White House Emails: Solyndra Default Would Not Look Good for Obama Reelection

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Lawmakers Question White House Role in Solyndra Scandal

Did administration know about troubles of green energy firm before $535M loan was given?

The Obama administration was concerned about the financial health of Solyndra -- and the political consequences if it failed -- even as officials publicly declared the company in good shape, newly released emails show.

An email from a White House budget official to a co-worker discussed the likely effect of a default by Solyndra Inc. on President Obama's re-election campaign.

"If Solyndra defaults down the road, the optics will arguably be worse later than they would be today," an official from the Office of Management and Budget wrote in a Jan. 31 email to a senior OMB official. "The timing will likely coincide with the 2012 campaign season heating up."

Asked Friday if this showed politics was involved, White House spokesman Jay Carney said, "The answer is no...the loan process was run by the Department of Energy, merit-based by career officials."

The email was released by the House Energy and Commerce Committee as part of its investigation into a half-billion dollar federal loan to the company. The email says the budget official wanted White House budget director Jacob Lew to warn Energy Secretary Steven Chu about the risk posed by Solyndra, which was once the poster child for the Obama administration's clean energy program. It has since laid off 1,100 people and filed for bankruptcy.

Former Solyndra employees are applying for Trade Adjustment (TAA) benefits, a source within the federal government told NetRightDaily.com. The program provides benefits to people who lose their jobs to foreign trade

At the time of the email, the Energy Department was pushing to release an additional $67 million to Solyndra to help the company through a cash-flow crisis.

The budget official, whose name is blacked out in the email, questioned whether Solyndra should be given additional money on top of the nearly half-billion it had received by then.

"Questions will be asked as to why the administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment, or worse)," the email says.

Ultimately, the Fremont, Calif.-based solar panel maker received a total of $528 million in federal loans.

The FBI raided Solyndra's headquarters last week and interviewed company executives at their homes. A U.S. official, who spoke on condition of anonymity because the case is under seal, said the search was related to a fraud investigation into whether Solyndra filed inaccurate documents with the government.

The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. Obama visited the company's headquarters last year.

Even as Obama declared that "the future is here" during a May 2010 visit to Solyndra, warning signs were being sent from within the government and from outside analysts who questioned the company's viability.

At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program.

Emails obtained by The Associated Press show that a White House official dismissed reports about Solyndra's gloomy future. An email from Greg Nelson, a White House official who had been involved in the planning of Obama's May 2010 trip to Solyndra's headquarters, to a Solyndra executive downplayed a July 2010 news story in a trade publication that criticized the company's financial health.

"Seems B.S.," Nelson wrote.

A 2009 report by the Energy Department's inspector general warned that the DOE lacked the necessary quality control for the loan guarantee program, which was created in 2005 to support clean-energy projects that could not obtain conventional bank loans due to high risks.

In July 2010, the Government Accountability Office said the Energy Department had bypassed required steps for funding awards to five of 10 applicants that received conditional loan guarantees.

The report did not publicly identify the companies that were not properly vetted, but congressional investigators say one of them was Solyndra. The company was the first to receive a loan guarantee after the program was expanded under the 2009 stimulus law.

In March, DOE Inspector General Gregory Friedman again faulted the loan program for poor record keeping. A report by Friedman said the program "could not always readily demonstrate, through systematically organized records ... how it resolved or mitigated relevant risks prior to granting loan guarantees." According to the report, the department kept limited or no electronic data on 15 of 18 loan guarantees examined.

Damien LaVera, a spokesman for the Energy Department, said all reviews were completed before any taxpayer money was obligated.

Even so, warnings about the company persisted. A report last year by auditor PricewaterhouseCoopers said Solyndra had suffered recurring losses from operations and negative cash flows, raising "substantial doubt about its ability to continue as a going concern."

But last May, a Solyndra email informed the White House that "things are going well" at the company and that it had "good market momentum, the factory is ramping up and our plan puts at cash positive later this year. Hopefully, we'll have a great story to tell toward the end of the year."

Meanwhile, the Treasury Department's inspector general said Thursday it has opened an investigation into the Solyndra loan.

The Energy Department's inspector general also is investigating Solyndra and the DOE's loan guarantee program, which has provided billions in loan guarantees to renewable energy companies.

Fox News' Ed Henry and The Associated Press contributed to this report.