The White House is under fire for its decision to grant Solyndra a loan guarantee of $500 million on short notice. Congress is investigating the loan guarantee and calling on the Obama administration to provide more details. As the Washington Post’s Joe Stephens and Carol Leonnig reported:
The Obama White House tried to rush federal reviewers for a decision on a nearly half-billion-dollar loan to the solar-panel manufacturer Solyndra so Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory, newly obtained e-mails show.
The Silicon Valley company, a centerpiece in President Obama’s initiative to develop clean energy technologies, had been tentatively approved for the loan by the Energy Department but was awaiting a final financial review by the Office of Management and Budget.
The August 2009 e-mails, released exclusively to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.
Solyndra collapsed two weeks ago, leaving taxpayers liable for the $535 million loan.
One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.”
“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”
White House officials said Tuesday that no one in the administration tried to influence the OMB decision on the loan. They stressed that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.
“There was interest in when a decision would be made because of its impact on whether an event involving the vice president could be scheduled for a particular date or not, but the loan guarantee decision was merit-based and made by career staffers at DOE,” White House spokesman Eric Schultz said.
With the Solyndra decision becoming a national story, there are many misconceptions of it all means. Wonkblog’s Brad Plumer explained the five myths about the Solyndra collapse:
1) This scandal is no big deal. To the contrary, evidence is mounting that there was something irregular about the way the Solyndra deal got greenlighted. My colleagues Joe Stephens and Carol D. Leonnig have obtained e-mails showing that the White House pressed the Office of Management and Budget to hurry up in finalizing the deal (note that this came after the Energy Department had already approved the loan), even as OMB officials voiced concern about being rushed.
Does that prove the White House engaged in cronyism, shoveling cash toward a political ally? Not necessarily. Democrats have pointed out that Solyndra’s loan process was initiated by the Bush administration and that many key investors were Republicans. Still, there could have been other reasons the deal was hastened. As a former Clinton energy aide stressed to me, it was arguably a mistake to sell the loan guarantees as job-creating stimulus (the program was expanded as part of the 2009 stimulus bill). “It means you try to force huge amounts of money quickly through processes that aren’t quite ready yet,” the aide said. “It’d be better to have a calmer, steadier source of funding.”
2) Solyndra proves that energy-loan guarantees are a flop. Not exactly. The Energy Department’s loan-guarantee program, enacted in 2005 with bipartisan support, has backed nearly $38 billion in loans for 40 projects around the country. Solyndra represents just 1.3 percent of that portfolio — and, as yet, it’s the only loan that has soured. Other solar beneficiaries, such as SunPower and First Solar, are still going strong. Meanwhile, just a small fraction of loan guarantees go toward solar. The program’s biggest bet to date is an $8.33 billion loan guarantee for a nuclear plant down in Georgia. Improper political influence in the process is disturbing, but, at least so far, Solyndra appears an exception, not a rule. (That said, the GAO and others have pointed out potential pitfalls and the need for stricter oversight in the loan program.)
A House committee opened an investigation into the loan on Wednesday, with both Democrats and Republicans asking tough questions of administration officials. As Carol Leonnig and Joe Stephens reported:
A House committee opened an investigative hearing Wednesday morning into a $535 million federal loan to a favored solar company by asking why the Obama administration sought to pour more taxpayer money into a company when the firm warned it was near collapse.
Republicans and Democrats on the House Energy and Commerce Committee questioned the reasoning of the administration’s decision earlier this year to help Solyndra restructure its debts and to release another $67 million to the troubled California-based company. Solyndra — once a centerpiece in President Obama’s initiative to develop clean-energy technologies — shuttered its plant two weeks ago, laying off 1,100 workers and leaving taxpayers on the hook for repaying the $535 million loan.
New records obtained by The Washington Post show that some federal reviewers warned internally earlier this year that it would be far cheaper for the government to allow Solyndra to shut down and sell off its assets, rather than to restructure the deal and bet on the company recovering. A preliminary estimate by the Office of Management and Budget in January showed that restructuring Solyndra could cost taxpayers up to $168 million more than liquidation.
At the hearing, Rep. Cliff Stearns (R-Fla.), chairman of the energy subcommittee on oversight and investigations, quoted from internal e-mails about those officials’ concerns and questioned two senior administration officials about why more public money was put on the line.
“I want to find out what happened to this money and who is responsible for putting these dollars at risk,” Stearns asked Jonathan Silver, head of the Energy Department’s loan guarantee program, and Jeffrey Zients of the Office of Management and Budget.
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