Solyndra Loan: Now Treasury Dept. Is Launching Investigation

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Republicans Push Back

Republicans pushed back hard against this version of events, unearthing internal Energy Department emails that indicate the panel evaluating the loans had made the unanimous decision to shelve Solyndra's application two weeks before Obama took office.

Blaming the failed loan on the Bush administration marked an abrupt turn for the Energy Department, which had championed the Solyndra loan as a model for its efforts to build a so-called "green energy" industry that creates jobs and safeguards the environment. The Solyndra loan was so central to this strategy that the administration initially planned to have Obama personally announce it, and later sent the president to the company's solar panel manufacturing facility in Fremont, California to celebrate its work.

The $535 million loan to Solyndra included a quarterly interest rate that is now at 1.025 percent, the government bank reported in July. Of 18 Energy Department loans cited in the bank's report, Solyndra's rate was lowest. Eight other Energy Department projects, each also backed by the Federal Financing Bank, came with rates three or four times higher, the report shows.

That treatment is in keeping with the history of the loan to the California solar panel maker, an arrangement inked in September 2009 with great fanfare. Monthly government bank reports filed since then reveal Solyndra's rate as the lowest for any energy-related project in nearly every report; in every case its rate was well below that of most energy projects, which ranged from cutting-edge electric car makers to wind and solar ventures.

Department of Energy officials said the rates for all of its green energy loans were set by the bank using a formula, and Solyndra's favorable terms were not the result of special treatment.

"All borrowers under the [government loan guarantee] program receive the same treatment," Energy Department spokesman Damien LaVera wrote to iWatch and ABC News in response to questions.

READ the Energy Department's Full Response

Solyndra spokesman David Miller agreed, saying that the interest rate was based on hard data -- such as when the loan was granted and the length of the repayment period. Solyndra's loan was for seven years, he noted, while other energy loans would have longer repayment periods. Miller pointed to a Treasury spreadsheet showing rates for 20- and 30-year loans are higher than those that are to be repaid in seven.

"It depends on the terms you negotiated," Miller said. "You'd have to look at each one of those other companies and see what their term was and that would probably explain to you what the difference would be."

But records show the advantageous terms came in spite of red flags about the risks of investing in Solyndra. In 2008, as the loan agreement was moving forward, an outside rating agency gave the deal with a B+ grade, a less than optimum score, according to records obtained by iWatch and ABC under the Freedom of Information Act. That same year, the records show, Dun & Bradstreet assigned the company's credit appraisal as "fair."

The path taken by Solyndra's application for a massive government loan was just one of several questions explored by members of the House Energy and Commerce Committee's investigative subcommittee Wednesday. Members grilled Silver and Jeffrey Zients, deputy director of the Office of Management and Budget, as to why the initial loan was approved, and why the Solyndra deal was restructured earlier this year. The restructuring came at a time when the company was already showing signs of financial stress, with Chinese competitors offering similar products for less money.

The House investigation into the matter had been underway well before the company collapsed. Federal auditors had already questioned the methods the energy department was using to analyze the loans. And beginning in March, ABC News, in partnership with the Center for Public Integrity's iWatch News, began reporting on simmering questions about the role political influence may have played in Solyndra's selection as the Obama administration's first loan guarantee recipient.

WATCH the Original ABC News Report on Solyndra

On Tuesday, some of the fruits of that investigation began to surface in anticipation of the hearing.

Emails uncovered by investigators for the House Energy and Commerce Committee showed that the Obama White House closely monitored the Energy Department's deliberations over the $535 million government loan, which was backed by an Obama fundraiser. The internal emails uncovered by investigators showed the administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved.

"This deal is NOT ready for prime time," one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

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"If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY," wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009. The "West Wing" is the portion of the White House complex that holds the offices of the president and his top staffers. Klain declined comment to ABC News.

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