Larry Summers: Gov't Is 'Crappy Venture Capitalist'

Monday, 03 Oct 2011 04:49 PM

By David A. Patten

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As early as December 2009, top officials in the Obama White House received warnings that Solyndra, the now-bankrupt solar panel manufacturer that left taxpayers holding the bag for $535 million in loan guarantees, might be headed for trouble.

Over 700 pages of documents released Friday by the White House and the Office of Management and Budget (OMB) indicate the White House elected to go forward with a high-profile visit by the president to the company in May 2010, even after the warnings.

One alarm was sounded by Brad Jones, an executive of the Redpoint Ventures investment firm.

Speaking of Solyndra, Jones wrote to top presidential economic adviser Lawrence H. Summers: “One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million. While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”

Jones added: “The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much.”

Summers’ reply appeared to be an acknowledgement that government was ill-suited to the role of choosing winners and losers in the marketplace.

“I relate well to your view that gov. is a crappy v.c.,” Summers wrote, using “v.c.” as an abbreviation for venture capitalist investors.

Despite his admission that government was ill-equipped to vet taxpayers “investments,” Summers went on to tell Jones: “But suppose we think there are all kinds of externalities to renewable investments. What should we do?”

Summers did not state whether those “externalities” included political pressure from the White House or the Department of Energy to award loans in support of President Obama’s view that clean-energy jobs could lead America out of its economic doldrums.

Another warning came from Obama fundraiser Steve Westly, a California investor. He fired off a May 2010 e-mail to Obama senior adviser Valerie Jarrett, stating: “A number of us are concerned that the president is visiting Solyndra. Many of us believe the company’s cost structure will make it difficult for them to survive long term …. I just want to help protect the president from anything that could result in negative or unfair press.”

When he visited the Solyndra plant in May 2010, Obama declared: “The future is here. We’re poised to transform the ways we power our homes and our cars and our businesses. And we’re poised to lead our competitors in the development of new technologies and products and businesses. And we are poised to generate countless new jobs, good-paying middle-class jobs, right here in the United States of America.”

When Solyndra closed down at the end of August, it cost 1,100 workers their jobs.

Democrats on the House subcommittee on oversight and investigation concluded the White House e-mails released Friday show that White House officials “made their decisions based on their assessment of the merits, not political influence.”


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