Issa & Solyndra: Looking for Scandal in All the Wrong Places

If insanity is doing the same thing over and over again and expecting a different result, the House GOP is insane. Last February, an article in Bloomberg Businessweek highlighted that since the Solyndra bankruptcy last year:

House Republicans have sent 32 congressional letters, compelled 187,000 pages of administration documents, 72,000 pages of documents from Solyndra investors, 9 committee staff briefings, 5 committee hearings, and a sworn committee interview with the Obama bundler who raised money from people involved in the company. Much (but not all) of the committee’s $7 million budget has been devoted to funding this inquisition. And it’s turned up no evidence of wrongdoing.

Since that article came out, Secretary Chu was brought to testify again in March, a dozen subpoenas were issued to current and former DoE employees and contractors, some of which were delivered by armed U.S. Marshals, and Rep. Darrell Issa, chairman of the House Oversight committee, is pressing the Secretary to appear again on September 20th. Despite Issa’s many repeated attempts, no evidence of wrongdoing has surfaced. We’ve written quite a bit about Solyndra and, in short, there was zero evidence of wrongdoing, it had attracted a substantial amount of private capital, and was named the top clean-tech company in 2010 by the Wall Street Journal.

In reality, there is no conspiracy. There was no big payoff to donors. There is just the reality that emerging businesses occasionally fail. In fact, the Bloomberg article points out that the loan program authors, who established the program in 2005 under the Bush Administration, anticipated this reality and budgeted $2.5 billion to cover any potential losses. In fact, the DoE loan program has a less than four percent default rate, far lower than other loan programs.

If anything, this proves the importance of government’s role as an incubator for emerging research and development. The federal loan program can absorb the cost of something like Solyndra and still continue to invest in further research and development because it is not constrained by private capital and its need for investment returns. As we’ve pointed out, there is no private market incentive for environmental protection and other public goods. By its nature, private capital is interested in how high a return it gets, not how much it has advanced environmental protection. If the two can coincide, that’s great. If not, the priority is profit. In contrast, the public benefit of a cleaner environment, or cleaner energy, can be enough to justify making it a government priority.

Then, there are Washington’s priorities. Issa has devoted most of his committee’s budget on investigating a clean energy loan program that, as Secretary Chu pointed out, will cost taxpayers $2.5 billion but could really revolutionize the clean energy sector. In contrast, Jamie Dimon was called once before a Senate Committee and once before a House Committee to explain JP Morgan’s multi-billion dollar loss that he admitted was the result of several gross mistakes, in other words engagin in unncessarily risky behavior.

Considering taxpayers were on the hook for $700 billion to bailout banks engaging in exactly this type of risky behavior, you would think Dimon would appear before Congress many times more than Secretary Chu. Yet, the exact opposite is true.

Perhaps expecting Congress to do the right thing means I'm the one who is insane.