Export bank

The Export/Import Bank is a government agency that creates jobs by guaranteeing loans to American companies who export products. Recently a company called First Solar received a loan guarantee from the Export/ Import Bank to make solar panels and sell them to Canada. In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two solar farms in Canada. That means if the solar farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid. The buyer of the panels is a company called St. Clair Solar which is a wholly owned subsidiary of First Solar. This means that First Solar is selling these panels to itself. Now if St. Clair is unable to sell these panels and goes broke the US taxpayers will cover the loss. The question is how is First Solar doing? Here is a recent report. First Solar (FSLR-Q26.11-0.84-3.12%) cut its 2011 sales and profit forecast for the second time in two months Wednesday and said next year’s profits would fall below Wall Street’s forecast, sending its shares tumbling more than 20 per cent to their lowest level since 2007. The U.S. company, long the darling of the solar industry, has suffered amid the dramatic drop in the price of solar panels this year that has nearly erased profit margins across the sector. The next question is how is St. Clair Solar doing because if they default then the Export/Import bank will cover the loss to First Solar to the tune of $456 million. At least it provided jobs to the people at First Solar who built the panels. It may have provided some large salaries to the officers of First Solar and they may be able to use some of the money to donate to political campaigns. Who knows?