Long before the politically connected California solar firm Solyndra went bankrupt, President Obama was warned by his top economic advisors about the financial and political risks of the Energy Department loan guarantee program that boosted the company's rapid ascent. At a White House meeting in late October, Lawrence H. Summers, then director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, expressed concerns that the selection process for federal loan guarantees wasn't rigorous enough and raised the risk that funds could be going to the wrong companies, including ones that didn't need the help.
...In late October 2010, administration officials took their opposing views directly to Obama. In preparation, a memo was drafted by Summers, who remained wary of the program, and two others who were more supportive: then-energy advisor Carol Browner and Ron Klain, then chief of staff to Vice President Joseph Biden. The memo laid out their different concerns and options to fix a "broken process" for getting loans approved.
...Government audits in recent years have found problems in the implementation of the program. A July 2010 report by the Government Accountability Office found that the department committed to back the loans without completing required studies of market, legal and technical issues. "Without this information, it is not clear that the program could have fully evaluated the risk of the loans it committed to," said Frank Rusco, an analyst for the GAO.
This story will leave a mark for a number of reasons. First of all, it indicates that President Obama himself was warned -- directly and specifically -- about the systemic hazards inherent in broadening and expediting the "green energy" loan program. Among those admonishing Obama against moving forward were Larry "There's no adult in charge" Summers, and Tim "This Second Stimulus is a Bargain!" Geithner. The president discarded their advice, the White House gave a green light to the loans, and the rest is history. That history includes a presidential visit to Solyndra's factory, a vice presidential speech to Solyndra employees about "permanent jobs," and this touching moment from March of 2009:
While the LA Times report casts further doubt on the efficacy and wisdom of the overall "green energy" loan scheme, it's important to note that in the specific case of Solyndra, poor vetting of the company's finances and business model was not the problem. Bush-era DOE officials rejected Solyndra's loan application prior to Obama's inauguration in January of 2009. A few months later, Obama OMB actuaries reached a similar conclusion -- arguing that the $535 Billion deal was "not ready for prime time," and accurately predicting that Solydra would implode in September of 2011.
So for all of the sloppiness of the overall process, the Solyndra ticking time bomb was discovered and repeatedly flagged as too risky by two separate administrations. Every conceivable red flag was flapping in a stiff wind, yet the loan was fast-tracked anyway because Obama's political team insisted on it. They now claim major Obama donor George Kaiser's four visits to the White House immediately before the approval had nothing whatsoever to do with the decision. It's premature to declare that a giant lie, but it sure smells like one. Especially since the White House was complicit in masking the company's tail-spinning finances as recently as this summer. Now that we know that President Obama was personally appraised of this program's risks, RNC Chairman Reince Priebus is demanding a presidential explanation:
"The President’s been silent about this debacle so far but with this news, I think that it’s time for President Obama to do what he does best, which is to start talking. He owes the American people an explanation of how he’s going to get their money back and how he’ll prevent it from happening again in yet another failed Stimulus 2.0 attempt that he’s trying to sell in Denver today." (Me: Denver, Wyoming?)
Meanwhile, we're still trying to sort out why the California Democratic Party is listed as a Solyndra creditor. Maybe all will be made clear in the trove of Energy Department documents that are due tomorrow to Congressional investigators. Maybe not:
The Energy Department will likely miss its Wednesday deadline to hand over more documents to House Republicans investigating the Obama administration's role in the Solyndra affair. Committee Republicans set the Wednesday deadline in a letter sent last week to Energy Secretary Steven Chu requesting all DOE-White House communications involving Solyndra’s $535 million loan guarantee, including anything from the Office of Energy and Climate Change Policy, the Council on Environmental Quality and the National Economic Council. Republicans also gave DOE a Wednesday deadline on their long-standing request for all of the department’s communications on Solyndra with the Treasury Department and Office of Management and Budget.
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