Solyndra Scandal Linked To Valerie Jarrett (Did She Rush DOE Loan Procedure?)

Solyndra: A Big Story for the Wrong Reasons

A bankrupt green energy company will create both real and political problems for President Obama today, as the U.S. House of Representatives continues its investigation into how Fremont, California-based Solyndra LLC used its access to the president and his inner circle in order to secure and lose half a billion taxpayer dollars.

Until last Thursday, the investigation into Solyndra had been coming only from the legislative branch of the federal government. In February, House Energy and Commerce Committee Chairman Fred Upton (R-Michigan ) opened a probe into a $535-million loan guarantee awarded to the maker of innovative solar panels by the Obama Department of Energy. That loan followed multiple visits to the White House by Solyndra officers and by George Kaiser, a Tulsa, Oklahoma billionaire and Obama fundraiser. Late in August Solyndra announced it would declare bankruptcy.

Last week, following a cycle of negative news coverage and revelations about the company’s close ties to the president, the executive branch response began with a raid on Solyndra’s headquarters by the Federal Bureau of Investigation and the Department of Energy’s Inspector General. News coverage highlighting DoE Inspector General Gregory Friedman’s hawkishness about insufficient due diligence in making lending decisions suggests the Obama Administration’s image management apparatus is making an effort to show the president takes the Solyndra scandal seriously.

Because of the depth and documentation of Obama’s relationship with Solyndra, as well as new House revelations that White House officials pressed the Energy Department to expedite its lending to the troubled company, the effort to distance him from the scandal will almost certainly fail.

Obama did a photo opp at Solyndra headquarters last year and has emphasized the company’s cylindrical solar panels in his propaganda for green energy subsidies. Kaiser, whose Argonaut Ventures owned a 35 percent stake in Solyndra, bundled nearly $100,000 for Obama’s 2008 campaign. Solyndra executives met with White House executives about 20 times. In the period before and just after the March 2009 loan guarantee (Solyndra eventually borrowed and blew through $527 million), Kaiser met with senior advisors Austan Goolsbee, Pete Rouse and Valerie Jarrett; chief of staff Rahm Emanuel, and others.

FBI and Energy both report to the president. While suspicion of overt crime could have triggered the executive-branch investigation, the involvement of these two departments clouds what had been a straightforward congressional investigation. In addition to the risk that Obama appointees can steer investigators away from evidence harmful to the president, the involvement of a competing presidential investigation detracts from what has so far been very effective work by the House.

Shortly after Solyndra announced its bankruptcy, I made the none-too-daring prediction that this scandal would prove to be durable. The figure of a half-billion dollars is easy to understand yet still incomprehensibly large. There is no distance between the president and the scandal. And the company name is memorably goofy enough that there’s no need to add the lame suffix “-gate.”

Ron Bailey remarked earlier that Solyndra is already getting shoehorned into Republocrat he-said-she-said. Although it would be a shame if this lesson in the folly of subsidizing industry degenerated into simple point-scoring, it’s also true that in this case it is because of competitive politics that we know about the scandal at all. Solyndra’s dim financial prospects, its dubious technology and its unlikely survival as anything other than a ward of the state were known before the loan was approved. (In a Business Insider article, Bruce Krasting says the company’s only valuable item may be its net operating loss.) Yet in the period after that loan, Solyndra continued to behave as a green-energy market leader, even attempting an initial public offering. Who knows how much longer the company could have gone on wasting public money, deluding investors and delaying formal bankruptcy, if not for Upton’s investigation?

It’s also clear that “contextualizing” the Solyndra scandal in the way Bailey regretted (by noting that Republicans do it too) only makes the story more infuriating. While Solyndra will be useful as a campaign issue, the real outrage is that the government is proudly putting your money into companies that private investors are unwilling to put their own money into. Once this violation of common sense has taken place, the story can only end, as it appears to have ended here, in suffering and crime. That’s not a corruption of the system. It’s the natural way the system works.




Solyndra's loans were rushed

Republican lawmakers, escalating the political furor over the collapse of a solar equipment manufacturer that received a $528 million government loan, released excerpts from Obama administration emails Wednesday suggesting that the White House pressed federal officials to wrap up their review of the loan quickly for political purposes.

In the emails, officials at the Office of Management and Budget expressed frustration that they were being put under time pressure to sign off on the loan to the company, Solyndra, two years ago so that Vice President Joe Biden could announce its approval at a groundbreaking for a factory.

The White House wanted an announcement that would show progress on job creation.

The disclosure became a focus of a House Energy and Commerce subcommittee hearing Wednesday about the loan to Solyndra, which has developed into a political headache for the Obama administration. The administration used the company as a prime example of stimulus-bill dollars creating "green jobs."

But Solyndra recently filed for bankruptcy protection and closed its factory, and its headquarters was raided by the Federal Bureau of Investigation, apparently in connection with the loan.

The bankruptcy filing and the raid "clearly show that the committee was more than justified in its scrutiny of the deal," said the panel's chairman, Rep. Fred Upton, R-Mich. "Why did the administration think Solyndra was such a good bet?"

