Treasury Secretary Tim Geithner and then-National Economic Council Director Larry Summers warned President Obama in October 2010 that the Department of Energy’s loan guarantee program was dangerously short on due diligence.
According to three reporters from the Los Angeles Times:
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.
Energy Secretary Steven Chu, also at the meeting, had a different view. Under pressure from Congress to speed up the loans, he wanted less scrutiny from the Treasury Department and the Office of Management and Budget, or OMB...
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.
Warning that the program could "fail to advance your clean-energy agenda" by investing in companies that didn't need help, the memo proposed alternatives, including diverting the funds into grants available to the entire industry. By contrast, Energy Department officials wanted to end the "deal by deal" reviews by the Treasury and OMB, the memo said.
As evidence like this continues to pile up, the Obama Administration’s media defenders can’t abandon the idea that Solyndra’s failure was capitalism’s fault and therefore not foreseeable by officials who were doing their best in good faith. In the Washington Post, Dana Milbank allows that the Solyndra loan guarantee and bankruptcy wasn’t President Bush’s fault before explaining that, really, it was Bush’s fault:
This doesn’t mean that Bush is to blame for Solyndra or that the Obama administration should be absolved. Obama, whose administration gave the company the loan guarantee, deserves the black eye that Republicans have given him over the half a billion dollars squandered on the company. But the Republican paternity of the program that birthed Solyndra suggests some skepticism is in order when many of those same Republicans use Solyndra as an example of all that is wrong with Obama’s governance.
“Loan guarantees aim to stimulate investment and commercialization of clean energy technologies to reduce our nation’s reliance on foreign sources of energy,” Bush’s energy secretary, Sam Bodman, announced in a press release on Oct. 4, 2007. The release said the Energy Department had received 143 pre-applications for the guarantees and narrowed the list down to 16 finalists — including Solyndra. Bodman said the action put “Americans one step closer to being able to use new and novel sources of energy on a mass scale to reduce emissions and allow for vigorous economic growth and increased energy security.”
Bush’s Energy Department apparently adjusted its regulations to make sure that Solyndra would be eligible for the guarantees. It hadn’t originally contemplated including the photovoltaic-panel manufacturing that Solyndra did but changed the regulation before it was finalized. The only project that benefited was Solyndra’s.
It’s certainly fair to point out, as Ira Stoll did at Reason yesterday, the Republican angles in the Solyndra debacle. House Oversight Committee Chairman Darrell Issa (R-California) recently made the self-contradicting claim that it’s OK to "ask for money from whatever pool is available to help their constituents" as long as the process is "truly competitive and is without political interference" – and while Daily Kos manages to miss the irony of that comment, Kos is also right to point out how widely the cancer of corporate welfare has spread.
But this New York Times editorial is so inaccurate it must be intentionally misleading:
The United States, which three years ago led the world in investments in clean energy, has now fallen behind China and Germany, which provide far more generous subsidies. The failure of a single company — and anyone who knows anything about transformative technologies knows there will be failures — is no reason to stop our efforts to catch up.
There are important issues here that need a hard look. The Justice Department is investigating whether Solyndra was upfront about its problems with investors. A House committee is asking whether the company’s loan application was hurried along by Obama officials so that the White House could trumpet its job creation efforts.
The administration claims to have exercised due diligence and seems to have been forthcoming in responding to Congress. The company has been decidedly less so; two senior executives, citing the Justice Department inquiry, took the Fifth Amendment when they appeared before a Congressional committee on Friday.
Leave aside the economically illiterate notion that the United States is in some kind of race with other countries to dominate green industry – as if the marketplace were a flag-waving Olympiad or the Cold War’s fictional “missile gap.” The claim that the White House “seems to have been forthcoming in responding to Congress” flies in the face of all known facts about this case. To wit:
The Obama Administration has provided no explanation for its behavior toward Solyndra over the last twelve months – which includes having Department of Energy officials apparently sit in on board meetings.
Former Obama Chief of Staff Rahm Emanuel claims not to remember anything about Solyndra, while the president’s spokesman says he hasn’t been briefed on the matter.
When the Department of Energy and the Office of Management and Budget finally coughed up officials to testify to the House Committee on Energy and Commerce, they sent two guys who were not even around when the original loan guarantee was decided.
After the House investigation made Solyndra a national story, the administration unleashed a series of its own investigations, the only practical effect of which was to make it virtually impossible for the company’s executives – whom Los Tiempos now blames for not cooperating – to testify.
And the obstruction continues. Secretary of Energy Steven Chu has not divulged any information about the Solyndra scandal. Nor has top adviser Valerie Jarrett. Last week, the House committee requested Solyndra-related correspondence among the Department of Energy, the White House and the Department of Treasury. The DoE now is apparently saying it won’t be able to make its deadline for turning over those documents. I have calls and emails in on this report, but if the Energy Department is really claiming this, it is absurd given that the company’s troubles have been known since the beginning of this year and Solyndra has been a major news story since the end of August.
The Bush Administration was at least this “forthcoming” during the Valerie Plame scandal. Why was The New York Times so stingy with its praise back then?
Back on Planet Earth, the San Francisco Chronicle’s Debra Saunders dismantles the newest package of Solyndra excuses. (And when San Francisco is Planet Earth, you know you’re in trouble.)