White House Debated Solyndra Warnings: Memo
The White House and congressional Democrats released new internal documents Monday that they said show top officials were aware and concerned about the financial stability of Solyndra well before the company filed for bankruptcy.
An internal memo summarizing more than 700 pages of new e-mails represents the latest step by the White House and Democrats to counter Republican charges that the Obama administration showed favoritism to Solyndra because its investors included Argonaut Private Equity, a private fund owned by Obama fundraiser George Kaiser.
The solar panel manufacturer received a government loan guarantee in 2009 under a new program designed to spur the renewable energy industry, and had been highly touted by the
Obama administration before it ran out of cash and filed for bankruptcy in August.
The documents highlight a divide between the Energy Department, which promoted the project, and the Office of Management and Budget, where analysts were concerned about loans made to Solyndra and other clean energy companies.
The e-mails also show the extent to which top White House officials were aware of Solyndra before the company became a political embarrassment -- officials including Lawrence Summers, then-director of the National Economic Council, Ron Klain, chief of staff to Vice President Joe Biden, and Valerie Jarrett, senior advisor to Obama.
Klain and Jarrett debated the merits of having Obama visit Solyndra's factory in May 2010 given concerns about the company's stability.
"The reality is that if (Obama) visited 10 such places over the next 10 months, probably a few would 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," Klain said in an e-mail to Jarrett, according to the Democrats' memo.
The Republicans leading an investigation into the company and the government's investment did not immediately have a response to the memo.
The U.S. Energy Department defended the due diligence done on the loan guarantee to the company, and noted the U.S. solar industry has been hit hard by plunging prices.
"With China offering more than $30 billion in government financing to solar manufacturers last year, the United States simply cannot afford to stand on the sidelines while jobs go overseas," said Damien LaVera, a department spokesman.
WARNINGS FROM VENTURE CAPITALISTS
Venture capitalists close to the Obama administration sent up red flags about the company, the new e-mails showed.
In May 2010, as the White House planned a visit by Obama to Solyndra, venture capitalist Steve Westly e-mailed Jarrett, warning her that the company's finances were shaky.
"A number of us are concerned that the president is visiting Solyndra," said Westly, who was a prominent member of Obama's campaign team in California in 2008.
"Many of us believe the company's cost structure will make it difficult for them to survive long term," he wrote.
"If it's too late to change/postpone the meeting, the president should be careful about unrealistic/optimistc forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc."
The Energy Department defended Solyndra. And after the visit, one of the company's lobbyists, the Glover Park Group, had also said the company was on the way to profitability.
GOVERNMENT IS "CRAPPY" VENTURE CAPITALIST
As early as December 2009, only months after the government had finalized the loan guarantee, a partner with private equity firm Redpoint Ventures warned Summers about the investment.
Brad Jones, a founding partner of Redpoint, said the government's spending on clean energy was "haphazard," citing Solyndra as an example. Redpoint was an investor in Solyndra.
"While that (loan) is good for us, I can't imagine it's a good way for the government to use taxpayer money," Jones told Summers in an e-mail.
Summers agreed that the government is a "crappy" venture capitalist. "If (you) were closer to it, you'd feel more strongly," Summers told Jones.
(Editing by Cynthia Osterman)