Washington (CNSNews.com) – Obama administration officials told U.S. lawmakers Wednesday that a contributor to the president’s 2008 campaign played no role in pushing the $535 billion federal loan to the bankrupt solar panel firm Solyndra, Inc., raided by the FBI last week.
However, one Energy Department official did not answer directly when asked whether he had direct communications with the White House over the loan provided through stimulus money.
Emails obtained by the House Energy and Commerce Committee appear to show that Office of Management and Budget (OMB) and Department of Energy (DOE) employees had expressed concerns that the process was being rushed – even as President Obama, Vice President Joe Biden and Energy Secretary Steven Chu were touting the California-based “clean energy” company as the wave of the future.
A hearing Wednesday of the Energy and Commerce subcommittee on oversight and investigations heard testimony on the affair from two administration officials, OMB deputy director Jeffrey Zients and Jonathan Silver, the executive director of the DOE’s loan program office.
“The documents demonstrate that, when DOE was reviewing the Solyndra guarantee in 2009, it was well aware of the financial problems the deal posed,” said the subcommittee chairman, Rep. Cliff Sterns (R-Fla.).
“What the documents also show is that the rush to push out stimulus dollars may have impacted the depth and quality of DOE and OMB’s review,” he said. “In fact, the White House had scheduled Vice President Biden’s and Secretary Chu’s appearance at Solyndra’s groundbreaking event prior to the DOE even making its final presentation to OMB on the terms of the Solyndra deal.”
Rep. Lee Terry (R-Neb.) asked Silver whether the White House – as distinct from OMB – had communicated with him on the matter.
“Were there any communications between you and the White House on Solyndra?” Terry asked.
Silver first responded that he did not start in his position until November 2009, after the loan had been approved.
Terry then asked if there had been any communications from the White House about Solyndra regarding the restructured loan agreement reached early year.
“I was in contact with several different agencies,” Silver continued to answer, in a five-minute exchange between the two.
“I asked about communications directly with the White House,” said an evidently frustrated Terry.
Solyndra filed for bankruptcy on September 6 and laid off 1,100 employees. Later last week the FBI raided its Fremont, Calif. offices and secured warrants to search the homes of Solyndra executives. The DOE’s Office of Inspector General is also probing the loan, made through the American Recovery and Reinvestment Act.
Neither administration official before the panel knew the reason for the FBI probe, but Silver told the subcommittee that “there is no reason, sitting here today, to believe we were misled” by Solyndra.
Rep. Henry Waxman (D-Calif.) asked both Silver and Zients whether campaign contributions had played any role. Both answered, “No.”
It has been widely reported that George Kaiser, who owns about one-third of the company, was a major bundler for the Obama presidential campaign in 2008.
Democrats on the subcommittee argued that the loan application began during the Bush administration. They also stressed that one bad loan should not be used to discredit federal assistance for “clean energy” programs at a time when China is taking the lead.
Several emails obtained by Republicans on the panel indicated that the administration hoped to see the final approval of the loan before the groundbreaking of the new plant on Sept. 4, 2009.
Biden attended the ceremony, and told those gathered, “The announcement today is part of the unprecedented investment this administration is making in renewable energy and exactly what the Recovery Act is all about.”
On May 25, 2010, Obama delivered remarks at Solyndra’s Fremont plant, saying that “the true engine of economic growth will always be companies like Solyndra.”
After the loan was restructured, Chu said on March 3 this year, “We are confident they can repay the loan.”
‘Not ready for primetime’
Solyndra first applied for the DOE loan in December 2006. As the application worked its way through the process, the department’s Credit Committee – made up of career federal employees, not political appointees – sent the proposal back to department staff on Jan. 9, 2009 saying, “the number of issues unresolved at this time makes a recommendation for approval premature at this time.”
On Jan. 26, 2009 – six days after Obama’s inauguration – an email by Energy Department staff read, “we are approaching the beginning of the approval process for Solyndra again.” On March 12 of that year, a second Credit Committee meeting delivered a unanimous vote for the application.
Silver said the makeup of the Credit Committee did not change when the new administration took office, but that members had changed positions after having certain questions answered.
Still, emails obtained by the committee Republicans gave the impression that political pressure was a factor.
One March 6, 2009 email between OMB staff read, “DOE staff just told me that there’s a 99 percent certainty that President Obama, on March 19 in California for other reasons, will announce that DOE is offering a loan guarantee to Solyndra. As far as I can tell the obligations won’t be entered until May, but once the president endorses it, I doubt seriously that the secretary will withdraw for any reason.”
On March 7, 2009, Biden chief of staff Ronald Klain wrote in an email to OMB staff, “Can we chat on Monday about the DOE flag in here on Solyndra … If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY.”
A few days later, an email between OMB staff said, “the deal is not ready for primetime.”
On Aug. 31, 2009, just a few days before Biden made his announcement at the Solyndra groundbreaking, an email from OMB staff and Terrell McSweeny, special assistant to the vice president, said, “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). We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around.”
Last February Solyndra, facing financial hardship, re-negotiated the loan guarantee with the Energy Department. Under the agreement, Solyndra’s investors would loan the company $75 million, but would be first in line – ahead of taxpayers – for repayment in case of default.
Silver faced several tough questions Wednesday on the matter. He responded that it would have been difficult to leverage private funds if investors were not assured they would be first in line.
“Unfortunately, changes in the solar market have only accelerated in 2011 since the restructuring – making it much more difficult for the company to compete,” Silver said.
“Chinese companies have flooded the markets with inexpensive panels and Europe, currently the largest customer base for solar panels, has suffered from an economic crisis that has significantly reduced demand and forced cuts in subsidies for solar deployment that were important to Solyndra’s business model,” he said.