Lead story on the ABC World News Tonight broadcast 9/14/11:
Solyndra Loan: Now Treasury Dept. Is Launching Investigation
By RONNIE GREENE and MATTHEW MOSK
iWATCH NEWS and ABC NEWS
Sept. 14, 2011
The Treasury Department's inspector general has
opened a new front in the investigation of the
government loan to Solyndra, the now bankrupt
company that had been touted as a model of President
Obama's ambitious green energy program, ABC News
and the Center for Public Integrity/iWatch News have
The new probe involves the $535 million loan,
arranged by the Energy Department, but actually
processed by the Federal Financing Bank, a
government lending institution that falls under
Treasury's control. Already, the FBI and the Energy
Department's inspector general have executed search
warrants at Solyndra's headquarters and questioned
"We're going to look at everything the FFB had to do
with its role in this thing," Rich Delmar, a spokesman
for the Treasury Department's inspector general, told
ABC News and iWatch News.
Earlier this month, iWatch News and ABC News
disclosed that Solyndra received a rock-bottom
interest rate of 1 to 2 percent -- lower than those
affixed to other Energy Department green energy
projects. The low rate was set even as an outside
agency, Fitch Rating, scored Solyndra as a B+ --
"speculative" -- investment. Energy Department
officials said the bank set the rate, based on formulas
including the payout length, and that Solyndra did
not receive special treatment.
Word of the broadening probe came as the head of
the Energy Department's loan program came before
Congress at a contentious hearing on Capitol Hill
After spending months touting the Obama
administration's decision to loan $535 million to
Solyndra, top officials took a new tack Wednesday
while testifying 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
"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.
Even after the loan was restructured in 2011, the
Energy Department and other administration officials
continued to tout Solyndra's prospects.
In May, Silver told ABC News and iWatch News that
questions about the loan guarantee were unfounded,
and that Solyndra's canceled public offering and
restructuring were hiccups that are typical for start-
Solyndra Loan: Now Treasury Dept. Is Launching Investigation
"I have never seen a company go straight up without a
bump along the way," Silver said. "I have no doubt
they will continue to hire more people."
Republicans Push Back
Republicans pushed back hard against this version
of events, unearthing internal Energy Department
emails that indicate the panel evaluating the loans h
ad made the unanimous decision to shelve
Solyndra's application two weeks before Obama took
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 $535 million loan to Solyndra included a
quarterly interest rate that is now at 1.025 percent,
the government bank reported in July. Of 18 Energy
Department loans cited in the bank's report,
Solyndra's rate was lowest. Eight other Energy
Department projects, each also backed by the Federal
Financing Bank, came with rates three or four times
higher, the report shows.
That treatment is in keeping with the history of the
loan to the California solar panel maker, an
arrangement inked in September 2009 with great
fanfare. Monthly government bank reports filed since
then reveal Solyndra's rate as the lowest for any
energy-related project in nearly every report; in every
case its rate was well below that of most energy
projects, which ranged from cutting-edge electric car
makers to wind and solar ventures.
Department of Energy officials said the rates for all of
its green energy loans were set by the bank using a
formula, and Solyndra's favorable terms were not the
result of special treatment.
"All borrowers under the [government loan guarantee]
program receive the same treatment," Energy
Department spokesman Damien LaVera wrote to
iWatch and ABC News in response to questions.
Solyndra spokesman David Miller agreed, saying that
the interest rate was based on hard data -- such as
when the loan was granted and the length of the
repayment period. Solyndra's loan was for seven
years, he noted, while other energy loans would have
longer repayment periods. Miller pointed to a
Treasury spreadsheet showing rates for 20- and 30-
year loans are higher than those that are to be repaid
"It depends on the terms you negotiated," Miller said.
"You'd have to look at each one of those other
companies and see what their term was and that
would probably explain to you what the difference
But records show the advantageous terms came in
spite of red flags about the risks of investing in
Solyndra. In 2008, as the loan agreement was moving
forward, an outside rating agency gave the deal with a
B+ grade, a less than optimum score, according
to records obtained by iWatch and ABC under the
Freedom of Information Act. That same year, the
records show, Dun & Bradstreet assigned the
company's credit appraisal as "fair."
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
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
"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
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
"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
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
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."
Remainder at ABCNEWS.COM