This excerpt originally appeared in Green Techmedia on July 19, 2012.

De Rugy also said that loan guarantee programs transfer risk from lenders to taxpayers, may inhibit innovation, and increase the cost of borrowing. “Such guarantees,” she said, “distort crucial market signals.” The worst impact, she added, is that “guarantees introduce political incentives into business decisions, creating the conditions for businesses to seek financial rewards by pleasing political interests rather than customers. This is called cronyism, and it entails real economic costs.”