Obama White House Warned Solyndra Bad For Reelection

Emails: 'Questions will be asked' about Solyndra loan.

ByMatthew Mosk
September 16, 2011, 9:18 AM

Sept. 16, 2011 — -- White House budget analysts warned in January that a controversial decision to restructure a $535 million government loan to a struggling solar power company "could easily be portrayed as bad judgment or worse," just-released emails now show.

The latest emails are part of an emerging portrait of the troubled government loan -- a half-billion-dollar federal investment that went from being touted as a model of President Obama's "green jobs" initiative to being criticized by Republicans as an ill-advised boondoggle.

Beginning in March, ABC News, in partnership with the Center for Public Integrity's iWatch News, was first to report on simmering questions about the role political influence may have played in Solyndra Inc.'s selection as the Obama administration's first loan guarantee recipient. The loan had been shelved by the Bush administration but was fast-tracked just days after President Obama took office, and one of the major investors in the company is an Obama fundraiser who has visited the White House 16 times, including four meetings with such senior aides as Valerie Jarrett, Austan Goolsbee and Pete Rouse in the months prior to the loan's approval.

WATCH the Original ABC News Report on Solyndra

READ the Original ABC News Report on Solyndra

Senior Energy Department officials publicly described the decision in January to restructure the loan to Solyndra as a hiccup, and said the extra infusion of cash was normal for start-up ventures. "I have never seen a company go straight up without a bump along the way," Energy Loan chief Jonathan Silver told ABC News and iWatch News in May. "I have no doubt they will continue to hire more people."

But internally, the restructuring decision was the source of intense debate and disagreement, emails released by the House Energy and Commerce Committee now show. Budget analysts at the Office of Management and Budget not only saw financial risks in increasing the federal investment in Solyndra. They also foresaw political risks for Obama.

"If Solydra defaults down the road, the optics will arguably be worse later than they would be today," one email says. "At that point additional funds have been put at risk, recovery may be lower, and questions will be asked as to why the administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment or worse). In addition, the timing will likely coincide with the 2012 campaign season heating up…."

Damien LaVera, an Energy Department spokesman, said the decision to restructure the loan was intended to salvage the government's initial investment.

"Since the restructuring went forward, if anything, this email is yet another piece of evidence that political or optical considerations took a backseat to putting the company and its workers in a better position to succeed and repay the loan," he said.

In addition to the new emails, Bloomberg News reported Wednesday that Solyndra unsuccessfully sought a meeting with environment chief Carol Browner to argue for the use of solar panels on government buildings.

The news outlet cited emails sent by Chris Fish, a lobbyist with McAllister & Quinn LLC in Washington. In July 2010, Fish requested a meeting between Solyndra executives and Browner. Solyndra executives sought to "increase U.S. government installation deployment of U.S.-made solar panels," according to the e-mail from Fish. The government did not purchase panels from Solyndra.

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