Critics of the loan have focused on whether political considerations played a role in awarding the loan to Solyndra, which the Obama administration denies. But the hearing also cast doubt on the government's competence to assess how sure a bet it is making, regardless of politics.

Officials of the Energy Department's loan office and the White House budget office defended their decisions, which they said were carefully reviewed and not politically inspired. The administration said the emails showed only that the White House wanted to know when a decision would be made for its planning.

"As the emails indicate, there was interest in when a decision would be made because of its impact on whether an event involving the vice president could be scheduled for a particular date or not," said Eric Schultz, a White House spokesman. "But the loan-guarantee decision was merit-based and made by career staffers at the Department of Energy, and the process for this particular loan guarantee began under President George W. Bush."

Suspicions that the administration might have pushed the loan for political reasons have centered on the fact that a major investor in the company is a charitable foundation associated with George B. Kaiser, a billionaire from Tulsa, Okla., who raised $50,000 to $100,000 as a "bundler" for President Barack Obama's 2008 presidential campaign.

Logs show that Kaiser visited the White House on several occasions during the spring and summer of 2009, while the loan to Solyndra, based in Fremont, Calif., was being considered. Among the officials he met with were chief of staff Rahm Emanuel and Pete Rouse and Valerie Jarrett, both senior advisers to Obama.

"It seems like crony capitalism was trumping the smart decision-making," Rep. Steve Scalise, R-La., said at the hearing.

Campaign finance records analyzed by OpenSecrets.org show that there were about 235 other bundlers for the Obama campaign in Kaiser's range, while about 326 bundlers raised significantly larger sums.

Administration officials said the White House meetings were not about Solyndra but rather were related to Kaiser's charitable interest in policy matters such as early-childhood education. The George Kaiser Family Foundation has said that Kaiser "did not participate in any discussions with the U.S. government regarding the loan."

Three factors pushed the market price of solar arrays below Solyndra's cost of production, according to experts. The cost of silicon, a key ingredient in competitors' cells but not in Solyndra's, fell sharply. The economic crisis in Europe cut demand for solar cells. And China subsidized a huge increase of solar equipment production, producing a surplus.




Furor Over Loans to Failed Solar Firm

Republican lawmakers, escalating the political furor over the collapse of a solar equipment manufacturer that received a $528 million government loan, released excerpts from Obama administration e-mails on Wednesday suggesting that the White House pressed federal officials to wrap up their review of the loan quickly for political purposes.

In the e-mails, officials at the Office of Management and Budget expressed frustration that they were being put under time pressure to sign off on the loan to the company, Solyndra, two years ago so that Vice President Joseph R. Biden Jr. could announce its approval at a groundbreaking for a factory. The White House wanted an announcement that would show progress on job creation. The emails were first reported by the Washington Post and on the Web site of ABC News, in partnership with iWatch.

The disclosure became a focus of a House Energy and Commerce subcommittee hearing on Wednesday about the loan to Solyndra, which has developed into a political headache for the Obama administration. The administration used the company as a prime example of stimulus bill dollars creating “green jobs.” But Solyndra recently filed for bankruptcy protection and closed its factory, and its headquarters was raided by the Federal Bureau of Investigation, apparently in connection with the loan.

The bankruptcy filing and the raid “clearly show that the committee was more than justified in its scrutiny of the deal,” said the panel’s chairman, Representative Fred Upton, Republican of Michigan. “Why did the administration think Solyndra was such a good bet?”

Critics of the loan have focused on whether political considerations played a role in awarding the loan to Solyndra, which the Obama administration denies. But the hearing also cast doubt on the government’s competence to assess how sure a bet it is making, regardless of politics.

Officials of the Energy Department’s loan office and the White House budget office defended their decisions, which they said were carefully reviewed and not politically inspired. The administration said that the e-mails showed only that the White House wanted to know when a decision would be made for its planning.

“As the e-mails indicate, there was interest in when a decision would be made because of its impact on whether an event involving the vice president could be scheduled for a particular date or not,” said Eric Schultz, a White House spokesman. “But the loan guarantee decision was merit-based and made by career staffers at the Department of Energy, and the process for this particular loan guarantee began under President George W. Bush.”

Suspicions that the administration might have pushed the loan for political reasons have centered on the fact that a major investor in the company is a charitable foundation associated with George B. Kaiser, a billionaire from Tulsa, Okla., who raised $50,000 to $100,000 as a “bundler” for President Obama’s 2008 presidential campaign.

Logs show that Mr. Kaiser visited the White House on several occasions during the spring and summer of 2009, while the loan to Solyndra was being considered. Among the officials he met with were the chief of staff, Rahm Emanuel, and Pete Rouse and Valerie Jarrett, both senior advisers to Mr. Obama.

“It seems like crony capitalism was trumping the smart decision-making,” Representative Steve Scalise, Republican of Louisiana, said at the hearing.

Campaign finance records analyzed by OpenSecrets.org show that there were about 235 other bundlers for the Obama campaign in Mr. Kaiser’s range, while about 326 bundlers raised significantly larger sums.

