Solyndra White House e-mails show ignored warnings about loan guarantee risks
Pressure on the Obama administration over the loan guarantee given to Solyndra ratcheted up after the discovery of e-mails from a White House official warning of possible political ramifications of the loan. As Carol Leonnig and Joe Stephens reported:
A White House official fretted privately that the Obama administration could suffer serious political damage if it gave additional taxpayer support to the beleaguered solar-panel company Solyndra, according to newly released e-mails.
The firm had burned through millions of dollars and in January still tottered near collapse. The official wanted the government’s top budget official to warn Obama’s energy secretary about the risk, according to the e-mails.
At the time, the Energy Department was trying to pump taxpayer money into the California company to save it from imminent failure. The firm had received a $535 million federal loan from the agency in 2009, but early this year confided to the Obama administration that without a rapid infusion of cash it was in danger of defaulting.
“The optics of a Solyndra default will be bad,” the Office of Management and Budget staff member wrote Jan. 31 in an e-mail to a co-worker. “If Solyndra defaults down the road, the optics will be arguably worse later than they would be today. . . . In addition, the timing will likely coincide with the 2012 campaign season heating up.”
The e-mail suggests that, as the Energy Department pushed to release an additional $67 million in installments of the loan to Solyndra, the OMB was not participating in the decision about whether to help the company. OMB staff had been in charge of assessing the default risk of firms that received Energy Department loan guarantees.
The Solyndra bankruptcy has led to increased criticism of the Obama administration’s promised green jobs initiative and the small number of actual jobs created from his loan guarantee program. As Carol Leonnig and Steve Mufson explained:
A $38.6 billion loan guarantee program that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show.
The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to Energy Department tallies.
President Obama has made “green jobs” a showcase of his recovery plan, vowing to foster new jobs, new technologies and more competitive American industries. But the loan guarantee program came under scrutiny Wednesday from Republicans and Democrats at a House oversight committee hearing about the collapse of Solyndra, a solar-panel maker whose closure could leave taxpayers on the hook for as much as $527 million.
The GOP lawmakers accused the administration of rushing approval of a guarantee of the firm’s project and failing to adequately vet it. “My goodness. We should be reviewing every one of these loan guarantee” projects, said Rep. Marsha Blackburn (R-Tenn.).
Obama’s efforts to create green jobs are lagging behind expectations at a time of persistently high unemployment. Many economists say that because alternative-energy projects are so expensive and slow to ramp up, they are not the most efficient way to stimulate the economy.
Solyndra, the first renewable-energy company to receive a loan from the stimulus law creating the guarantee program, had its headquarters raided by the FBI last week. As AP reported:
The FBI raided Solyndra’s headquarters last week and interviewed company executives at their homes. A U.S. official, who spoke on condition of anonymity because the case is under seal, said the search was related to a fraud investigation into whether Solyndra filed inaccurate documents with the government.
The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. President Barack Obama visited the company’s headquarters last year.
Even as Obama declared that “the future is here” during a May 2010 visit to Solyndra, warning signs were being sent from within the government and from outside analysts who questioned the company’s viability.
At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program.
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