The White House's half billion dollar loan to a now- bankrupt solar panel firm is just the first act in an emerging scandal of insider political influence over a deeply flawed, and possibly corrupt, clean energy program.
What has come to light so far as part of a congressional investigation is the administration's willful order to approve a bad loan, despite dire warnings from a number of federal officials that the Solyndra corporation, a California-based solar panel maker, was in deep financial trouble.
A steady stream of government e-mails released by a House Energy and Commerce subcommittee tell a sordid tale of a company that President Obama turned into an energy showcase for his $40 billion loan program -- until it went bankrupt in August, putting 1,100 employes out of work.
One of the people promoting Solyndra's $535 million loan, which will now have to be paid by federal taxpayers, is Steven J. Spinner, a senior Energy Department adviser, a major fundraiser for Obama, and a Silicon Valley investor who was given the job of guiding the government's clean technology investments.
He was not only one of Solyndra's unabashedly inside defenders, his wife worked for the California law firm that represented the solar company and helped it file for the government loan her husband was promoting.
While internal concerns were raised about Solyndra's shaky finances as early as the summer of 2009, Spinner e-mailed a top aide to then-Chief of Staff Rahm Emanuel that Solyndra was a financially solvent company that fully deserved the administration's support.
"I haven't heard anything negative on my side," he told Emanuel's aide in an e-mail about the warnings. "I... have no idea what they're referring [to]."
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As the loan deal stalled over internal criticism of the firms' looming insolvency, Spinner grew more impatient. "How [expletive] hard is this?" he wrote to a career Energy staffer on Aug. 28, 2009 about its delayed clearance by an Office of Management and Budget official.
"What is he waiting for? Will we have it by the end of the day?"
But internal complaints from OMB and Treasury about Solyndra's dubious finances as well as the favorable terms of its loan persisted.
That sparked further internal debate over the legality of the loan's revision, though to no avail.
Dismissing warnings that the government's restructuring of the loan was illegal and should be reviewed by Justice Department attorneys, Energy officials moved ahead with changes in February that required Solyndra's investors be repaid before taxpayers if the company defaulted on its debt.
Other e-mails released by the House panel last month reveal a politically pressured program that was heavily influenced by powerful special interests who had a stake in its outcome.
"In an administration that said it would curtail lobbyists' influence, the documents show ardent lobbying by political appointees inside the agencies and significant White House access given to venture capitalists with a major stake in the $40 billion stimulus investment program for clean energy," the Washington Post reported last month.
One of these venture investors was David Prend, whose company, Rockport Capital, was a Solyndra backer. He met with White House officials about the deal in March of 2009.
"It was great to meet you with [then-White House climate adviser] Carol Browner last week," Prend wrote. "I look forward to working with you to get the message out and to effect real change in the Energy Industry. I will follow up shortly on 2 of the companies we discussed," he said. One of them was Solyndra.
But e-mails from government officials to Energy officials, who were responsible for reviewing the deal, were growing increasingly critical of Solyndra's rising debts and declining revenues.
"DOE... has one loan to monitor and they seem completely oblivious to this issue," an OMB analyst wrote on April 2, 2010.
"What's terrifying is that after looking at some of the other [loan guarantee projects] that came next, this one [Solyndra] started to look better," a budget analyst e-mail said.
"Bad days are coming," another OMB analyst wrote, referring to other shaky companies the Department of Energy prepared to invest in next as part of Obama's loan guarantee program.
As news stories proliferated about Solyndra, and the president's job approval polls sank further last month, House Energy Chairman Fred Upton of Michigan, and Rep. Cliff Stearns of Florida, who chairs its investigating subcommittee, accused the White House of "stonewalling" its demands for further documents about the West Wing's role in the scandal.
"What is the White House trying to hide from the American public," the two Republicans said in a statement last week, warning they will be forced to subpoena the requested documents if they were not forthcoming.
Last week, in an effort to blunt the GOP's demands, White House Chief of Staff William Daley ordered a 60-day review to evaluate the administration's entire $35 billion loan portfolio. That may be too little, too late. Insiders say that future loans may be in trouble as well.
Meantime, other internal White House e-mails show that there was a growing fear within the Obama administration that Solyndra's finances were weak when it was given the green light. Indeed, one unusually blunt White House e-mail suggested that the Energy Department was woefully "ill-equipped" to make these kinds of investment decisions.
So hang on to your wallet. Look for more failed loans in the months to come.
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