Clearing Up How Loan Guarantees (like Solyndra’s) Work? (VIDEO)

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The Solyndra investigation has brought loan guarantees out of the obscure world of political wonkery and into the living rooms of Americans around the country.

The problem is, many in the media are completely misrepresenting how the instrument works and who supports it.  So we’ve put together a video primer on how loan guarantees work, posted below.

Some Republicans may want you to believe they don’t support this Obama-era display of government largesse. But in fact, one of the loan guarantee programs for clean energy was signed into law by the Bush Administration. And what did the Bush folks have to say about it in 2007?

“The administration is one step closer to issuing guarantees for loans for clean energy projects that will help reduce our dependence on foreign energy sources, boost economic competitiveness, and combat climate change,” DOE spokeswoman Megan Barnett wrote in an e-mail.

If that statement were made by the Obama Administration today, conservative politicians would be all over the airwaves complaining about government manipulation of markets. The fact is, loan guarantees have historically enjoyed bipartisan support — until it wasn’t politically convenient to do so.

That includes Michigan Republican Fred Upton, chairman of the committee leading the investigation into the failed loan guarantee, who was an early backer of the policy. In 2007, he proposed adding $4 billion more to the loan guarantee program in order to help build new nuclear facilities around the country.

But speaking during a subcommittee hearing on Solyndra this week, Upton explained that he thinks they are “speculative”:

“In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat.”

That’s quite a bold statement considering that no nuclear facility would get built in this country if it weren’t for loan guarantees and government-backed insurance. Yet Upton is one of the biggest supporters of nuclear in Congress. By comparison, even though the loan guarantee program is extremely important for helping the largest and most innovative renewable energy facilities get built, there’s still plenty of activity taking place in that sector without the program.

It’s time to set the record straight on loan guarantees. The Solyndra debacle has wrongly turned this financing mechanism into a political lightning rod. But we can’t let that happen.

Below, Richard Caperton of the Center for American Progress explains why both parties have historically supported the policy — because it is not a direct government investment. A loan guarantee simply provides a financial backstop in case of default, which is good for raising financing for nuclear and renewable energy projects. Rather than picking winners and losers, the policy leverages private capital across a range of competing industries and technologies that are of strategic national interest.

We can’t let the punditocracy hijack this program. If they’re able to completely redefine what loan guarantees are, what else will they misconstrue?

Watch this 3-minute video, link to it, and send it along to anyone who may need a primer on how loan guarantees work. Perhaps you might know a reporter at Fox News …?

 This story was originally published at and was cross-posted with permission.


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