Obama defends Solyndra loan as emails reveal early concerns
The president, addressing Solyndra's failure in a Monday interview with ABC News, said his administration knew that "not every single business is going to succeed in clean energy," but argued that "if we want to compete with other countries that are heavily subsidizing the industry's future, we've got to make sure that our guys here in the United States of America at least have a shot."
"Hindsight is always 20-20, it went through the regular review process, and people felt like this was a good bet," Mr. Obama told ABC's George Stephanopoulos. He argued that "if you look at the overall portfolio of loan guarantees that have been provided, overall it's doing well."
An investigation into the August bankruptcy of Solyndra Inc., an energy company that produced solar panels, has raised questions about whether or not the White House adequately vetted the half-billion-dollar loan.
Reports have indicated that the Obama administration may have rushed a decision on the matter in order to be able to announce it officially at a press event, and critics have noted that at least one investor was a prominent fundraiser for the president.
On Monday, a memo released by the House Energy and Commerce Committee revealed that White House officials had expressed concerns about the future of the company well before the $535 million loan was made. Some had also argued that its failure could lead to an "embarrassing" situation.
"I am increasingly worried that this visit could prove embarrassing to the administration in the not too distant future," an official at the Office of Management and Budget (OMB) wrote in an email.
In the memo, which was prepared by the Democratic staff of the House Energy and Commerce Committee and obtained by CBS News, OMB officials expressed concerns about Solyndra's ability to survive independently, and raised questions about the Department of Energy's loan monitoring process.
One OMB official specifically argued in an email that the DOE's loan monitoring system was "quite problematic."
"D.O.E.'s 'system' for monitoring loans is quite problematic (barely any review of materials submitted, no synthesis for program management, inherent conflicts in origination team members monitoring the deals they structured, etc) and does not seem to be a program priority," the Management and Budget official wrote in spring of 2010.
Indeed, after the independent company PriceWaterhouseCoopers audited Solyndra in March 2010, OMB analysts exchanged emails referring to the DOE loan monitors as "completely oblivious" to apparent issues regarding the company.
"DOE... has one loan to monitor and they seem completely oblivious to this issue -- and to make it worse it was the key thing I said they needed to watch," one analyst wrote.
The memo also reveals a private Solyndra investor questioning the government's investment in the company in a note to former chief economic adviser Lawrence Summers.
"One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million," the investor, Brad Jones, wrote in December 2009. "While that is good for us, I can't imagine it's a good way for the government to use taxpayer money."
"The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much," he continued.
The emails suggest that in April of 2010 - a month before the president's visit to the company - some people within the White House knew that "bad days" were on the way.
"What's terrifying is that after looking at some of the ones that came next, this one started to look better," reads one email sent in April 2010, which refers to the Solyndra loan and others that followed. "Bad days are coming."
After it was resolved that Mr. Obama would pay a visit to Solyndra, one OMB official wrote, of the company, "Hope doesn't default before then."
Steve Westly, the managing partner of the Westly Group, raised concerns about the visit in a note to White House senior adviser Valerie Jarrett.
"A number of us are concerned that the president is visiting Solyndra. ... [T]here is an increasing concern about the company because their auditors, Coopers and Lybrand, have issued a 'going concern' letter. ... Many of us believe the company's cost structure will make it difficult for them to survive long term," he wrote.
Westly added: "Could you perhaps check with DOE to make sure they're comfortable with the company? I just want to help protect the president from anything that could result in negative or unfair press. 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."
Jarrett apparently responded to Vice President Joe Biden's chief of staff, Ron Klain, who said he would look into the issue.
Nevertheless, Mr. Obama argued Monday that "some failures" were inevitable on the path to innovation.
"There are going to be some failures... and Solyndra's an example," he told ABC.
He added later: "The fact of the matter is, if we don't get behind clean energy, if we don't get behind advanced battery manufacturing, if we're not the ones who are creating the cars of the future, then we're not going to be able to make stuff here in the United States of America. And one of the most important things that I want to do over the next several years is restore a sense that America can manufacture, that we don't just purchase stuff from someplace else, that we're also exporting to other countries."
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