Former federal prosecutor Andrew McCarthy has an important column in which he argues that the Solyndra fiasco is not just a garden-variety scandal, but a criminal fraud that should land someone, inside and/or outside of the Obama administration, in the slammer.
The facts are very bad. Solyndra was a money-loser from beginning to end. Its business model was untenable. The Bush administration turned it down for funding. Its owners wanted to do a public offering; for that purpose, they had to have their books audited and a report written by PriceWaterhouseCoopers. The report was more or less an obituary for the company:
[O]utside auditors from PricewaterhouseCoopers (PWC) found that condition to be dire. “The company has suffered recurring losses from operations, negative cash flows since inception, and has a net stockholders’ deficit,” the PWC accountants concluded. Even with the gigantic Obama loan, Solyndra was such a basket case that PWC found “substantial doubt about its ability to continue as a going concern.”
Given that harsh assessment, the IPO failed for lack of new investors willing to pour their money down the rathole.
So your money was poured down the rathole instead. Incredibly, the Obama administration bailed out (at least in part) Solyndra’s investors by putting them ahead of the taxpayers in the company’s inevitable liquidation. There was no conceivable business justification for this action, so it can only be ascribed to the substantial amounts of money Solyndra’s founders raised for the Obama campaign, and to their dozens of lobbying visits to the White House. McCarthy concludes:
As the IPO failed and the company inevitably sank in a sea of red ink, Solyndra’s panicked backers pleaded with the administration to restructure the loan terms — to insulate them from their poor business judgment, allowing them to recoup some of their investment while the public took the fall.
It should go without saying that the duty of soi-disant public servants is to serve the public. In this instance, the proper course was clear. As structured, the loan gave the public first dibs on Solyndra’s assets if it collapsed, and, as we’ve seen, the law requires it. There was no good reason to contemplate a change.
In addition, as Andrew Stiles relates, OMB had figured out that there was no economic sense in restructuring: Solyndra was heading for bankruptcy anyway, and an immediate liquidation would net the government a better deal — about $170 million better. The case for leaving things where they stood was so palpable that OMB openly feared “questions will be asked” if DOE proceeded with an unjustifiable restructuring. So, with numbing predictability, the Obama administration proceeded with an unjustifiable restructuring. In exchange for lending some of their own money and thus buying more time, Solyndra officials were given priority over taxpayers with respect to the first $75 million in the event of a bankruptcy — the event all the insiders and government officials could see coming from the start, and that hit the rest of us like a $535 [m]illion thunderbolt last week.
The facts warrant a full-scale criminal investigation.
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