Solyndra Report: Obama Admin. Restructured Loan Because of PR Concerns


Democrats Say Republicans Made 'False Claims'

The Democratic report says "the Republican staff report is remarkably silent on the influence of campaign contributions. This is a tacit admission that the record before the Committee does not support the false claims that the Republican leadership of the Committee and prominent national Republicans have been making for months about the Solyndra loan guarantee."

The Democratic report also notes that one White House official recently interviewed by investigators testified that she did not know Kaiser was a Solyndra investor, and a second official said he did not know Kaiser was a donor.

The 150-page Republican report, which is based on interviews with key officials, testimony from five hearings, and on more than 300,000 internal administration emails, focuses considerable attention on the period in late 2010 and early 2011. The company that had been the flagship of President Obama's Green Energy initiative was on the verge of failure.

Inside the administration, the report concludes, a debate ensued between government analysts with the Office of Management and Budget (OMB) and those running the loan program at the Department of Energy. A struggling Solyndra had been missing payments on the government's $535 million loan to the company, and Energy Department officials began working on a plan to restructure the terms of the loan.

The report says OMB analysts concluded the decision to pour more federal money into the failing company was a mistake. And that mistake would be compounded, they wrote in emails, by a perplexing decision to allow the government to give up its position as the first to be repaid in the event of Solyndra's failure.

One analyst wrote that she was "vastly confused by DOE's decision to negotiate away their senior position in this transaction."

Another wrote that the federal government's chance of recovering some portion of the funds it had loaned would be "significantly higher" under an immediate liquidation. The OMB analysis "confirms our earlier concern that DOE's restructuring could effectively result in higher costs than liquidation at this point," the internal email stated.

The Republican report states that emails and documents produced by the White House and OMB confirmed that "the White House was involved in discussions about the Solyndra restructuring and agreed to allow DOE to proceed with the restructuring even after concerns about the transaction had been raised by OMB with the White House."

That assertion is based primarily on internal OMB emails, including one that said "prior to [the] restructuring, OMB staff expressed reservations about the prospects of the company and DOE's proposal. This issue was discussed with the [National Economic Council] and the Chief of Staff."

The report suggests that White House Chief of Staff Jack Lew – who was then the head of the Office of Management and Budget – made a critical decision in January 2011 about the role his agency would play in reviewing the restructuring. Rather than taking an active role in the decision, he took the position that the agency should simply review the financial upsides and downsides, and nothing more.

According to an interview with an OMB staffer cited by the report, in deciding "between a more 'active intervention' and OMB assuming its 'traditional oversight role ... Lew determined that OMB would play its 'traditional statutory role' with respect to the Solyndra restructuring."

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Republican House Speaker John Boehner seized on this during remarks Monday, saying the report "exposes [how] Jack Lew, now the White House chief of staff, ignored the warnings of his own Office of Management and Budget staff and failed to shut down Solyndra, which cost taxpayers hundreds of millions of dollars."

"I think Mr. Lew and the White House owe the American people an explanation as to why they squandered hundreds of millions of dollars," Boehner said.

"Because Republicans have found nothing to support their previous politically-driven allegations," responded White House spokesman Eric Schultz, "they are attempting to recycle a baseless issue around Jack Lew that was debunked nine months ago. House Republicans should instead be focused on creating jobs and growing the economy."

The Democratic report on Solyndra also said the GOP members of the House Energy and Commerce Committee had mischaracterized the role of the Office of Management and Budget in the loan restructuring,

The Energy and Commerce Committee had little more evidence showing senior officials were directly involved. According to the report, "the White House provided only a handful of documents from the period during which the Solyndra loan guarantee was being restructured."

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