THE SOLYNDRA LESSON
By Attorney Jonathan Emord
September 26, 2011
The national media has missed the real lesson taught by the $530 million in loans the Obama Administration’s Department of Energy (DOE) gave Solyndra, the now bankrupt solar-power panel manufacturer from Fremont, California. The real lesson is not just one of cronyism and abuse, it is one about the inherent folly of government planning, the inability of bureaucrats to decide for consumers which market players will be “winners.”
In May of 2010, President Obama stood before workers at the ill-fated Solyndra plant, lauding them for their green energy production and proclaiming them stewards of his vision of the American future, one replete with “the promise of clean energy.” The President had decided that Solyndra was an excellent example of the kind of company his vision of America’s future included. He not only decided that about Solyndra, but he also decided that his administration would help make Solyndra a success. His choice to show case Solyndra reveals just how out of touch he and his top advisors are with economic reality.
In March of 2010, PricewaterhouseCoopers LLP determined that Solyndra suffered from severe financial difficulties that “raise[d] substantial doubt” as to “its ability to continue as a going concern.” By contrast with that fair economic assessment, DOE proclaimed after it had purportedly performed “a rigorous financial, legal and technical review” that Solyndra was not only an appropriate candidate for receipt of taxpayer financed loans from the federal government but rightly deserving of the whopping sum of $530 million in those loans. For most medium-sized businesses in the United States, that enormous sum would be sufficient to finance operations for decades even without generation of revenue, but not so for Solyndra.
On August 31, 2011, Solyndra dismissed 1,100 employees, a huge army it had employed as part of an extravagant expansion project financed with the federal dollars. That same day the company announced that it would file for Chapter 11 bankruptcy, seeking reorganization of its business.