published Saturday, September 17th, 2011

Obama administration reworked Solyndra loan to favor donor

By MATTHEW DALY and JACK GILLUM

Associated Press

WASHINGTON (AP) — The Obama administration restructured a half-billion dollar federal loan to a troubled solar energy company in such a way that private investors — including a fundraiser for President Barack Obama — moved ahead of taxpayers for repayment in case of a default, government records show.

Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work.

Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.

The Fremont, Calif.-based company was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. Obama visited the company’s Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking.

Since then, the implosion of the company and revelations that the administration hurried Office of Management and Budget officials to finish their review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Obama as he sells his new job-creation program around the country.

An Associated Press review of regulatory filings shows that Solyndra was hemorrhaging hundreds of millions of dollars for years before the Obama administration signed off on the original $535 million loan guarantee in September 2009. The company eventually got $528 million.

Given the company’s shaky financial condition, Republican lawmakers say the decision to restructure the loan raises questions about whether the administration protected political supporters at taxpayers’ expense.

“You should have protected the taxpayers and made some forceful actions here after this analysis,” Rep. Cliff Stearns, R-Fla., told a top Energy Department official this week. “Because you should have seen the problems. And you should have said, ‘Taxpayers need to be protected and this has got to stop.’ ‘’

The loan restructuring is one element congressional investigators are focusing on as they look into the federal loan guarantee Solyndra received under the economic stimulus law.

Under terms of the February loan restructuring, two private investors — Argonaut Ventures I LLC and Madrone Partners LP — stand to be repaid before the U.S. government if the solar company is liquidated. The two firms gave the company a total of $69 million in emergency loans. The loans are the only portion of their investments that have repayment priority above the U.S. government.

Argonaut is an investment vehicle of the George Kaiser Family Foundation of Tulsa, Okla. The foundation is headed by billionaire George Kaiser, a major Obama campaign contributor and a frequent visitor to the White House. Kaiser raised between $50,000 and $100,000 for Obama’s 2008 campaign, federal election records show. Kaiser has made at least 16 visits to the president’s aides since 2009, according to White House visitor logs.

Madrone Partners is affiliated with the Walton family, descendants of Wal-Mart founder Sam Walton. Rob Walton, the eldest son of Sam Walton, contributed $2,500 last year to the National Republican Congressional Committee.

The AP review also found that officials at Solyndra had been seeking a second round of loans from the Energy Department to expand the company’s Silicon Valley headquarters. The request for a second loan was denied.

“We have incurred significant net losses since our inception, including a net loss of $114.1 million in 2007, $232.1 million in 2008 and $119.8 million in the first nine months of fiscal 2009, and we had an accumulated deficit of $505 million at Oct. 3, 2009,” the company said in a December 2009 filing to the SEC. “We expect to continue to incur significant operating and net losses and negative cash flow from operations for the foreseeable future.”

Energy Department spokesman Damien LaVera said Friday that the company’s financial losses were not uncommon for a high-tech startup and were a major reason Solyndra applied for the federal loan. The loan program is intended to help promising companies that cannot receive financing through private banks because of high risk.

Jonathan Silver, executive director of the Energy Department’s loan program, said DOE officials faced a stark choice late last year and early this year: Refuse to allow the loan restructuring, “thereby ensuring that Solyndra would close its doors immediately” or allow the company to accept emergency financing, “thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan.”

The decision by Energy Secretary Steven Chu was not an easy one, Silver told the House Energy and Commerce Committee, but appeared to be the right action at the time.

“Without DOE’s agreement to restructure Solyndra’s loan, the company likely would have faced bankruptcy much earlier — in December 2010” or soon after, Silver said. “Restructuring gave them a fighting chance to compete and succeed, and kept approximately 1,000 workers from losing their jobs.”

Republicans were not impressed.

“If their model was weak to begin with, and then the market gets worse, doesn’t that mean that maybe we should have just not thrown good money after bad?” asked Rep. Morgan Griffith, R-Va. “Because now we’re in a worse position in the bankruptcy courts to get our money back.”

GOP presidential candidate Michele Bachmann called the Solyndra loan an example of “crony capitalism” that benefited political donors.

“It’s wrong to abuse executive authority with unilateral actions” Bachmann said at a campaign event Friday in California. “And of course the other problem with Solyndra is the fact that it appears there was crony capitalism, that there were political donors that benefited by this $535 million loan.”

Newly released emails show the White House was worried about the likely effect of a default by Solyndra on Obama’s re-election campaign.

“The optics of a Solyndra default will be bad,” an OMB official wrote in a Jan. 31 email to a colleague. “The timing will likely coincide with the 2012 campaign season heating up.”

