Solyndra loan controversy casts pall on national transportation bank proposal

An escalating controversy over government loans to Solyndra could sap whatever momentum a proposed national bank for transportation projects may have gained from being included in President Obama's "American Jobs Act."

The bright lights from the inquiries into the grants to the failed California solar energy company come at time when a long-proposed national infrastructure bank was moving to the forefront of the country’s political debate.

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The proposal, contained in legislation by Sen. John Kerry (D-Mass.) and Kay Bailey Hutchison (R-Texas) that has been around since at least March, is accompanied by $50 billion in transportation investments in being included in President Obama's $447 billion “American Jobs Act.”

Obama is barnstorming the country calling on Congress to “pass this bill,” recently taking his message to a bridge that connects House Speaker John Boehner’s home state of Ohio and Senate Republican Leader Sen. Mitch McConnell’s home of Kentucky.

“We used to have the best infrastructure in the world here in America,” Obama said in his remarks Thursday. “We’re the country that built the Intercontinental Railroad, the Interstate Highway System. We built the Hoover Dam.  We built the Grand Central Station.  So how can we now sit back and let China build the best railroads?  And let Europe build the best highways?  And have Singapore build a nicer airport?”

Supporters admit that message may get muddled in the fallout from the Solyndra scandal, although they said they hoped that would not happen.

“You always have to factor in concerns, but the infrastructure bank as designed, you have to go through a thorough vetting process, by financial people and by government people,” Building America’s Future President Marcia Hale told The Hill Friday.

Chamber of Commerce Executive Director for Transportation and Infrastructure Janet Kavinoky said the fracas over Solyndra is an example of why her organization supports having an infrastructure bank for transportation that is insulated from politics.

As proposed, the bank would be managed by a board appointed by the president and lawmakers in both parties. It would also have its own inspector general to perform audits.

Plans call for the government to provide $10 billion to the bank, which advocates say would then be leveraged to get private sector investments in critical transportation projects.

“The National Infrastructure Bank proposal certainly builds in safeguards and risk management,” Kavinoky said Friday. “It’s meant to be a professional structure, immune from political pressure. Decisions (on grants) are meant to be based on technical factors and credit-worthiness.

But former Maryland Gov. Parris Glendening, a Democrat who is now president of the Smart Growth Leadership Institute, said separating the infrastructure bank proposal from politics may not be possible.

“Depending on how it is structured…there’s no real connection,” between Solyndra and the transportation grants, Glendening said.

But “like everything else that gets thrown into the politics, this is part of the president’s effort to deal with the recession,” the former governor, who strongly supports the proposal, told The Hill. “Just in terms of the president saying ‘this is what the country needs,’ in that envelope alone, there’s probably not enough to get it through the post office.”

Glendening said he hoped politics would not tarnish the proposal “because our infrastructure needs are so great.

“We’re in really bad shape, and this is one device to try to solve that,” he said.

But he was not at all convinced it would come to pass, at least until after the elections next year.

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"Pleasantly surprised, that’s the most optimistic phrase I can put on it,” he said. “Things will automatically be difficult in the politics of things until after the 2012 election."

The chairman of the House Oversight Committee, Rep. Darrell Issa (R-Calif.), called this week for an investigation into loans issued to the failed California solar energy company Solyndra, which went bankrupt despite receiving government assistance.

"I want to see when the president and his cronies are picking winners and losers… it wasn't because there were large contributions given to them," the chairman of the Oversight and Government Reform Committee said in an interview on C-SPAN.

After receiving $535 million in low-interest loans, Solyndra abruptly filed for bankruptcy earlier this month, much to the surprise of both its employees and the Obama administration.

Other Republicans have joined Issa in pouncing, dubbing the loans examples of “crony capitalism” from a White House whose agenda they are eager to stop.

“The more we learn about the failure of the stimulus-backed company Solyndra, the more questions we have,” Republican National Committee Chairman Reince Priebus said in an op-ed on the conservative Website Townhall.com. “It is time the White House give us honest answers, not convenient excuses.”