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Solyndra Loan Program Making Money for Taxpayers; How About So. Dak.’s EB-5 Program?

Republicans trying to deflect criticism of Senator-Elect Mike Rounds for his scandalous EB-5 visa investment program have often brought up an analogy to President Obama and the Solyndra affair. But it turns out the Department of Energy's loan program created by the Energy Policy Act of 2005, is turning a direct profit for taxpayers:

Overall, the agency has loaned $34.2 billion to a variety of businesses, under a program designed to speed up development of clean-energy technology. Companies have defaulted on $780 million of that — a loss rate of 2.28 percent. The agency also has collected $810 million in interest payments, putting the program $30 million in the black.

When Congress created the loan program under the Energy Policy Act of 2005, it was never designed to be a moneymaker. In fact, Congress imagined there would be losses and set aside $10 billion to cover them [Jeff Brady, "After Solyndra Loss, U.S. Energy Loan Program Turning A Profit," NPR, 2014.11.13].

EB-5 could have turned a profit for South Dakota taxpayers, but the state let EB-5 czar Joop Bollen privatize the program and put the profits in his own pocket, and perhaps the pockets of others in on the game.

25 Comments

  1. jerry 2014.11.14

    Cory, there really is no logical reason to have allowed Bollen to run the show if it were not for profit taking by the powers to be. The bosses of this criminal enterprise clearly got the skimming rights and the South Dakota taxpayers got the shaft. You hide and watch, with this information the republicans will now come out and say what a success Solyndra was and how they put it together in 2005, long before Obama.

  2. Troy 2014.11.14

    Two comments:

    1) Headline is wrong. Solyndra is defunct and 100% of that loan has been written off (roughly 2/3 or the realized losses). Solyndra is not making money

    2) Receiving interest payments in excess of defaulted write-offs doesn't necessarily mean the program is profitable. There is some very reckless usage of terms which have defined meaning in this article. In fact, I guarantee you that the programs cost of funds (interest paid to those who bought the Treasuries that funded the $34Billion absorbed at least 1/3 of the interest payments from the programs borrowers which is a lot more than the $30 million stated "profit").

    No way it is profitable to-date. My comments are not an indictment of the program. Just about the fundamental accuracy of the statement the program is profitable.

  3. caheidelberger Post author | 2014.11.14

    Troy:

    (1) Point taken; I'll correct that. Original headline said "Solyndra Making Money...," which is an inaccurate synechdochification of the Department of Energy's loan program.

    (2) Give me that guarantee with some documentation, please.

  4. Bill Fleming 2014.11.14

    LOL, Troy, reminds me a little of how Rounds claimed EB-5 losses have been made up for by increases in tax revenue. Those dang statistics! :-)

  5. jerry 2014.11.14

    Hee hee, the article very clearly lays out that this is a loan program and that even with the losses of Solyndra and others that the Bush administration knew would happen, is now making money. As noted in the article, the 10 billion that was put in reserve attests to that. What Troy has his panties in a bunch over is the fact that the loan program itself is a working testament to what was right with it in the first place and that his talking point just took a big dump on his melon. Always good to visualize when these things occur.

  6. Roger Cornelius 2014.11.14

    President Obama was not involved in the "transactional details" of Solyndra

  7. Troy 2014.11.14

    CH,

    The program borrows money from the Treasury. While likely and prudent (matching funds to duration) the program likely borrowed the money at least 10 yr. Treasuries (about 2%), the annual interest cost of the program would be currently $680 million a year (a lot more than $30 million of "profit").

    Even if the program used two year Treasuries as its source of funds (that would be so imprudent the Treasury Secretary and Energy Secretary should be fired), which I'm very sure they aren't that stupid, their annual interest costs would be $127 million a year (again a lot more than $30 million).

    Now, since I don't know the capital structure of the program and making every assumption in favor of the program, assume these interest payments from borrowers are only for the $10Billion of capitalization mentioned, you can divided the above interest costs of the program by 3.4.

    Even in the best case scenario, there is no way total interest cost is not more than $30 million. Keep in mind too that the interest costs to the program have been for more than a year (i.e. Solyndra money went out the door what 4-6 years ago?) and I'm just computing the annual costs for the money out the door today.

    Profit is a term that means Income (in this case interest payments from borrowers) minus all costs including borrowing costs of the program.

