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Solyndra Scandal Burns First Solar Stock

Stocks in this article: FSLR SPWRA

NEW YORK ( TheStreet) -- Shares of U.S. solar company First Solar (FSLR - Get Report) slid by as much as 7% on Wednesday as the political fallout from the bankruptcy of White House-backed solar company Solyndra produced more negative headlines.

The collateral damage to the solar sector pushed First Solar shares down at one point on Wednesday morning by more than $5 a share to below $74, after already dropping yesterday to a share price it hadn't seen since 2007. The company has three loans totaling $4.5 billion pending approval as part of the same program that provided funding to Solyndra.

The widening Congressional inquiry of Solyndra has created an unprecedented kind of political limbo for loan guarantees made by the Department of Energy, including three loans to First Solar, and it's an unquantifiable risk for First Solar shareholders.

Those loans may be at risk as an investigative subcommittee of the House Energy committee demands that Energy Secretary Steven Chu provide details by next Monday about 14 loans that are expected to close in the next 9 days as part of the same Department of Energy program that provided $528 million to Solyndra.

Emails related to the Solyndra loan suggest the loan review was rushed, and Congressional leaders want Chu to prove that the DOE is not accelerating more loan approvals before the stimulus-package program expires on Sept. 30.

First Solar shares also fluctuated earlier this year, when it was not clear if First Solar would receive DOE loan guarantees for its projects. The company's earnings power has become more reliant on large-scale solar projects for which it has received DOE loans.

If the DOE loans become political pawns, First Solar's earnings potential for 2012 and 2013 could weaken.

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