GOP Solyndra report: Administration ignored analyst warning

ByABC News
August 2, 2012, 3:44 PM

WASHINGTON -- As Obama administration officials pondered restructuring a government-backed loan for the struggling solar panel manufacturer Solyndra in late 2010, a White House budget analyst cautioned that an Energy Department plan could potentially cost taxpayers an additional $240 million more than if it allowed the company to collapse.

The details in the ongoing partisan fight over the Energy Department's loan guarantee program emerged in a new report released Thursday by the House Republicans investigating the collapse of Solyndra, a clean-energy company.

Kelly Colyar, an analyst at the Office of Management and Budget, wrote that the U.S. could lose about $141 million if Solyndra shut its doors in January 2011, as the company was on the precipice of collapsing, according to administration e-mails published in the report.

But if the Energy Department went ahead with a plan to restructure Solyndra's $535 million loan guarantee, taxpayer exposure would grow to $385 million, according to Colyar. As part of the restructuring, private investors were put ahead of the taxpayers for repayment if the company eventually shuttered.

The Energy Department approved the restructuring, and Solyndra eventually collapsed in September 2011.

"Our investigation revealed a shocking episode where politics were put before taxpayers and integrity was sacrificed for the sake of corporate favoritism," said Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.

Colyar's concerns about the restructuring were shared by her OMB colleagues, according to the report.

On Dec. 15, 2010, OMB official Kevin Carroll notified his superior, Richard Mertens, the deputy associate director of natural resources programs, in an e-mail of the plan to restructure the loan and questioned whether it was consistent with the Energy Policy Act, which established the guaranteed loan program.

Jack Lew, who was then the OMB's director and is now the White House chief of staff, knew about the concerns of the OMB staff but didn't intervene, according to the report. Instead, Lew let Energy officials determine whether to go forward with the restructuring, the report says.

Much of the 147-page report was rehash of the GOP's criticism throughout its investigation of Solyndra, including charges that the Obama administration fast-tracked approval of Solyndra for political reasons and the Department of Energy failed to anticipate market challenges that Solyndra faced.

Obama fundraiser George Kaiser's foundation was one of top investors in Solyndra.

The conservative group Americans for Prosperity has poured millions into advertisements hammering at Obama for the Solyndra debacle, and likely GOP presidential nominee Mitt Romney has criticized Obama for directing the loan guarantee toward a political backer. Thursday's report — and previous reports by the committee — have not established that Kaiser used his influence as a donor to help Solyndra win administration backing.

White House spokesman Eric Schultz reiterated the Obama administration's position that the decision to back Solyndra was based on merit.

"This is month 18 of this Congressional investigation, and everything disclosed … affirms what we said on day one: This was a merit-based decision made by the Department of Energy," Schultz said. "As Republicans won't answer how much the investigation has cost taxpayers, we believe they should instead be focused on legislation to create jobs and grow the economy."