DOE 1705 Loan Guarantees out-performing expected default rates

In Washington, John McArdle of E&E filed an analysis of Solyndra and the DOE’s Section 1705 loan guarantee program as a whole, writing that “none of the other projects have defaulted on the repayment of their loans. If it stays that way, the entire program will have a default rate of just over 3 percent and won’t even come close to using up the roughly $2.4 billion that Congress has set aside to cover losses associated with the program.”

McArdle compared the 1705 default rate to the USDA guaranteed farm loans default rate of 1.-1.5 percent, the 8.8 percent default rate on student loans  and the 9+ percent default rate on Federal Housing Administration loans, while pointing out that the nature of the 1705 program was explicitly to support higher-risk projects that could accelerate the transition of the nation’s energy program but would have higher-than-tolerable risks than could be affordably financed in the commercial sector.