E-mails show Energy Department was moving toward second loan for Solyndra
By Carol D. Leonnig and and Joe Stephens,
Newly released e-mails show the Obama administration’s Energy Department was poised to give Solyndra a second taxpayer loan of $469 million last year, even as the company’s financial situation grew increasingly dire.
The department was still considering providing the second loan guarantee to the solar-panel manufacturer in April and May 2010, at a time when Solyndra’s auditors were already warning that the company was in danger of collapsing.
Details of the plan are revealed in e-mails released this week by Democrats on the House Energy and Commerce Committee, which is investigating the original loan. On Wednesday, the probe intensified as committee Republicans requested that the White House provide all documents, dating back to President Obama’s inauguration, that would show communications between staff members and other officials regarding Solyndra’s original $535 million federal loan guarantee.
Republican leaders said that documents obtained in recent weeks show that Obama’s “closest confidantes” monitored the loan, and that his campaign donors offered advice on the company.
“Documents reveal a startlingly cozy relationship between wealthy donors and the president’s confidantes, especially in matters related to Solyndra,” Cliff Stearns (R-Fla.), chairman of the committee’s investigations panel, said in a statement.
E-mails already made public in the eight-month investigation have kept the White House and the Energy Department on the defensive for weeks, showing in part that Valerie Jarrett and Lawrence H. Summers, top Obama advisers at the time, took part in discussions about Solyndra.
The Energy Department provided Solyndra with its first taxpayer-backed loan guarantee in September 2009. Documents released this week show that White House career staffers, who first questioned the loan that fall, by April 2010 were using gallows humor to describe the prospect of giving Solyndra a second round of help. That spring, industry analysts were publicly questioning how the Silicon Valley start-up could be spending cash so quickly from the federal loan and $933 million in private capital.
“Apparently the loan size for Phase II is $469 million,” one analyst at the Office of Management and Budget wrote. “I’ve been told we should expect [to] see that project soon for conditional commitment.”
Another joked: “Possible to close and default on one before closing on a second??? Could be a new record.”
The agency didn’t drop plans for a second loan until October 2010, an Energy Department spokesman has confirmed. That was the month Solyndra executives and investors first warned the government that the company faced the threat of liquidation without emergency cash.
Energy Department spokesman Damien LaVera said Wednesday that OMB staffers were wrong in describing the agency as actively pushing to provide the second loan.
“In fact, the career staff at the department had only barely begun to do the due diligence that would have been required for a second loan,” LaVera said. “This application would have had to undergo many more months of analysis before being approved,” but that was rendered moot when the company reported severe financial problems.
Solyndra, which suddenly shut down Aug. 31 and sought bankruptcy protection, has left taxpayers on the hook for repaying that first half-billion-dollar loan. It also has left many lawmakers questioning why the Obama administration was so supportive of the start-up. Some Republicans have charged that the administration favored Solyndra because it was backed by investment funds linked to George Kaiser, a major Obama fundraiser.
Obama cited Solyndra as a showcase of his effort to boost the clean-energy industry. He visited Solyndra’s California headquarters in May 2010, after being warned not to go by a venture capitalist who feared the company could fail.
Even in May 2010, Energy Secretary Steven Chu’s top advisers — his senior adviser on stimulus , Matt Rogers, and his chief of staff, Rod O’Connor — were telling the White House not to worry about auditors’ warnings about Solyndra’s finances.
O’Connor told a top White House adviser to Vice President Biden that the warnings were exaggerated, when a venture capitalist and Obama donor had flagged the company’s finances as a reason why the president shouldn’t visit Solyndra as scheduled on May 25. O’Connor also raised the issue of more financial support for Solyndra.
Rogers, who had been a senior consultant at McKinsey before joining the administration and returned to that company last fall, told the White House that such auditors’ warnings were typical for start-ups.
Solyndra applied for a second loan days after receiving the first one in September 2009. The agency had put Solyndra’s request for a second loan guarantee on a fast-tracked priority list, two sources familiar with the company’s application told The Washington Post. The sources spoke on the condition of anonymity because the probes of the loan are ongoing.
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