Friday, August 3, 2012

When The Company You Are Investing In Suggests They Are A Risk Maybe You Should Listenn

The House Energy and Commerce Committee released some White House and other e-mails relating to Solyndra. Unsurprisingly, there were so very many warnings that this was a risky method of using taxpayer dollars, and it appears those warnings were ignored. White House Aide Aditya Kumar e-mailed communications director Dan Pfeiffer and other aids to say:

“Dan: Some background.  This is a Recovery Act Grant. Details: Will be first DoE Loan Guarantee since 1980s (since the geothermal grants in the 80s, I believe).  Total amount will be $535M (with a $107M govt subsidy).  This is a solar panel manufacturing company in Fremont, CA.

Story is two things: JOBS: Solyndra estimates this will create thousands of jobs (over 3,000K was on estimate I saw but not sure how dated that was); When Government Plays a Part, It can Bring the Private Sector Along: Solyndra has secured over large amounts in private capital which is a story in itself.”

However all those promised  jobs went up in smoke, and it isn't hard to figure out how when you consider that one of their main investors, Brad Jones, contacted chief economic adviser for the Obama Administration Larry Summers to tell him in an e-mail that:

“One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money (I’d prefer my opinion about that specific company to be between us). Every administration seems to feel it knows better than the private markets how to allocate capital, and I’ve just never seen that be true.”

A May 8, 2010 memo from an unidentified figure in Solyndra to George Kaiser Family Foundation Executive Director Ken Levit (George Kaiser was one of Solyndra’s largest investors):

"The past five months have witnessed a tremendous competitive headwind for the company coupled with some severe management mistakes. Cutting to the chase – we will not be going public during 2010 and our longer term business plan looks to be somewhat in jeopardy…. I think there is still a plan here to getting a solid return out of Solyndra for ourselves (and our friends and family shares alongside us) but we have pushed out any significant positive event until 2011 and perhaps 2012."

Yet mere months after it was revealed there would be no initial public offering  or IPO and that the company was in fact at serious risk of folding, Obama spoke at their plant praising them as the model of a government/private sector partnership. You know, maybe he was right on that at least.

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