former chief of staff for Vice President Joe Biden.

Steve Spinner, an Obama fundraiser who worked in the DOE loan department, repeatedly pushed the chief loan officer to expedite approval of Solyndra's loan — despite the fact that his wife worked for the law firm representing Solyndra. The firm received at least $2.4 million in fees related to the loan, according to the AP.  DOE officials have previously stated that Spinner did not "actively participate" in Solyndra's application.

“How [expletive] hard is this? What is he waiting for? Will we have it by the end of the day?” Spinner wrote on Aug. 28, 2009. “I have OVP [Office of Vice President] and WH [White House] breathing down my neck on this. They are getting itchy to get involved if needed. I don’t want that.”

In 2011, the Treasury Department warned the DOE about the questionable legality of Solyndra's refinancing deal, which put investors ahead of taxpayers in the event the company went under.
"In February, we requested in writing that DOE seek the Department of Justice’s approval of any proposed restructuring,” an assistant Treasury secretary wrote in an August 2011 memo to the OMB. “To our knowledge that never happened.”

Another email, obtained by TIME, suggests that Solyndra's bad finances and poor business model were well-known within the solar panel industry. A February 2009 letter from the CEO of Solyndra's main competitor, Nanosolar, basiclly asks what everyone in the country is asking now:

“In light of the DoE loan program application of a competitor of ours, Solyndra, and given the well-publicized rapidly deteriorating financial state of this company as well as its failure to secure new investors and maintain a balance sheet adequate for product introduction, I would appreciate clarification from you about whether the DoE loan guarantee program is suitable as a ‘bail-out’ program for failing private manufacturers."

Solyndra and the Solar Shakeout: Bankruptcies in Context

TriplePundit
Mike Koshmi and Seth Masia

During August, three homegrown photovoltaic (PV) module manufacturers failed and two European manufacturers decommissioned their U.S. production lines. All told, the United States lost 20 percent of its panel manufacturing capacity.

By far, Solyndra’s fall was the loudest. In September 2009, the Fremont, CA-based thin-film manufacturer received a $535 million loan guarantee from the U.S. Department of Energy (DOE) to ramp up to a 450-megawatt (MW) factory. Solyndra’s was the first section 1705 loan guarantee awarded, and the first to backfire. The bankruptcy triggered a congressional investigation into whether the timetable on Solyndra’s loan guarantee application was accelerated. Search warrants were issued, and the FBI raided the spanking-new and shuttered Fab 2 factory and Solyndra executives’ homes.

For a time in September, solar received unprecedented front-page ink. The media storm around Solyndra brought light to dramatic, unforeseen declines in the cost of PV, China’s influence on the market and doubt over the United State’s ability to compete.


Back Story

Solyndra offered a novel product, a cylindrical cadmium-indium-galium-(di)selenide (CIGS)  thin-film panel. The product’s economic viability depended on the price of pure polysilicon —the raw material for competing crystalline-silicon (c-Si) PV technologies. Four years ago, when the cost of polysilicon approached $1,000 a pound, Solyndra’s silicon-free product was a hot commodity, attracting venture capital connected to Richard Branson, oil baron George Kaiser, the Walton family, and investment bank Goldman Sachs. By late 2007, the Bush Administration DOE had moved to develop a conditional loan guarantee commitment.

By the time Solyndra’s application was approved in March 2009, under the Obama Administration, polysilicon prices had dropped by nearly 90 percent. They never bounced back and global c-Si PV prices fell off, throwing a wrench in the thin-film business model. There is no evidence Solyndra ever sold its panels at cost. According to filings for a cancelled initial public offering, Solyndra was producing its panels for $4.00 a watt and selling them for $3.24 a watt as recently as June 2010. With competing factories moving toward $1.00 a watt PV, a best-case-scenario for the Fremont factory was $2.00 a watt.

Those market conditions set in much faster than expected. Some indices have spot prices for modules down 40 percent since January. “What happened earlier this year is that this massive [module] oversupply situation led to prices plummeting,” said Shayle Kann, managing director of solar for GTM Research. “And we haven’t seen any recovery in prices yet. It’s [a] continued difficulty for every manufacturer globally, but it’s hitting those that can’t compete on price first.”

Kann expected more factory closures, both in the United States and abroad, over the next six months to two years. By and large, the so-called “shakeout” has been attributed to China’s influence on the global market.

