President Obama told George Stephanopoulos Monday that he didn’t regret his administration’s investment of $535 million in failed clean energy company Solyndra.
“People felt it was a good bet,” the president said.
But new e-mails revealed today indicate there were plenty of folks within the administration who had serious questions about Solyndra, with the president’s chief economic adviser at the time, Larry Summers, suggesting that the government was “crappy” at picking sound investments.
More than a year before Solyndra declared bankruptcy on August 31, 2011, still other White House staffers worried about the company’s shaky finances and expressed reservations about the competence of the Department of Energy officials in charge of it, calling them “completely oblivious.”
The emails were excerpted today by Democrats on the House Energy and Commerce Committee in a memo arguing that the evidence does “not support the allegations of political favoritism.”
What they do demonstrate is fierce debate within the administration, with officials aiming some rather pointed barbs at those supporting the loan.
In December 2009, Summers, director of the National Economic Council, emailed Brad Jones of the investment firm Redpoint Ventures, which had put money in Solyndra. Summers was seeking his general economic advice, and Jones told him that 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. … One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”
Summers responded that he related “well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly.”
A March 2010 exchange between two officials of the Office of Management and Budget (OMB) reveals deep skepticism about the Department of Energy staffers in charge of the loan program.
“DOE’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,” one OMB staffer emailed on March 1, 2010.
An independent audit by PriceWaterhouseCoopers that month questioned Solyndra’s viability.
“Interesting in light of DOE’s recent statement to OMB staff that Solyndra project was on schedule and on budget,” one OMB staffer emailed another. “I eager await DOE’s monitoring system.”
“Possible to close and default on one before closing on a second???” an OMB official added. “Could be a new record.”
On April 2, an OMB official “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.”
An OMB official seemed to think Solyndra may be the tip of the iceberg. “(W)hat’s terrifying is that after looking at some of the ones that came next, this one started to look better,” the official emailed. “Bad days are coming.”
But the Department of Energy viewed Solyndra very differently, writing in April 2010 that the project was on time and on budget, with Solyndra having raised almost $200 million in equity capital. The White House began preparing for a presidential visit to the company the next month.
When an OMB official heard about that, he emailed, “Hope doesn’t default before then.”
Wrote another: “I am increasingly worried that this visit could prove embarrassing to the Administration in the not too distant future, given 1) what we just heard today from DOE that Solyndra is delaying their IPO at least until the end of the year, and 2) what the auditors said about Solyndra making it through the year absent new financing.”
On May 24, 2010 — two days before the president’s visit — California businessman Steve Westley emailed senior White House adviser Valerie Jarrett, referencing the audit and saying the visit might “haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”
Jarrett reached out to Ron Klain, then the chief of staff to Vice President Biden, saying that “we clearly need to make sure that they are stable and solid.”
Klain contacted Energy Department officials and then wrote back to Jarrett, saying “Sounds like there are some risk factors here – but that’s true of any innovative company that POTUS would visit. It looks like it is OK to me, but if you feel otherwise, let me know.”
“I’m comfortable if you’re comfortable,” Jarrett wrote back.
Responded Klain: “The reality is that if POTUS visited 10 such places over the next 10 months, probably a few would be belly-up by election day 2012 – but that to me is the reality of saying that we want to help promote cutting edge, new economy industries.”
By October, Summers, Klain, and director of the Office of Energy and Climate Policy Carol Browner wrote a six-page memorandum to the President about the loan guarantee program, detailing the fights between the Department of Energy and OMB and giving the president four options to deal with the program, one of which would have terminated it altogether, seeking congressional approval to move the funds into a Department of Energy grant program.
House Democrats argue that the emails “show (1) there was vigorous internal debate among officials at the Department of Energy and the Office of Management and Budget about the Solyndra loan guarantee; (2) this debate was appropriately elevated to senior officials in the White House; and (3) the decisions involving Solyndra were made on the merits with no regard to the identity of the private investors.”