Tuesday, October 4, 2011

White House emails warned Solyndra could go 'belly-up' by 2012 election

White House Brushed Off Solyndra Alarms WSJ.com 10/4/11

Obama Says, 'Hindsight Is Always 20-20'


Top White House officials dismissed concerns about solar-panel maker Solyndra LLC before President Barack Obama visited the company in May 2010, newly released emails show.

Mr. Obama defended the Solyndra investment in an ABC News interview on Monday, saying that "hindsight is always 20-20." The president said Solyndra "went through the regular review process and people felt like this was a good bet."

The new emails show that the debate about Mr. Obama's visit went as high as Valerie Jarrett, a confidante of the president, and Ron Klain, then chief of staff to Vice President Joe Biden. In one email, Mr. Klain said that Solyndra and other clean-technology energy ventures could go "belly-up" by Election Day 2012, but that the visit "looks like it is OK."

The emails were included in a memo prepared by Democratic congressional staffers and sent to Democratic members of a panel of the House Energy and Commerce Committee.

They offer the latest evidence that White House and Department of Energy officials discounted warning signs about Solyndra, which received a $535 million loan guarantee from the Energy Department in 2009 and filed for bankruptcy protection last month.

Staffers at the Office of Management and Budget sounded alarm bells after Solyndra failed to go forward with a planned initial public offering and received a warning from its auditor about its ability to continue as a "going concern," the emails show.

By late 2010, Solyndra ran into such severe cash problems that it violated terms of its loan, and the government restructured its agreement in a way that allowed private investors, who agreed to provide a $75 million loan, to be paid ahead of the U.S. if the firm was liquidated.

Just days ahead of the president's 2010 visit, an email from one OMB staffer to another indicated growing worry about the political risks. "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," the email said.

Before Solyndra, Lawmakers Said Loan Program Was Slow
Another OMB staffer wrote, "Hope doesn't default before" Mr. Obama's May 26 visit.

Two days before the visit, Steve Westly, a California venture capitalist who raised funds for Mr. Obama's 2008 presidential campaign, emailed Ms. Jarrett to express concern about the visit, saying it could "haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc."

Ms. Jarrett emailed Mr. Klain, the Biden aide. Mr. Klain acknowledged "some risk factors here—but that's true of any innovative company that POTUS [the president of the U.S.] would visit. It looks like it is OK to me, but if you feel otherwise, let me know."

Mr. Klain then told Ms. Jarrett: "The reality is that if POTUS visited 10 such places over the next 10 months, probably a few will 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."

Democratic lawmakers said the emails showed internal debate but no improper influence on Solyndra decision-making. Republicans have alleged that politics influenced the Obama administration's decision to help the firm, and noted that a top Solyndra investor contributed to Mr. Obama's campaign. The White House denies political influence.

Democratic lawmakers said in their Solyndra memo Monday that the new emails "do not contain evidence that government decisions relating to Solyndra were influenced by considerations relating to campaign donations."

Cliff Stearns (R., Fla.), chairman of the House Subcommittee on Oversight and Investigations, said the documents "raise significant concerns." He said the people closest to the president "had direct involvement in the Solyndra mess," and "the administration was fully aware of numerous red flags about Solyndra's viability, but pressed ahead anyway in an effort to secure a policy or political victory."

In the ABC interview, Mr. Obama defended the loan-guarantee program, which has come under attack from Republicans. "What we always understood was that not every single business is going to succeed in clean energy. But if we want to compete with China, which is pouring hundreds of billions of dollars into this space, if we want to compete with other countries…we've got to make sure our guys here in the United States of America at least have a shot."

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