The House Energy and Commerce Committee chairman’s investigation into the bankruptcy of Solyndra, the solar manufacturing company that was the centerpiece of the Obama administration’s green jobs agenda, is heating up. Republicans allege that the White House, in a series of emails, attempted to pressure officials tasked with making a final decision on the company’s financing, so that Vice President Joe Biden could announce its approval at a 2009 groundbreaking for a new company factory. Committee Democrats, in alliance with the White House, sought to drag the Bush administration into the mix because it began the process of considering loan guarantees to the company in 2006. Yet no loan was ever finalized until Barack Obama became president and the first stimulus package was passed.
The current focus of the probe centers around a series of emails uncovered by investigators for the committee. They demonstrate two things. First, those emails shared with ABC News reveal that the White House was decidedly in the loop regarding the financial deliberations surrounding the company. Two of them indicate serious reservation’s about Solyndra’s viability. “If you guys think this is a bad idea, I need to unwind the WW[West Wing] QUICKLY,” wrote Ronald A. Klain, former chief of staff to Vice President Joe Biden, on March 7, 2009. Three days later, and only nine days before the administration announced that the company would be the first beneficiary of the first stimulus package, a White House budget analyst raised another red flag. “This deal is NOT ready for prime time,” he warned.
Second, emails released exclusively to the Washington Post demonstrate that the Obama administration was, in fact, attempting to rush the federal loan reviewers. The paper notes that White House officials repeatedly asked Office of Management and Budget (OMB) officials when a decision could be made, while reminding them about the upcoming press event. OMB officials reportedly expressed concern that they weren’t being given enough time to make an adequate assessment as to whether the $535 million loan was an acceptable risk. One email referred to “the time pressure we are under to sign-off on Solyndra.” Another warned, “There isn’t time to negotiate.” Yet another OMB staffer sent an email to Joe Biden’s domestic policy adviser, Terrell P. McSweeny, noting that “We have ended up with a situation of having to do rushed approvals on a couple of occasions…We would prefer to have sufficient time to do our due diligence reviews.”
The White House, while admitting to an “active interest,” stressed that interest was all about the timing of the decision, not the merits of the loan. “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,” said White House spokesman Eric Schultz.
White House press secretary Jay Carney echoed that sentiment to reporters on Air Force One Wednesday. “What the emails, I believe, made clear is that there was urgency to make a decision about a scheduling matter,” he said. “As you know, and you are familiar with it in a way that most Americans aren’t, it is a big proposition to move the president or to put on an event and that sort of thing. So people were simply looking for answers about whether or not we could move forward.” Jonathan Silver, executive director of the Energy Department’s Loan Programs Office, also insisted there was no pressure put on Obama administration staff to finalize the funding for the beleaguered solar manufacturer.
Committee Republicans weren’t buying it. “In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat,” said House Energy and Commerce Committee Chairman Fred Upton (R-MI). He further noted that the program was “shrouded in secrecy and uncertainty,” questioning whether the loan represented “one bad bet” or the “tip of the iceberg.”
Whether or not Solyndra is an anomaly or part of a larger agenda remains to be seen. But there is little question that this particular company was a risky investment at best. A timeline published by iWatchNews reveals that concerns about Solyndra’s financial viability go back to 2008, when Fitch Ratings assigned the company a not-so-hot B+ credit rating, and Dun & Bradstreet assessed its credit as “fair.” In March 2010, accounting firm PricewaterhouseCoopers noted that Solyndra “has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern.”
Yet in May 2010, the president delivered an address to an audience of Solyndra employees telling them that “the future is here. We’re poised to transform the ways we power our homes and our cars and our businesses. And we’re poised to lead our competitors in the development of new technologies and products and businesses. And we are poised to generate countless new jobs, good-paying middle-class jobs, right here in the United States of America.“ One month later, Solyndra withdrew a scheduled Initial Public Offering (IPO), despite being told by auditors the company wouldn’t last 12 months if it didn’t raise the $300 million it was seeking.
In November 2010, the Department of Energy announced that Solyndra had a “cash flow crisis that is very common for innovative start-up companies that are growing quickly,” even as nearly 180 workers were laid off. In February 2011, the House Energy and Commerce Committee and its subcommittee on Oversight and Investigations launched its investigation, while the company got $75 million from a group led by Obama campaign bundler George Kaiser. The DOE then refinanced its part of the company’s loan, and agreed to put private investors at the front of the line ahead of taxpayers if the company defaulted.
After that come the two most onerous developments. In July 2011, Solyndra CEO Brian Harrison went to Washington, D.C. to tout the company, telling policy-makers they should “separate Solyndra and its business results from the political process that is ongoing.” He also claimed the company was in a “strong financial position.” Two weeks later, it was over: the company closed its doors, laid off 1,100 workers and filed for Chapter 11 bankruptcy.
Harrison and CFO Bill Stover were supposed to appear before the committee yesterday, but a spokesman for the duo claimed that complications arising out of the bankruptcy forced them to re-schedule for some time next week. There is speculation that both men may plead the Fifth Amendment against self-incrimination.
Despite all of this happening on the Obama administration’s watch, Director Silver of DOE’s Loan Program Office attempted to pin equal shares of blame on the Bush administration, which initiated the process for Solyndra in 2006. Silver asserted that the current administration did nothing more than stay “on the exact schedule that had been developed during the Bush administration,” when it approved the loan in 2009. The DOE itself got on the bandwagon as well. During the hearing yesterday, it sent out emails attempting to promote the message that Solyndra was a “bipartisan problem.“ Republicans countered with internal DOE emails showing that the Bush administration’s loan evaluators made the unanimous decision to shelve Solyndra’s application two week before Obama took office.
Rep. Edward Markey (D-MA) tried a different tack, claiming Republican attempts to turn this investigation into a political albatross for Democrats “is all part of an agenda here that deals with the solar industry and the wind industry.”
Yet it was not the FBI under the Bush administration that raided the offices of Solyndra’s headquarters in Freemont, CA last week, or visited the homes of its CEO and founder. Nor did the former administration have anything to do with an announcement by the Treasury Department late yesterday afternoon that it, too, would be joining the investigation, due to the fact that the $535 million in loan guarantees arranged by the Energy Department were processed by the Federal Financing Bank. That government lending institution falls under Treasury’s control. “We’re going to look at everything the FFB had to do with its role in this thing,” said Rich Delmar, spokesman for the Treasury Department’s inspector general.
That makes a total of three separate investigations, at least one of which (the one conducted by the FBI) has been characterized as “criminal.” The Democratic Party and Obama administration talking points revolve around the idea that this was nothing more than a bipartisan “bad bet” on one company in an industry that requires massive government intervention in order to compete against “unfair” foreign competition. Unfair competition that is one of the principal reasons for Solyndra’s demise. Republicans contend that the Obama administration’s crony capitalist tendencies to pick “winners and losers” motivated them to cut corners at best, or condone and/or engage in criminal activity at worst.
Who’s right? That’s what three investigations will decide. But one aspect of this issue, the attempt by Democrats to drag the Bush administration into the middle of this story, smacks of desperation. In order to understand how, one only has to imagine the exact opposite scenario. If Solyndra were a booming success, what are the odds the Obama administration would highlight the Bush administration’s foresight in considering their loan?
Next week, when the top two executives of Solyndra testify – or don’t – we’ll get a much clearer picture of where these investigations are headed.