Nobel physicist turned venture capitalist, Steven Chu, testified before a House Sub Committee today to explain the loss of jobs in companies in which his company, Chu Capital, invested.
In questioning Chu, the Democratic representative from California was particularly critical of the loss of more than one thousand jobs in economically-depressed California at Chu Capital’s Solyndra plant.
Democratic representatives from Massachusetts and Nevada expressed similar concerns that companies in their states in which Chu Capital invested are either bankrupt or on the verge of bankruptcy.
In his testimony, Chu testified that companies fail when “the bottom of the market falls out.” That, he said, is what happened for reasons that could not be foreseen. In business start ups, no one has a crystal ball. Chu assured the committee that, at the time the investments were made, Chu Capital’s analysis “showed a low probability that any of the companies would go into default.”
“This company (Solyndra) and several others got caught in a very, very bad tsunami.” New plants to manufacture solar panels started up in China and elsewhere, while the market for the panels was softening because of economic troubles in Europe. Prices dropped 70 percent in two and a half years.
Democratic representatives remained skeptical: Two of the first three deals supported by Chu Capital “have now blown up and filed for bankruptcy, and you admit no fault whatsoever. You just say: “Hey, sometimes things don’t work out.’ ”
The Times of New York comments that the failures of Chu Capital investments will surely harm any future ambitions of Chu for higher political office.
Satire based DOE Secretary Chu’s Solyndra testimony before Congress. http://www.nytimes.com/2011/11/18/business/energy-environment/energy-secretary-defends-solyndra-loan.html and http://www.youtube.com/watch?v=NbUu6CrWkmY