Energy Loan Oversight Is Needed, Audit Finds
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WASHINGTON -- The Department of Energy's loan guarantee program for alternative energy projects, which produced the ill-fated loan to the solar panel maker Solyndra, needs more rigorous financial oversight and stricter performance standards for recipients to reduce the chance of future defaults, according to an audit conducted by the White House and released Friday.
The audit, led by Herbert M. Allison Jr., a former financial executive and senior Treasury Department official, found that the government could lose as much as $3 billion of the total loan commitments so far of $24.3 billion granted to 30 companies under two Energy Department programs.
In setting up the loan guarantee programs, Congress set aside $10 billion for potential losses.
The riskier programs were those at the cutting edge of technology with no assured markets, the study found. Loans for solar or wind power generation, by contrast, were much less risky because they had ready buyers for their electricity.
Mr. Obama ordered the review in October as the political heat over the failed Solyndra loan was intensifying. The White House claimed that Mr. Allison's report essentially vindicated the overall program, while recommending several ways to improve it.
"The report confirms that the overall loan portfolio as a whole is expected to perform well and holds less than the amount of risk envisioned by Congress when they designed and funded the program," said Eric Schultz, a White House spokesman.
Solyndra, a California manufacturer of cylindrical solar panels, went bankrupt last year after drawing $527 million in federal loans. A second solar company that received federal loans, Beacon Power, declared bankruptcy last year. The government stands to lose as much as $13 million on that deal.
Republicans in Congress and on the campaign trail have seized on the Solyndra loan as an example of what they call "crony capitalism" because one of the investors in the company was a major fund-raiser for President Obama. The White House is battling the House Energy and Commerce Committee over documents relating to the overall loan guarantee program.
First Published February 11, 2012 12:00 am