Bigger Picture

It’s not that Western manufacturers can’t make competitive, well-made products. The problem is that they can’t get competitive financing. Western investors and banks are simply unwilling, and probably unable, to compete with the Chinese government’s vigorous investment in solar manufacturing. It means that Chinese factories ramp up faster, achieve economies of scale more quickly, and flood the market with cheap, commoditized c-Si. A Sept. 25 Mercom Market Intelligence Report laid out the raw numbers.

Since January 2010, Chinese banks have offered Chinese solar companies a staggering $40.7 billion. For perspective, U.S. solar manufacturers have received $1.4 billion in DOE loan guarantees since 1705’s inception (Solyndra’s allotment was the largest). The Chinese manufacturer Suntech disputed the figures cited by Bloomberg and Mercom, but declined to give an interview for this story.

Solyndra Executives To Plead the Fifth

jobmouse
Anneline Waldman

Top Solyndra executives have decided that they will not testify before Congress about the federal government’s backing of the failed solar power company.


Solyndra Chief Executive Brian Harrison and Chief Financial Officer Bill Stover will be exercising their Fifth Amendment rights at an upcoming hearing before the House Energy and Commerce Committee, according to a statement released by the company Tuesday.

The Fifth Amendment:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without dueprocess of law; nor shall private property be taken for public use, without just compensation.”

The executives will be taking the advice received from the Company’s counsel and will be “unable to provide substantive answers” to lawmakers’ questions at Friday’s hearing. However, the company has stated that it followed the rules of the application process and that the Department of Energy conducted extensive due diligence of the firm, according to CNNMoney.

Lawmakers have recently been referring to the company’s failure as a precedent to highlight the danger of government funding for private firms. The company was one of 18 companies that received more than $10 billion in backing from the Energy Department as part of President Obama’s 2009 stimulus program to support renewable and clean energy technology.
 

U.S. House of Representatives to probe Solyndra’s bankruptcy

Ecoseed
Jhoanna Frances S. Valdez

The United States House of Representatives is set to investigate the collapse of a solar startup which obtained a hefty amount of funding from the government, to identify possible misrepresentation on the part of the company or if state officials overlooked details that could have determined whether the firm had the capability to pay back its debts or not.

House committee on energy and commerce chairman Fred Upton, Republican of Michigan, said his committee will probe circumstances surrounding California-based Solyndra L.L.C.'s immediate suspension of operations and planned filing for bankruptcy next week in Delaware.

"As the highly celebrated first stimulus loan guarantee awarded by the [Department of Energy], the $535-million loan for Solyndra was suspect from day one," Mr. Upton said.

"Our investigation to protect American taxpayers has revealed that in the rush to get stimulus cash out the door, despite repeated claims by the [Obama] administration to the contrary, some bets were bad from the beginning," Mr. Upton added.

"Our investigation continues, and with Solyndra's bankruptcy we expect full and continued cooperation from the [Office of Management and Budget], as we must ensure American taxpayers are not left holding the bag," he said.

The committee has been checking up on Solyndra since the energy department awarded a $535-million loan guarantee to the company in September 2009 to inquire about the company's financial health, to which Solyndra executives, lobbyists and investors have been responding in the affirmative, Mr. Upton said.

Manufacturing plant 
 
The loan guarantee was intended for the construction of a commercial-scale solar panel manufacturing plant which was expected to generate 3,000 jobs.

The committee started an inquiry into the energy department's Recovery and Reinvestment Act of 2009 spending last February. The move was followed by the subcommittee on oversight's public hearing on the department's use of stimulus funds last March 17.

Last June 24, the oversight subcommittee initiated moves to determine how much influence the management and budget office has on the energy department's loan guarantee process.
The energy and commerce committee issued a subpoena last July 15 to the management and budget office for the submission of documents related to approving the credit subsidy costs of all D.O.E. guarantees.

Since closing the D.O.E. loan guarantee, Solyndra has suffered financial setbacks, including the cancellation of a planned initial public offering in June 2010, factory closures, laying off of workers totaling 1,100 and postponement of a plant expansion.

Under the government's loan guarantee program, the government will not provide an actual loan to a company but will repay the commercial loans the company receives in case of a default.

Solyndra Spent Liberally to Woo Lawmakers Until the End, Records Show

New York Times
John McCardle

The 1,100 full- and part-time employees who were abruptly laid off two weeks ago aren't the only ones whose paychecks have been affected by the sudden and dramatic failure of bankrupt solar energy company, Solyndra Inc.

