by Shauna Theel, in a Media Matters cross-post
After incessant coverage of the failed solar panel maker Solyndra, major TV and print news outlets are now ignoring a report concluding that “the focus on Solyndra is not proportional to its impact.” The Bloomberg Government analysis of the Department of Energy’s 1705 loan guarantee program found that 87 percent of the portfolio is low-risk and that even if all 10 of the higher risk projects defaulted, we’d still have nearly half a billion dollars left in the fund set aside by Congress to cover losses.
Alison Williams – who previously served as a DOE analyst under both the Bush and Obama administrations – authored the report, which is a must-read for anyone seeking to understand the loan guarantee program that assisted Solyndra. According to a Nexis search, not a single major newspaper or television news outlet has reported on the analysis, which was covered by The Hill and the Huffington Post.
The main takeaway from the report is that 87 percent of the value of all the 1705 loan guarantees (18 of the 28 projects) went to power generation projects, as opposed to manufacturing projects like Solyndra’s factory. The DOE required generation projects to secure a buyer before receiving a loan guarantee — ensuring stable revenue and significantly reducing the risk of the investment. In fact, Shayle Kann, a solar power market expert at GTM Research, has said that these projects have almost no risk of default.
Congress budgeted $2.47 billion, or more than 15% of the total value of approved loan guarantees, to cover for defaults, like those of Solyndra and Beacon Power, which were both higher risk loan guarantees. Williams found that even if all of the higher risk (non-generation) projects defaulted on the full amount of their loan guarantees and “no assets were to be recovered, the DOE would still have $446 million remaining to cover additional project losses.”
The press has largely failed to explain that there was money set aside to cover defaults like Solyndra’s, and that most of the other projects are low-risk, even as they were emphasizing the potential loss of taxpayer money from loan guarantees.
The Associated Press said recently approved loan guarantees “could cost taxpayers as much as $6 billion” without giving any indication that that would only be the case in the unlikely event that all those guaranteed loans defaulted in full. USA Today said that two loan guarantees “face questions similar to those of Solyndra,” downplaying the fact that they had “agreements with utilities to buy their energy.” The Washington Post ran a headline saying “Investors, federal officials: Energy Department was careless with taxpayer money,” The New York Times focused on the risk of the program, The Los Angeles Times suggested the Administration was a “lax overseer of taxpayer dollars,” and The Wall Street Journal reported criticism that the program was a “waste of taxpayer dollars.” None of these articles mentioned that the Congress had anticipated that some of the loans would go into default, and set aside money to cover those losses.
The Bloomberg analysis concludes that the focus on Solyndra is disproportionate because Solyndra is only 3 percent of the DOE’s 1705 loan guarantee program, which in turn is only “1.7 percent of the federal government’s guarantee commitments across all agencies.”
We previously analyzed coverage of Solyndra in the month after it filed for bankruptcy and found that every major news outlet devoted much more coverage to Solyndra than to two other stories on massive waste and corruption.