The rapidly evolving scandal surrounding a $535 million government loan to Solyndra, a California solar energy company, that shuttered its doors and filed bankruptcy last week, has now been connected to the office of Vice-President Joe Biden.
Emails obtained by investigators for the House Energy and Commerce Committee and released to ABC News demonstrate how deeply involved the White House was at the highest levels in fast-tracking the approval of the politically well connected start-up in direct conflict with numerous private as well as government warnings that the survival of the company was very doubtful.
On March 10, 2009 according to ABC a White House budget analyst warned in an email that "This deal is NOT ready for prime time." That followed an email from Ronald A. Klain, Chief of Staff to the Vice-President on March 7 that said, "If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY."
The White House and the Department of Energy pressed forward and fast-tracked the approval of the first green energy loan of the Obama Administration in March, 2009. In addition to questions about possible political cronyism and corruption, the terms of the loan included a subordination of the taxpayer's interest to private investors and the lowest interest rate of any such loan approved by the Obama Energy Department.
As reported earlier this week on these pages, numerous industry analysts had raised questions about the viability of Solyndra's business model. Peter Lynch, a solar industry analyst, explained in simple terms to ABC News the folly of Solyndra's plan; "It's very difficult to perceive a company with a model that says, well, I can build something for six dollars and sell it for three dollars. Those numbers don't generally work."
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In 2008, the investment analysis agency Fitch rated Solyndra "B+" – right between "highly speculative" and "speculative." Dun & Bradstreet rated the company only "fair."
PricewaterhouseCoopers had filed a public audit with the SEC that Solyndra "has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders' deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern."
New information disclosed that Solyndra first approached the Bush Administration for a loan. That request was denied during the Administration's final weeks in office. Solyndra ramped up lobbying efforts with the new Obama Administration taking advantage of the billions earmarked in the new President's $800 billion economic Stimulus legislation. Company executives visited the White House meeting with some of the Administration's most highly placed officials. Those visits included four by a principle investor in Solyndra that was also a major contributor and bundler for Obama's 2008 campaign in just two days the week prior to the announcement of loan approval.
In the early days of the Obama Administration, the DoE analysts were questioning the risk of the Solyndra request. One exchange was particularly prescient saying, "a major outstanding issue" was that Solyndra's financial numbers showed the company would run out of cash in September, 2011. It did.
Not only did the Obama Administration ignore all the warning signs and the advice of their own government analysts, Barack Obama scheduled a visit to Solyndra in 2010 to hail the company as "leading the way to a brighter and more prosperous future."
For months before the collapse of Solyndra two weeks ago, Energy Department officials had been sitting in on regular board meetings apparently blind to the facts.
Questions of company operations and political corruption have already prompted investigations by the FBI, the Inspector General for the Energy Department, and the House Energy and Commerce Committee who will begin hearings tomorrow, September 14.
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