  8. jerry 2014.11.14

    I will be willing to bet that Tory drives down the road to argue with the signs. The whole world is wrong Tory and you are right. Your party says Obama is conceited, but you clearly wrote the book on it.

  9. jerry 2014.11.14

    I think also that the problem may be that you have failed to read the article so that you can articulate what is being said, you know, like Mike Rounds says he did with the EB-5.

  10. jerry 2014.11.14

    I made a mistake, it is Troy not Tory. See a Tory was a turncoat patriot that was looking out for the crown in the Revolutionary War. Funny how you get those things messed up.

  11. Troy 2014.11.14

    Nothing that I said is a criticism of the program, Solyndra or the President. Only the accuracy of the underlying article (which I did read) from which Cory quotes that asserted the program has generated a profit.

    And, when I go to the DOE direct, the Department doesn't make the claim of being profitable (again, a defined term). In fact, the article is pretty clear there is no expectation to be profitable (which is not an indictment or criticism except to the source Cory used who said the program was profitable).

    http://energy.gov/articles/energy-department-s-loan-portfolio-continues-strong-performance-while-deploying-innovation

  12. Douglas Wiken 2014.11.14

    Troy, those interest calculations are interesting. How about applying them to the SD-EB5 program and the money the Joop made disappear?

  13. larry kurtz 2014.11.14

    "Moniz said Friday that the $34 billion program had losses of $780 million overall, about a 2 percent rate that he called "pretty enviable" given the inherent riskiness of its investments. The $810 million in interest collected so far exceeds the losses, he said, and Moniz predicted the program will ultimately return $5 billion in profits to taxpayers over its 20-year life.
    But Moniz said profit, while welcome, was never the priority of the program. The point was to kick-start clean-energy manufacturing, he said."

    http://www.sfgate.com/nation/article/Even-with-Solyndra-feds-clean-energy-loans-5893115.php

  14. Troy 2014.11.14

    Larry,

    Again, an article is misusing terms that I doubt Moniz said. DOE's website says they expect a total of $5billion of INTEREST PAYMENTS, not profits. To be profitable, interest payments have to exceed cost of funds and loan losses. And, because they have already lost $780 million via loan losses and there is a cost of funds disbursed (currently $21Billion) that needs to be paid over the "average 22 year term of the outstanding loans that will run into the billions and finally they admit they will have additional loan losses.

    DOE doesn't assert they are profitable and basically admit they will be unprofitable over the life of the program.

    All that is inaccurate is the articles that keep getting referenced in this thread.

  15. larry kurtz 2014.11.14

    Substitute 'Costello' for 'Moniz' in the AP article and Future Fund for Treasury then write your comment again, Troy.

  16. Troy 2014.11.14

    I am defending Moniz and conforming his words to what is on his own website. I'm discounting/discrediting the person who wrote the article you referenced.

  17. mike from iowa 2014.11.14

    Solyndra was up and running twice as long as NBP before both crashed.

  18. larry kurtz 2014.11.14

    Troy, so EB-5/Future Fund has never been intended to make profit but exists as a mechanism to reward donors?

  19. Steve Sibson 2014.11.14

    So Cory, if the Democrats do crony capitalism, it is OK. If the Republicans do it, it is corruption. No wonder we find no solutions in the political arena. Total dysfunction.

  20. larry kurtz 2014.11.14

    Yeah, Cory: we should go into the arena with crosses and pray the lions won't eat us.

  21. Roger Cornelius 2014.11.14

    When a bank earns interest off their loans, isn't that considered a profit?

  22. Troy 2014.11.14

    Well, all I can say is the DOE website doesn't claim a profit and all these articles appear to be referencing the same raw data.

  23. jerry 2014.11.14

    Good news, the Department of Defense does not claim a profit either. I will get back to you on the other departments, but am quite sure they will not be posting profit or loss data either.

  24. leslie 2014.11.22

    hey troy, why don't you correct rounds & daugaard on their misunderstanding of medicaid expansion dollars for SD, EB5 state jobs created, NBP's "not a loss", EB5 is a "federal matter" so Jackley's failed investigation is misleading, ect. accuracy and all, that is important to you?! Still waiting for your take on what Kochs did from their two offices on both ends of our lil' 800k population state, before the election, and now. Who would know?

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