Solyndra: Blame It On Bush, Say Obama Officials

Officials tell Congress $535M loan to failed solar firm was Bush WH's idea.

September 13, 2011, 8:23 PM

Sept. 14, 2011 — -- After spending months touting the Obama administration's decision to loan $535 million to the California solar energy upstart Solyndra, top officials took a new tack Wednesday while testifying before Congress about the company's abrupt shut-down and bankruptcy: the loan, they said, was actually the Bush administration's idea. The Energy Department's top lending officer told Congress that the Solyndra loan application was not only filed during President Bush's term, but it surged towards completion before Obama took office in January 2009.

"By the time the Obama administration took office in late January 2009, the loan programs' staff had already established a goal of, and timeline for, issuing the company a conditional loan guarantee commitment in March 2009," said Jonathan Silver, who heads the Energy loan program.

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 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.

"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.

Solyndra Was Central to Obama Green Strategy

Both administration officials and Energy Department officials pushed back on suggestions from Republican critics that politics could have influenced the process. They said emails released Tuesday only show that the White House was eager to have the president make the Solyndra announcement, and that a great deal of advanced planning work was underway to try and accomplish that. They said Kaiser made no effort to influence the process, and noted that several Solyndra executives were Republicans -- including its chief executive.

Democrats in Congress spent much of the Wednesday hearing voicing those key points.

"The documents and briefings that I've reviewed show that the Department of Energy in both the Bush and Obama administrations supported Solyndra's loan guarantee application," said Rep. Diana DeGette, a Colorado Democrat.

But with the company in bankruptcy and FBI agents investigating elements of the deal, some Democrats in the House were still raising doubts about the wisdom of the investment.

"We need to understand what happened, who should be held accountable, and how we can avoid future losses," said Rep. Henry Waxman, D.-Calif.

In April, after ABC News and the Center for Public Integrity aired the first in a series of reports on the Solyndra deal, Waxman was an early critic of the decision by House investigators to pursue the matter. He wrote a letter saying his own review had not uncovered "any information or documents that suggest any impropriety, wrongdoing, or favoritism in the award of the Solyndra loan guarantee."

But Wednesday, Waxman expressed displeasure with the sudden collapse of the company, especially after the company's CEO had just weeks earlier visited his office and personally vouched for the promise of the company.

"Well, these rosy scenarios were not realized," Waxman said. "Today we'll ask why. Is the reason unforeseen developments in the global marketplace, as Solyndra and DOE argue? Or is the reason sloppy or inadequate vetting, or worse yet, corporate malfeasance?"

As the hearing was underway, the Department of Energy was sending out emails to the press intended to convey that Solyndra was a bipartisan problem.

"At several points in the hearing, folks have pointed out the party affiliation of the private investors who lost a billion dollars of their own private capital on this deal," wrote Dan Leistikow, the department's director of public affairs. "Of the two major investment firms who risked and lost the most, one happens to be associated with a Democratic donor and one with a Republican donor. I frankly can't understand what that has to do with anything, but I suppose it's always good to see a little bipartisanship."

But Rep. Cliff Stearns, a Florida Republican, made note during the hearing that "the administration officials held out the company as a shining example of how the stimulus was creating jobs and invigorating the economy."

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Indeed, when the loan was announced in March of 2009, Energy Secretary Chu issued his own press release, identifying Solyndra as "part of President Obama's aggressive strategy to put Americans back to work and reduce our dependence on foreign oil."

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