Congressional committees are looking into government loan guarantees for solar energy companies. Image: Flickr / maleny_steve / CC-BY-SA

For the last two years, the Department of Energy has been offering a financial helping hand to clean-energy companies. Through the American Recovery and Reinvestment Act, the DOE guaranteed billions of dollars in loans. Some of those companies did not grow as expected, and Congress is now questioning the decisions of the DOE.

Clean energy loans

The Department of Energy has been selecting various clean-energy projects to support through loan guarantees. Rather than directly giving the projects loans, the DOE has been providing federal guarantees for bad credit loans to these companies. These agreements basically say that if the company goes under or cannot repay their loan obligations, the government will make sure the lender receives payment. These clean energy loans went to a variety of projects, including solar power in Reno, Nevada, and Solyndra Inc. in California.

Solyndra Inc investigated by Congress

One of these clean-energy bad credit loan guarantees did not go as the DOE planned. The DOE promised about $500 million in guarantee money to help Solyndra Inc. secure financing for expansion into a second plant and hiring of about 1,000 additional workers. Solyndra also planned on making an initial public offering within a few months of the loan going through to help raise capital to pay back the loan. After an auditor warned that company did not have the revenue necessary to support the IPO and revenue did not outpace costs, however, Solyndra had to roll back its plans for expansion. The company has not closed, and the government has not yet been asked to pay back any of the $500 million loan guarantee. However, House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) has opened an investigation into the guarantee.

Wider investigation into stimulus money

The investigation into Solyndra Inc. is just the first in what the House Energy and Commerce committee expects to be a larger investigation into clean energy loans. Proponents of green-energy support from the government are pointing out that not every company that gets a loan guarantee can do well, just as every company that gets a traditional loan may not succeed. Opponents say that even though the government hasn’t yet had to put out any money, it should not be in the business of guaranteeing loans for green energy projects.

Sources

Reuters
The Hill

Many small businesses are struggling and relying on SBA loans to make ends meet. Image from Flickr.

The Small Business Administration has been charged with helping businesses weather the recession, and money is running out. The 7(a) lending program provides loans, personal and large, to small businesses around the country. The program, which was funded by the American Recovery and Reinvestment Act, is currently in a holding pattern, waiting for more money.

How the SBA provides low cost loans

The Small Business Administration itself does not give instant money to business owners. Instead, the government agency backs up loans made by banks. With the SBA “insurance policy” against default in place, banks are much more willing to act as money lenders to often cash-strapped small businesses. The stimulus package authorized the SBA to waive fees and guarantee up to 90 percent of a loan’s value.

The effect of SBA loans

Small businesses are often forced to rely on credit and loan lenders to keep their businesses going. Over just a three-month period of April, May and June, the SBA lent out $3 billion over 12,123 loans. Compared to the same quarter of 2009, that is 21 percent more emergency money for cash-strapped businesses. The program, however, is still waiting for re-authorization, which is leaving millions of dollars of loans in limbo.

The SBA loan queue

Since the official authorization for SBA loans expired in May, the agency has been forced to queue requests for loans. There are currently 419 borrowers waiting for more than $123 million in SBA-guaranteed funding. Because these SBA loans are often one of the very few types of credit available to these businesses, the agency is scrambling to help them find financing. Given the length of the recession thus far and the fact that the economy is not yet growing at a steady pace, it is almost for certain that programs such as the SBA 7(a) program will need to continue providing support for small business.

Peter Orszag has announced he will be stepping down as White House budget director. (Photo: Center for American Progress, Flickr.com)

The director of the White House office of Management and Budget, Peter Orszag, will be leaving his post in July. Peter Orszag has been thinking about leaving the administration for a while and finally decided on leaving in  July after he was pressed by administration officials. As director of the White House budget office, Orszag has wielded significant powers within the government. The replacement for Office of Management and Budget head has not yet been announced.

Peter Orszag as budget guru

As head of the Office of Management and Budget, Peter Orszag has held a cabinet-level position. The OMB is charged with creating the annual White House budget that is sent to Congress. The OMB also provides estimates and opinions on legislation, in support of the Congressional Budget Office, upon the request of members of Congress. While in the position of budget head, Peter Orszag championed two major pieces of legislation — the stimulus bill and health care reform.

Peter Orszag’s history of service

Peter Orszag first started working for the White House in 1997. He started as a Special Assistant to the President for Economic Policy and has moved up the ranks since then. From January 2007 to November 2008, Peter Orszag served as head of the Congressional Budget Office. Peter Orszag has also made a name for himself as an official White House blogger on budget issues.

Who will replace Peter Orszag?

The replacement candidates for Peter Orzag have not yet been officially announced. However, political watchers have been throwing names around already. More likely than not, Peter Orszag’s replacement will be someone already in the White House. Some point to Rob Nabors, who has recently been attending senior staff meetings at the White House and acted as Orszag’s right-hand person from ’96 to ’98. Members of the Economic Recovery Advisory Board and Treasury Secretary counselors have also been named as possible replacements. Whoever the replacement is, President Obama has put significant power in the hands of the director of the OMB, so the budget guru better be someone up to the task.