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Oct 31

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Wrong Solyndra Participants are Being Investigated

On Friday, the White House Chief of Staff Bill Daley said that they appointed Mr. Herb Allison to investigate the Department of Energy loans that included Solyndra. Mr. Allison is a former president of Merrill Lynch and former chief executive of the insurance company TIAA-CREF. He led Fannie Mae when it was forced into a government conservatorship during the Bush administration. In 2009, he was nominated by President Obama to be assistant Treasury secretary for financial stability and to oversee the Troubled Asset Relief Program.

Solyndra is already under criminal investigation by the FBI, the U.S. Treasury and the Department of Energy. News reports indicate that the White House believes that the Solyndra loan was obtained with false information and fraudulent accounting data. With all these investigations by the Executive Branch of government regarding itself, please forgive me for being concerned that too much energy is being placed at identifying someone besides the White House as the culprit to the Solyndra write-offs.

My confidence in the Executive Branch investigations was further shaken by the transcript of yesterday’s Meet the Press. White House Advisor David Plouffe was being interviewed. Understandably, Mr. Plouffe did not say much about Solyndra, wanting instead to talk about other topics. But practically everything he said about Solyndra was wrong. The Solyndra-related excerpts are in the rest of this blog:

 MR. GREGORY: Were campaign contributors involved here in terms of these–their projects that ultimately forced the government’s hand?

MR. PLOUFFE: Absolutely not. These decisions about the loan program were made by career officials at the Department of Energy on the merits.

Wrong!  A prior blog post quoted extensively White House documents that clearly showed the career officials at the Department of Energy actually turned down the loan. Immediately after President Obama was inaugurated, the decision was made to go forward with the Solyndra loan. We know that those looking at the loan had enough information to deny the loan. … until the White House overrode that decision.

This same prior blog post provided quotes showing the credit analysis of Solyndra identified exactly what happened. Namely, Solyndra was forecast to run out of cash almost to the exact month when Solyndra actually went bankrupt. The Solyndra loss was not caused by accounting fraud as the current executive Branch investigations would have us believe. It was instead caused by having a failed business plan from the start, and then having White House ignore all of the warnings that the Department of Energy loan analysts identified.

Mr. Plouffe described the White House’s somewhat brainless approach in approving the Solyndra loan when he said yesterday:

MR. PLOUFFE: …listen, you see what’s happening in other countries, you know, huge investments in this clean energy sector. We have to do everything we can.

We all know about Europe’s financial mess, largely caused by unchecked government spending that these European countries had no way of supporting. That is how the Solyndra loan got White House approval.  If the countries in Europe think this is a great idea, let’s jump off the cliff with them.

 

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2011/10/wrong-solyndra-participants-are-being-investigated/

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