It might seem hard to imagine amid the daily headlines and blitz of congressional hearings, but if Solyndra had been the last loan guarantee granted under the Department of Energy's Section 1705 program rather than the first, the company's $527 million default might have been written off as an acceptable loss.

That's the point Sen. Mark Warner (D-Va.), who made his fortune as a venture capitalist before coming to Congress, made yesterday afternoon as some of his GOP colleagues again called for an end to the controversial DOE loan guarantee program and as House Republicans prepare to grill a pair of Treasury Department officials tomorrow in their fifth hearing on Solyndra in as many months.

"It's very unfortunate that you had this high-profile [failure] this early in the portfolio," Warner said, referring to 28 projects totaling $16 billion dollars in loan guarantees that DOE has given out under the stimulus-funded 1705 program for renewable energy projects.

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Solyndra, a solar manufacturer that was given a $535 million loan guarantee and touted by the White House as a model for the clean energy economy, has filed for bankruptcy. E&E examines how it got there and what it means. Click here to read the report.

"The challenge you've got now with Solyndra [is] ... it happened early enough in the program that you don't have the track record of how all the other loan guarantees are doing," he said.

Currently, 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.

When it created the program in 2009, Congress originally provided just under $6 billion to pay the credit subsidy costs associated with 1705 loans. But that money, which serves as the program's loan loss reserve fund, has been dipped into for other purposes over the past two years. About $2 billion was used in 2009 to help extend the Cash-for-Clunkers program while another $1.5 billion went toward assistance to state governments in 2010.

But even if some other 1705-funded projects don't pan out, Warner said, the upside of helping the private sector develop a breakthrough technology is worth a few failures.

"As a venture capitalist, if we had one out of 10 be successful, the upside more than made up for the losses," Warner said.

In the weeks since the Solyndra scandal broke, the White House and Department of Energy have repeatedly sought to turn public attention to the potential benefits of the many projects funded by the 1705 program. But those efforts have been mostly drown out as the depth of Solyndra's spectacular failure has been uncovered.

The Solyndra story has become a near-daily obsession in media circles, fed by the release of over a thousand pages of internal Obama administration emails and punctuated by high-profile hearings of the House Energy and Commerce Committee. The media circus hit a peak last month when two Solyndra executives invoked their Fifth Amendment rights 20 different times before the Energy and Commerce Committee's investigations subcommittee.

Meanwhile, Republicans like Sen. Rand Paul (R-Ky.) have been working to knock the 1705 program off the pedestal they believe DOE and the White House have put it on. Instead they see the loan guarantee program as simply a vehicle by which the White House tried to reward political friends, including the Obama fundraiser who is part of an investment company that was one of Solyndra's main backers.

"I'm sort of appalled by the fact that the state of Kentucky gets $420 million every year for roads and they gave $500 million to one company for something that is not ever going to be probably profitable," Paul said yesterday.

"It seems to be money directed with political purposes to his campaign contributors. ... I think for the most part the government shouldn't be involved with things like that," Paul said. "We don't have enough money to provide for infrastructure and we're doing risky investments to political contributors?"

But several of Warner's Democratic colleagues and other supporters of the DOE loan program said yesterday that critics seem to have forgotten that Congress saw enough potential in the 1705 program that lawmakers deemed the risk associated with such a program to be acceptable.

"I think obviously you work to avoid failure on any project that the government has provided a guarantee for, but realistically you have to go into it understanding that there will be some level of failure," Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said yesterday.

Defaults in other agency loan programs

Indeed, some level of default is expected in other loan programs across the government.

For example, last year, the default rate for USDA's portfolio of guaranteed farm loans was approximately 1 to 1.5 percent. According to the Department of Education, 8.8 percent of borrowers overall defaulted in the fiscal year that ended Sept. 30, 2010. Last year, the number of loans backed by the Federal Housing Administration that were in default topped 9 percent.

When it comes to the DOE program, "some in Congress seem to have lost sight of the fact that the purpose of federal loan guarantees is to encourage private-sector investment in new technologies by having the government assume some of the risk," Jason Grumet, president of the Bipartisan Policy Center, said yesterday.

"This method has been relied upon for nuclear power, renewables and a host of projects outside the energy sector," Grumet said. "The notion that people are now shocked that failures could occur is a triumph of selective memory and begs the question of why it was thought the program was needed to begin with."

Bingaman said there is "no question" that some of the scrutiny and criticism of DOE for the 1705 loan program is a reflection of the general lack of support for renewable energy and the whole idea of clean energy.

Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) was even more blunt about the politics she says are at play.

"The Republicans are the voice of the big oil companies and they don't want anything to threaten the dominance of oil," Boxer said. "They try to make a big deal out of this even though we knew that there would be problems" with some companies over the life of the 1705 program.

While she believes that "massive oversight" needs to be done on the Solyndra deal to find out if any mistakes were made, she said that does not mean Congress should abandon the program altogether.

Boxer said the United States didn't take that attitude when it ran into problems early in its effort to put a man on the moon.

"We lost people and it cost billions, but we didn't say we are never going to go to the moon," she said.