Because for its brief lifespan, Solyndra proved to be pretty good for the lobbying community.
According to records filed with the Clerk of the House and a search of disclosure forms compiled by the Center for Responsive Politics, Solyndra spent nearly $1.9 million on lobbying activities over a period of 43 months from 2008 to 2011.

About $1 million of that was earned by the company's two in-house lobbyists, Joseph Pasetti and Victoria Sanville, over an 18-month period from 2010 until this year. But Solyndra has also had several big-name lobbying shops on its payroll, including established powerhouses Dutko Worldwide and Holland and Knight, which began representing the then-fledgling company in 2008.

While Holland and Knight helped the company with renewable energy tax credit issues, Dutko was brought aboard, according to its filings, to "identify decisionmakers and to assist with the client's loan application" through the Department of Energy.

It is that DOE loan that has touched off an outcry on Capitol Hill and has singed the Obama administration, just as President Obama campaigns across the country for his new jobs plan and Republicans look to scale back clean energy and environmental programs.

By 2009, Solyndra was finished with Dutko and Holland and Knight and was working with well-known energy lobbyist, McBee Strategic Consulting, whose clients have included the Applied Materials Inc., a semiconductor and solar panel equipment manufacturer; Babcock & Wilcox; BrightSource Energy Inc., a solar developer; Google Inc.; Better Place Inc., an electric-vehicle charge station developer; Honeywell International; and Tesla Motors Inc., a developer of electric cars.

McBee was brought on to monitor how the new American Reinvestment and Recovery Act would affect the solar industry. The group specifically reported on lobbying forms that its issues included the DOE loan guarantee program, through which Solyndra eventually received $527 million in funding before it went bankrupt.

Behind Solyndra's own lobbyists, McBee was the shop that made the most off the company, taking in $360,000 over a two-year period.

By 2010 Solyndra had hit its lobbying peak. Not only had the company begun paying its own in-house lobbyists but it was also working with nine other lobbyists at three different agencies including McBee and two others, the Washington Tax Group, which had been brought on board to handle the company's interest as it related to the Solar Manufacturing Jobs Creation Act that was up for consideration, and McAllister and Quinn, which was handling the company's interests on the National Defense Authorization Act.

McBee stayed on board through the first quarter of this year but filed no lobbying report for the company beyond then.

One lobbying shop that was added to Solyndra's stable this year was the Democratic-leaning Glover Park Group. Glover Park had had a communications relationship with Solyndra for about a year before filing with the Clerk of the House on July 18 to conduct lobbying.

The stated purpose on that filing was to provide an "introduction of the company to [House] Energy and Commerce Committee Members."

Glover Park only worked with the company a month but it was efficient.
Three days after it filed with the clerk's office it hosted a media event in Washington at which Solyndra CEO Brian Harrison sought to convince reporters that his company was fiscally sound. At that meeting, Harrison told reporters that he was in town to brief several members of Congress about the health of his company.

But in light of the company's subsequent downfall, those meetings have left a bad taste in some members' mouths.

At an Energy and Commerce Oversight and Investigation Subcommittee hearing this week, members said they felt misled by the meetings they participated in with Harrison.

"This July, Solyndra's CEO visited my office as well as other members and talked about the strong demand for the company's products and how 2011 revenues were projected to double from 2010. Now as we all know, less than two months later, the company announced it would file for bankruptcy," committee ranking member Diana DeGette (D-Colo.) said in her opening statement at the hearing. "I'm perplexed how they could be in my office in July, telling me things were looking better and filing for bankruptcy two months later."

Rep. Morgan Griffith (R-Va.) questioned Jonathan Silver, the head of DOE's loan program, and Jeff Zients, the deputy director of the Office of Management and Budget, on Wednesday on whether they ignored warning signs from their staff about the company as recently as July.

"Apparently ... Solyndra was here on Capitol Hill speaking to members of Congress indicating everything was on track at the same time that your observer was telling us -- was telling you all that there was a problem," Griffith said. "I'm not saying that you all knew they were up here telling fibs, but I am concerned that they were up here telling fibs."

Obama admin reworked Solyndra loan to favor donor

AJC
Matthew Daly

FILE - In this Aug. 31, 2011, file photo,
Solyndra workers leave Solyndra
in Fremont, Calif. Newly released
emails show that the Obama
administration was worried about
the financial health of a troubled
solar energy company even as officials
publicly declared the company in
good shape. An email from a White House
budget official to a co-worker
discussed the likely effect of a
default by Solyndra Inc. on
President Barack Obama’s
re-election campaign.

Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work.

Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.

The Fremont, Calif.-based company was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. Obama visited the company's Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking.

Since then, the implosion of the company and revelations that the administration hurried Office of Management and Budget officials to finish their review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Obama as he sells his new job-creation program around the country.

An Associated Press review of regulatory filings shows that Solyndra was hemorrhaging hundreds of millions of dollars for years before the Obama administration signed off on the original $535 million loan guarantee in September 2009. The company eventually got $528 million.

Given the company's shaky financial condition, Republican lawmakers say the decision to restructure the loan raises questions about whether the administration protected political supporters at taxpayers' expense.

"You should have protected the taxpayers and made some forceful actions here after this analysis," Rep. Cliff Stearns, R-Fla., told a top Energy Department official this week. "Because you should have seen the problems. And you should have said, 'Taxpayers need to be protected and this has got to stop.' "
The loan restructuring is one element congressional investigators are focusing on as they look into the federal loan guarantee Solyndra received under the economic stimulus law.

Under terms of the February loan restructuring, two private investors — Argonaut Ventures I LLC and Madrone Partners LP — stand to be repaid before the U.S. government if the solar company is liquidated. The two firms gave the company a total of $69 million in emergency loans. The loans are the only portion of their investments that have repayment priority above the U.S. government.

Argonaut is an investment vehicle of the George Kaiser Family Foundation of Tulsa, Okla. The foundation is headed by billionaire George Kaiser, a major Obama campaign contributor and a frequent visitor to the White House. Kaiser raised between $50,000 and $100,000 for Obama's 2008 campaign, federal election records show. Kaiser has made at least 16 visits to the president's aides since 2009, according to White House visitor logs.

Madrone Partners is affiliated with the Walton family, descendants of Wal-Mart founder Sam Walton. Rob Walton, the eldest son of Sam Walton, contributed $2,500 last year to the National Republican Congressional Committee.

The AP review also found that officials at Solyndra had been seeking a second round of loans from the Energy Department to expand the company's Silicon Valley headquarters. The request for a second loan was denied.

"We have incurred significant net losses since our inception, including a net loss of $114.1 million in 2007, $232.1 million in 2008 and $119.8 million in the first nine months of fiscal 2009, and we had an accumulated deficit of $505 million at Oct. 3, 2009," the company said in a December 2009 filing to the SEC. "We expect to continue to incur significant operating and net losses and negative cash flow from operations for the foreseeable future."

Energy Department spokesman Damien LaVera said Friday that the company's financial losses were not uncommon for a high-tech startup and were a major reason Solyndra applied for the federal loan. The loan program is intended to help promising companies that cannot receive financing through private banks because of high risk.

Jonathan Silver, executive director of the Energy Department's loan program, said DOE officials faced a stark choice late last year and early this year: Refuse to allow the loan restructuring, "thereby ensuring that Solyndra would close its doors immediately" or allow the company to accept emergency financing, "thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan."

The decision by Energy Secretary Steven Chu was not an easy one, Silver told the House Energy and Commerce Committee, but appeared to be the right action at the time.

"Without DOE's agreement to restructure Solyndra's loan, the company likely would have faced bankruptcy much earlier — in December 2010" or soon after, Silver said. "Restructuring gave them a fighting chance to compete and succeed, and kept approximately 1,000 workers from losing their jobs."
Republicans were not impressed.

"If their model was weak to begin with, and then the market gets worse, doesn't that mean that maybe we should have just not thrown good money after bad?" asked Rep. Morgan Griffith, R-Va. "Because now we're in a worse position in the bankruptcy courts to get our money back."

GOP presidential candidate Michele Bachmann called the Solyndra loan an example of "crony capitalism" that benefited political donors.

"It's wrong to abuse executive authority with unilateral actions" Bachmann said at a campaign event Friday in California. "And of course the other problem with Solyndra is the fact that it appears there was crony capitalism, that there were political donors that benefited by this $535 million loan."
Newly released emails show the White House was worried about the likely effect of a default by Solyndra on Obama's re-election campaign.

"The optics of a Solyndra default will be bad," an OMB official wrote in a Jan. 31 email to a colleague.
"The timing will likely coincide with the 2012 campaign season heating up."

The budget official, whose name is blacked out in the email, wondered whether Solyndra should be allowed to restructure its loan.

"Questions will be asked as to why the administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment, or worse)," the email says.

Associated Press writer Gillian Flaccus in Costa Mesa, Calif., contributed to this story.

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