WASHINGTON - White House officials discussed the political ramifications of a possible default by a troubled solar energy company that received more than $500 million in federal loans, newly released emails show.
Emails released Thursday night show the Obama administration privately worried about the effect of a default by Solyndra Inc. on the president's re-election campaign.
"The optics of a Solyndra default will be bad," an official from the Office of Management and Budget wrote in a Jan. 31 email to a senior OMB official. "The timing will likely coincide with the 2012 campaign season heating up."
That message has turned out to be a fairly accurate prophecy of Solyndra's failure haunting President Obama's 2012 campaign, even before the end of 2011.
In remarks on the Senate floor Thursday, Senate Minority Leader Mitch McConnell, R-Ky., argued that Solyndra's bankruptcy this month was.
"This place was supposed to be the poster child of how the original stimulus would create jobs. Now it's bankrupt and most of its 1,100 employees are out of work," McConnell said.
The email, released by the House Energy and Commerce Committee as part of its investigation into the Solyndra loan, showed that Obama administration officials were concerned about Solyndra's financial health even as they publicly declared the solar panel maker in good shape.
Solyndra, which received $528 million in federal loans under the stimulus law, declared bankruptcy late last month and laid off 1,100 workers.
The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. President Obama visited the company's Fremont, Calif., headquarters last year.
Even as Obama praised the company's plans to hire more than 1,000 workers, warning signs were being sent from within the government and from outside analysts who questioned Solyndra's viability as a "going concern."
At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program that provided the loan to Solyndra Inc., a now-bankrupt solar panel manufacturer.
Emails obtained by The Associated Press show that a White House official dismissed reports about Solyndra's gloomy future. An email from Greg Nelson, a White House official who had been involved in the planning of Obama's May 2010 trip to Solyndra's headquarters, to a Solyndra executive downplayed a July 2010 news story in a trade publication that criticized the company's financial health.
"Seems B.S.," Nelson wrote.
A 2009 report by the Energy Department's inspector general warned that the DOE lacked the necessary quality control for the loan guarantee program, which was created in 2005 to support clean-energy projects that could not obtain conventional bank loans due to high risks.
In July 2010, the Government Accountability Office said the Energy Department had bypassed required steps for funding awards to five of 10 applicants that received conditional loan guarantees.
The report did not publicly identify the companies that were not properly vetted, but congressional investigators say one of them was Solyndra. The company was the first to receive a loan guarantee after the program was expanded under the 2009 stimulus law.