Another wrote that top Energy officials seemed “completely oblivious” to mounting risks in their first project: a $535 million government-backed loan to a now-shuttered solar panel-manufacturer, Solyndra.
Their broader concern was that Obama’s energy agency was not making careful enough choices in the companies that it backed with loans, or carefully monitoring those companies.
The e-mails, covering from late 2009 until May 2010, were released by the Democratic minority on the House Energy and Commerce Committee and capture only part of the administration’s internal debate about Solyndra. But this portion revealed that two private investors and some career federal employees warned top White House advisers about what they considered the Energy Department’s blind spots.
At that time, early April 2010, concern mounted at the Office of Management and Budget when news broke that Solyndra’s independent auditors had questioned whether the company could continue as a “going concern.” OMB officials had felt rushed in approving the major loan to Solyndra in September 2009.
Now eight months later, as the Fremont, Calif.-based company sought to go public, auditors highlighted the firm’s mounting debts and paltry revenue.
“DOE … has one loan to monitor and they seem completely oblivious to this issue,” one Office of Management Budget analyst said April 2, 2010, “and to make it worse it was the key thing I said they needed to watch.”
The unnamed analyst complained that the agency’s loan monitoring was “problematic” and not a priority, despite the large sums that taxpayers would have to repay if the projects failed.
“Interesting in light of DOE’s recent statement to OMB staff that Solyndra project was on schedule and on budget,” another OMB analyst wrote back that day about the auditors’ findings. “I eager[ly] await DOE’s monitoring system.”
In an ongoing exchange that day, the analysts discussed the bad news they believed was looming inside the projects the Energy Department had backed.
“What’s terrifying is that after looking at some of the [loan guarantee projects] that came next, this one [Solyndra] started to look better,” one OMB staffer said to another.
They remarked on how the Energy Department was still considering granting Solyndra more funding in a second loan guarantee application.
“Possible to close and default on one before closing on a second??? Could be a new record,” one wrote.
Later, on May 21, an OMB analyst reacted incredulously to learning of President Obama’s pending visit to Solyndra on May 25. The event had been scheduled by the White House to showcase the administration’s use of stimulus funds to generate jobs.
“Hope doesn’t default before then,” the staffer wrote.
Even venture capitalists like Steve Westly, whose firm had invested in companies that the Obama administration had helped with stimulus funds, questioned the Energy Department’s judgment and Obama’s pending trip. He e-mailed senior Obama adviser Valerie Jarrett urging that the White House reconsider the trip because there was a high likelihood the company would fail.
Westly declined to comment when asked about his remarks to Jarrett in May 2010.
The president did visit the firm in May, with encouragement from Energy Secretary Steven Chu’s top stimulus adviser, Matt Rogers, a McKinsey consultant who returned to his firm late last year. Solyndra did default on its first loan in December 2010, but Chu approved loan refinancing to allow the company to continue receiving installments.
Energy Department spokesman Damien LaVera declined to answer specific questions about whether Chu was aware of outside investors warning the White House about the Energy Department’s investment in Solyndra and the pending trip.
“This program was established by Congress to support innovative, cutting edge projects that by their nature carry a degree of risk. These emails show that the Administration was aware of those risks, and that decisions were based on more than two years of rigorous analysis and due diligence by career officials spanning two administrations,” LaVera said in an e-mailed statement. “As we have consistently said, there was a thoughtful and appropriate debate within the Administration and decisions were made solely on the merits of the project.”