Administration officials said the White House meetings were not about Solyndra but rather were related to Mr. Kaiser’s charitable interest in policy matters like early childhood education. Mr. Kaiser has declined to comment directly about the meetings. But the George Kaiser Family Foundation has said that “he did not participate in any discussions with the U.S. government regarding the loan.”

While Mr. Kaiser’s connection to the Obama campaign and to Solyndra, based in Fremont, Calif., have helped draw attention to the loan, he was not a major topic of discussion at the hearing on Wednesday. Republicans did, however, press those testifying on whether the Solyndra bankruptcy offered proof that the government should not be lending to companies that have trouble raising money from private investors.

“In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat,” Mr. Upton said.

Three factors pushed the market price of solar arrays below Solyndra’s cost of production, according to experts. The cost of silicon, a key ingredient in competitors’ cells but not in Solyndra’s, fell sharply. The European economic crisis cut demand for solar cells. And China subsidized a huge increase of solar equipment production, producing a surplus.

While taxpayers could lose the $528 million the company borrowed from the Treasury, Jeffrey D. Zients, deputy director of the Office of Management and Budget, said that the system for evaluating such loans was sound. He said it was inevitable that some cutting-edge firms would fail but that over all, the investments would prove worthwhile. He did allow, “The lesson learned here is that marketplaces can change even more rapidly than one would have anticipated.”

Executives from Solyndra are scheduled to testify before the subcommittee next week.

Meanwhile, the White House provided about 900 pages of e-mails this week to the committee, which had asked for all correspondence between Obama aides and Solyndra executives. Most of the correspondence concerned logistics for a visit by Mr. Obama in the spring of 2010.

However, several e-mails from the company to the White House flagged and sought to discredit a handful of articles that had questioned the company’s financial viability as far back as July 2010. A Solyndra official, David Miller, called one such report baseless and noted that Solyndra “had no intention of going out of business” and that its goal was to be “a true success story for this administration to point to.”

Another Solyndra e-mail, from this past May, informed the White House that “things are going well” at the company and that it had “good market momentum, the factory is ramping up and our plan puts at cash positive later this year. Hopefully, we’ll have a great story to tell toward the end of the year.”

A White House official, Greg Nelson, replied: “Fantastic to hear that business is doing well — keep up the good work! We’re cheering for you.”



Solyndra "Scandal" Is Washington Business as Usual

I haven't written much about the California solar company Solyndra, which recently went bankrupt after receiving over $500 million in taxpayer money as part of the Department of Energy's program of loan guarantees for renewable energy companies. Short story: the sudden demise of the California-based company—which went out of business on Aug. 31, costing more than 1,000 employees their jobs—raised speculation that the Obama Administration may have channeled money toward Solyndra for political reasons.

Republicans in the House launched an investigation, and turned up emails that seemed to show White House staffers pushing officials at the Office of Management and Budget to sign off on the loans in time for a major public appearance by Vice-President Joe Biden at Solyndra's headquarters.

On Sept. 14 , a House subcommittee held hearings on the Solyndra affair, and Republican representatives tried to portray the Solyndra loans, and the White House's renewable energy support policy, as an expensive, politically motivated failure.

My response: meh. TIME's Michael Grunwald has covered this from the start, and while he's unhappy—to say the least—with executives at Solyndra for misleading the government on its financial health, the solar industry more broadly is doing well, thanks in part to the money the Obama Administration has channeled towards more successful companies. And it's worth noting that in addition to government loan guarantees, Solyndra also scored over $1 billion in private capital—including from GOP-friendly investors like the Walton family of Wal-Mart.

Solyndra turned out to be a bad investment—the company failed in part because it made the wrong bet on solar technology, failing to foresee that silicon prices would drop drastically.

Bad investments are a part of business, especially a cutting-edge industry like renewable energy, and failure is a necessary ingredient for innovation. (Just ask the famously fired Steve Jobs.) The idea that the collapse of one solar company discredits the entire solar industry is absurd.

Still, many Republicans would argue that the real question here is whether government policies like loan guarantees and subsidies can actually help support companies and create new jobs rather than simply engendering failure and waste. That's a fair debate to have. But the haters are being hypocritical.

Nosing for federal money and federal support is the name of the game in Washington—otherwise the expense accounts of lobbyists on K Street wouldn't be so generous.

Oil and gas and coal companies all spend millions in lobbying, putting former government regulators on their payrolls to ensure that policy goes their way.

House Speaker John Boehner himself has received more than $1.5 million from the coal industry—money that was spent well. It's not just Republicans—Democrats from oil or coal states know to look out for industry.

And it's not just the energy industry either—every major business sector is happy to lobby in Washington and bend legislation to their favor. That's the way things work—or don't, I suppose.

If Solyndra threw its weight around Washington to pull in that $500 million-plus loan guarantee, the firm was only copying its more entrenched competitors. In fact, maybe it was a sign that the renewable energy industry was finally ready for prime time. You can criticize the White House for spending public money foolishly in support of one of the President's signature policy objectives: building green jobs. But there's nothing here that makes the Solyndra debacle special. It's business as usual.


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Sources: Bloomberg TV, CNN, NY Times, Open Secrets, Reason.com, TIME, Twin Citizens.com, USA Today, Washington Post, Youtube, Google Maps