We all remember Solyndra. It was a producer of solar panels that got government loan guarantees. It went bankrupt. The lenders got paid by taxpayers.
There is another firm that is bordering on a Solyndra event. This one produces components to produce geothermal energy. Its auditors question whether it can stay in business.
The loss to taxpayers will be $98.5 million.
The Washington Times reports that Nevada Geothermal Power (NGP) “has substantial debts and does not generate enough cash from its current operations after debt-service costs.”
Nevada’s Senator Harry Reid was a promoter of this loan guarantee. He said the company would “put Nevadans to work.” However, a recent report by the House Oversight Committee and Government Reform Committee found the loan “did not help create a single job.”
Loan guarantees promote lending to companies that do not meet the standards of the private loan markets. This is why government guarantees are crucial for these loans. These loans re-direct capital from companies that do meet lending standards. As with all government funding, loan guarantees promote inefficient, high-risk projects.
When these loan guarantees are made, politicians say that no taxpayer money is involved. They should add “yet.”
I hope the company makes a successful reversal. I wish it well. Let’s save taxpayers’ money.
It used to be when these loans were undertaken in the private markets (another term would be, "venture capital"), they usully had higher-than-market interest rates associated with them. This way, if the borrower went bankrupt, they would have hopefully repaid enough of the prinicpal and interest so that it would not be a total loss. Instead, these government guarantees allow them to get loans at a lower interest rate, ensuring that their failure would be a total disaster. Would any sane person, acting as banker, accept the same interest rate from a firm like Nevada Geothermal as they would from Microsoft? If the answer is "yes," then such a person needs retraining and behavior modification. Unfortunately, our government system will give them a bonus, a pay raise, and a promotion.
Ha! That's known as elevating them to their level of incompetency. Unfortunately, this happens in a lot of companies.
What's new?
Just another example of waste and fraud in this administration. And of course Harry the Weasel Reid would be backing it. He is just as much of a fraud and liar as is odumbo and crowd.
The only difference between the Republicans andthe Democrats is that Republicans are better at being sneaky. They're BOTH crony fascists.
You can vote for whomever you choose, but I will vote for the candidate that isn't a Communist; would I rather have someone else, like maybe a friend of Gary North; as a matter of fact, yes.