Emails Reveal White House Pressure To Approve Solyndra Loan
Despite previous denials, the White House did in fact intervene in the approval process for a loan to Solyndra.
The media and Congressional investigations into the California solar power company Solyndra, which, received a $500 million federally guaranteed loan despite questions about its products viability, no history of ever making a profit, and warnings from analysts about the company’s stability are continuing to uncover evidence of what can only be described as an unusual amount of involvement by White House offices in the decision making process at the Energy Department. In today’s Washington Post, for example, Joe Stephens and Carol Leonning, report that the White House pushed the Energy Department to approve the loan quickly so that Vice-President Biden could announce its approval at a political appearance:
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.
The White House pressure may have had a “tangible impact” on OMB’s risk assessment of the loan, the congressional investigators concluded.
In one e-mail, an OMB staff member questioned whether the review team was using the best model for determining the financial risk to taxpayers in evaluating the Solyndra deal.
“[G]iven the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model,” the staffer wrote.
The emails also reveal another interesting fact. In August 2009, an Energy Department staffer involved in the review expressed concern about Solyndra’s cash flow problems, and noted that if the trend continued the company would run out cash in September 2011. The company shut down on August 31, 2011. Clearly, not only did the Energy Department know this company had problems, they could see exactly where it was headed, and they approved the loan anyway.
ABC News’s Brian Ross notes that the emails were uncovered in the course of an ongoing Congressional investigation but perhaps the most significant revelation today is the news that, at the same time these emails were going back-and-forth, independent analysts were issuing warnings about Solyndra:
Two months before Obama’s visit, accounting firm PricewaterhouseCoopers LLP warned that Solyndra, the recipient of $535 million in federal loan guarantees, had financial troubles deep enough to “raise substantial doubt about its ability to continue as a going concern.”
The Obama administration stood by Solyndra through the auditor’s warning, the abandonment of a planned initial public offering and a last-ditch refinancing where taxpayers took a back seat to new investors. That unwavering commitment has come under increasing scrutiny since the company’s travails culminated in its filing for bankruptcy protection on Sept. 6 and a raid on its headquarters by the Federal Bureau of Investigation two days later.
Before the revelation of these emails, the White House was saying that it didn’t intervene in the Energy Department’s loan approval process at all. What the emails reveal, however, is that the White House was putting time pressure on the loan reviewers so that approval could be announced at Vice-Presidential appearance that had already been scheduled, with the wesulting fact that staffers decided that they didn’t have time to take another look at Solyndra’s financial viability notwithstanding the warnings that were coming from outside analysts.
What it appears to me to have happened is that the Administration had already gone into the process with the pre-conceived idea that anything solar or “green” was per se good and that any evidence to the contrary about this particular company was simply ignored. Some are pointing to the political connections between the Administration and George Kaiser, who heads the Oklahoma-based Kaiser Family Foundation, one of Solyndra’s largest investors as evidence of what was going on. There doesn’t have to have been a quid pro quo here for something wrong to have gone on, though. Even if there’s no connection between campaign donations and the access that Solyndra was given to White House officials, there seems to be no question at all that Solyndra did have access to high-ranking White House officials that an ordinary solar energy start up most likely would have happen. Logically, that access most likely existed because one of their owners also happened to be one of the Obama 2008 campaigns biggest bundlers. That’s the definition of crony capitalism.
As I’ve said before, and as Tim Cavanaugh makes clear in an excellent piece over at Reason today, the Solyndra story isn’t really about something that’s unique to the Obama Administration. Instead, it points to a problem that’s endemic to Washington as a whole. First, there’s the whole issue of the kind of access that being a large campaign donor buys you. If George Kaiser had just been some entrepreneur from Oklahoma, it’s unlikely that top staffers in the White House would’ve given two hoots about the fate of Solyndra. The access, though, is only part of the problem. If the government wasn’t involved in giving guaranteed loans to companies that likely wouldn’t be able to get money in the private market, then the fact that George Kaiser was a “friend of Obama” really wouldn’t matter. The access becomes a problem when it leads politicians to do things that favor one company or industry over another, when it, to borrow a phrase from the President himself, “picks winners and losers.” That’s not a legitimate function of government. If Solyndra can survive in the free market, then it survives. If it can’t then that means that it wasn’t deemed to be a profitable enterprise. Instead of letting the market decide things, though, the Obama White House put its thumb on the scale and decided to hand over a half billion dollars in taxpayer dollars. That’s the real Solyndra scandal. It may be totally legal, but it’s not right.
There’s a broader story that Solyndra brings up as well, of course, and that’s the Obama Administration’s entire meme that “green jobs” would be the key to getting America out of the recession. That’s been the justification they’ve used for pushing things like the Solyndra loan, but the performance of the economy to date makes clear that they back the wrong horse. While the Solyndra story is unlikely to harm Obama politically in the way that some conservatives are probably dreaming, it is likely to deal a significant blow to the entire “green jobs” meme, which in turn makes the President’s promises about turning the economy around ring hollow.
Photo via The Washington Post