Obama was advised against visiting Solyndra after financial warnings
By Carol D. Leonnig and Joe Stephens,
Administration officials and outside advisers warned that President Obama should consider dropping plans to visit a solar startup company in 2010 because its mounting financial problems might ultimately embarrass the White House.
“A number of us are concerned that the president is visiting Solyndra,” California investor and Obama fundraiser Steve Westly wrote to Obama senior adviser Valerie Jarrett in May 2010. “Many of us believe the company’s cost structure will make it difficult for them to survive long term. . . . I just want to help protect the president from anything that could result in negative or unfair press.”
The warning, which did not convince the White House to drop the Obama factory visit, was detailed in e-mails released Monday by the Democratic minority on the House Energy and Commerce Committee. The panel is investigating a $535 million government-backed loan to the now-shuttered company.
Democrats said the e-mails demonstrate that there was no political favoritism for Solyndra or for the Obama fundraiser whose family foundation held an interest in the company. But the internal messages revealed for the first time the high level of White House interest in the startup and its faltering finances after the Energy Department backed it with $535 million in loans.
On Monday, Obama made his first public comments about Solyndra’s collapse, saying that he does not regret supporting or visiting the company as part of his administration’s backing of clean-energy companies.
“Now there are going to be some failures,” he said in an ABC News/Yahoo online television interview. “Hindsight is always 20/20. It went through the normal review process and people thought this was a good bet.”
Since Solyndra filed for bankruptcy on Aug. 31, leaving taxpayers on the hook for almost half a billion dollars, the White House has said that decisions about supporting the solar-panel manufacturer were made by career employees at the Department of Energy, starting in the Bush administration.
But the e-mails capture the vigorous debate within the Obama White House about whether the solar-panel manufacturer was a smart bet. They also highlight the angst inside the West Wing about whether the president’s initiative to support clean energy was ill-equipped to pick winners, or could, as some hoped, help validate Obama’s use of $80 billion in stimulus to build a clean-energy industry.
Obama’s Energy Department had provided Solyndra with a government-backed loan in 2009. A year later, when the company ran out of money, the agency agreed to refinance Solyndra’s loan and continue paying out federal funds.
What was once a showcase of that Obama clean-energy initiative is now a political crisis for the White House. Despite the federal largesse, Solyndra’s sudden shutdown left 1,100 employees out of work and many of its assets up for auction.
A week later, FBI agents raided the company’s headquarters in a criminal probe looking at potential accounting fraud.
In spring 2010, before Solyndra’s fortunes turned, the White House highlighted the administration’s investment in the company in a “Main Street Tour,” to show taxpayers how their stimulus dollars had been put to work.
“Rahm is very pleased,” one staffer wrote referring to then-Chief of Staff Rahm Emanuel and the decision to have Obama visit Solyndra in May 2010. Emanuel, now the mayor of Chicago, has said he does not remember discussions about the company.
But the administration was being waived off by worried venture capitalists, some of whom were major Obama fundraisers and also advised the White House.
Obama fundraiser and investment fund president Steve Westly warned Obama senior deputy Valerie Jarrett days before to reconsider whether the president should visit the company that May. He cautioned that Solyndra’s financial problems might worsen and embarrass Obama later.
Westly’s fear stemmed from a warning issued by Solyndra’s outside auditors the previous month, in April. They noted that the company was burning through cash rapidly and might not remain a “going concern.”
Westly told Jarrett that if Obama visited, he should be careful about touting the company’s future.
“If it’s too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”
The White House Office of Management and Budget also worried. An OMB official e-mailed a White House staffer in May 2010: “I am increasingly worried that this visit could prove embarrassing to the Administration in the not too distant future.”
Top officials at the Energy Department counseled the White House not to worry.
Matt Rogers, senior adviser to Energy Secretary Steven Chu on stimulus funding, responded that these kinds of warnings were typical in the Silicon Valley startup world.
Rogers wrote that “the ‘going concern’ letter is standard for companies pre-IPO,” and he predicted that “the company should be strong going into the fall with their new facilities on line.”
Obama did visit Solyndra on May 25, 2010, calling the company an“engine of economic growth.”
But the previous year, one of Solyndra’s own investors raised concerns in an e-mail to Obama’s senior economic adviser.
In late 2009, Brad Jones of Redpoint Ventures warned Larry Summers, director of the National Economic Council, that the Energy Department didn’t seem “well-equipped to decide which companies should get the money and how much.” He noted that Solyndra, which his company was backing, had received its loan despite having no profits and revenue of less than $100 million.
“While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money,” Jones wrote.
Summers agreed: “I relate well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly,” then added: “What should we do?”
Rep. Cliff Stearns, R-Fla., who chairs the investigative subcommittee leading the probe, said the Democrats’ preemptive release of the unflattering e-mails was “damage control.”
“The Democrats deny that any political influence was involved, yet in their own memo they highlight the role of Obama fundraiser Steve Westly in the discussions,” Stearns said in a statement.