Solyndra gave feds 22 pages of reasons why the firm could fail | Diana Furchtgott-Roth | Columnists | Washington Examiner

Solyndra gave feds 22 pages of reasons why the firm could fail | Diana Furchtgott-Roth | Columnists | Washington Examiner


Solyndra, a California solar power company that filed for bankruptcy earlier this month, demonstrates the perils of "industrial policy" where the government decides which new industries or start-up companies to support with federal money.
But it's not like the government wasn't warned ahead of time.

Solyndra, in a public S-1 filing at the Securities and Exchange Commission in September 2009 before a public offering that was subsequently withdrawn, offered 22 pages of reasons why it might fail.

The report included a table of historical financial and operating data from 2006 to 2009, showing six different measures of gross and net losses. Not one positive number.

And still federal officials opted to give Solyndra a $535 million loan from the Federal Financing Bank, guaranteed by the Energy Department under its economic stimulus program funding for innovative clean-energy technologies.

The company, founded in 2005, had used $460 million of these loans by January 2011 to build a second factory, even though it still had excess capacity at its first plant.

By January 2011, it was clear that the company was going to fail. Still, the Energy Department helped shore up Solyndra by allowing it to draw on another $68 million in government loans.

In addition, the Obama administration allowed $385 million in government loans to take a back seat to $75 million in new investors' funds.

This was done because the Energy Department thought that the January deal represented the highest net benefit for the taxpayer, according to government reports. The $75 million from investors became senior to all government debt except $143 million.