The budget official, whose name is blacked out in the email, wondered whether Solyndra should be allowed to restructure its loan.

“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.

Associated Press writer Gillian Flaccus in Costa Mesa, Calif., contributed to this story.

Follow Jack Gillum at http://twitter.com/jackgillum and Matthew Daly at http://twitter.com/MatthewDalyWDC

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joetheplumber said...

This entire administration needs the piss beat out of them. They run this country like a bunch of gang members and thiefs. Face it folks, the lazy, dead beats that put this guy in office for one thing and one thing only - giveaways. Now they've got what they wanted and we're all in a mess. I am sure there is a way President Highyellow will blame it on Bush, again...

This is wrong and rotten and criminal. I swear, and couple of years ago I would never said anything like I am anout to say but I don't see a way to get out of the messes Washington makes except the following - 1. If you don't hold a job you can't vote. 2. If you work for the government, no vote. 3. If you've received walfare 24 months prior to an election - no vote. 4. Convicted of a felony - no vote. 5. Over 21 years old and only regestered 12 months before election - no vote. 6. No I.D. - no vote (I believed this proir to President Highyellow) 7. First generation American - no vote. 8. Ever protested against this country in support of another - no vote. 9. Every voter must apply and take a test prior to receiving and voter card or - no vote. 10. Pay no income taxes - no vote.

Number 10 on the list is the key. When will we get anywhere until the folks putting up the money have the ONLY voice of how it is spent. The bailouts are a prime example - 82% of working Americans did not want it passed - 61% of all Americans did not want it passed but "our voices" in Washington did otherwise! WTF

September 17, 2011 at 10:06 a.m.
holdout said...

Yeah good idea about not letting government workers vote. What have those lazy military slugs done for us lately huh Joe? Same for those slug cops and firefighters. Just leeches on the buttocks of society. Just because they do a vital job that very few would do or even attempt cuts no ice with you does it? Its so easy to criticize when you are so ignorant of what the real world is about. Its easy to whine about how things are done when you're so ignorant you don't even know that you are ignorant. The hypocrisy sickens me.

September 17, 2011 at 10:25 a.m.
Legend said...

Not only is joetheplumbers' ignorance showing. He's trying to hide his obvious bigotry behind it. joe, you should really revisit the prior administrations' screw ups and how those screw ups led to America, and the world's, present tragic situation.

September 17, 2011 at 12:03 p.m.
joetheplumber said...

Holdout - you are correct Legend - you are stupid

September 17, 2011 at 12:49 p.m.
rick1 said...

Legend said "you should really revisit the prior administrations' screw ups and how those screw ups led to America, and the world's, present tragic situation."

Why don’t you focus on what the current administration has done and continues to do that is keeping this economy from growing and grow up and stop blaming the prior administration.

September 17, 2011 at 12:50 p.m.
patriot1 said...

Why keep blaming Bush when we all know it's the tea party's fault..no wait, it's the hurricane's fault..or the earthquake in Japan..no, no Greece's fault, or is it Europe's fault, oh yeah, John Boehner's fault, Mitch McConnell maybe? Could it be Sarah Palin's fault....all those mean republicans.....

September 17, 2011 at 1:18 p.m.
terrybham said...

If what the article states is true then it is a shame and everyone involved should face investigation. But no matter what these knee-jerk comments on this page suggests, it still isn't nearly as criminal or disgusting as starting two wars on false and trumped-up information. Wars that have killed several thousand Americans and uncounted Iraqis and Afghans and resulted in almost one trillion US dollars spent on these misadventures. And what about the billions of dollars that simply went missing in Iraq. So for you Obama haters-why doesn't this anger you? I think I know why this story offends you.

September 17, 2011 at 1:48 p.m.
rick1 said...

terrybjam: please read this with an open mind on Iraq and WMD. You may not change your mind but at least give it a try.

http://www.freerepublic.com/focus/f-news/1022824/posts

September 17, 2011 at 2:08 p.m.
holdout said...

I will never for as long as I live think that going to war with Iraq was right. There were WMDs found but so what. There were mass graves of men, women and children found but so what. Those were not reasons to go to war. I don't care if Saddam was piling babies head high and setting them on fire with flaming puppies. Its their country and they had several chances to get rid of him and didn't. Not our problem and not our fault. But Afghanistan is a whole other issue. There is no way you can compare the two TB. That war was justified and should have been supported fully instead of draining money and resources off to Iraq. We have already gotten Bin Laden and bounced the rubble several times over. Declare victory and leave.

September 19, 2011 at 6:07 a.m.
anniebelle said...

holdout, BREAKING NEWS! there were NO WMDs found in Iraq. No matter how you spin it, there were none. Quit twisting history to suit your fantasy world that you inhabit. And don't be sending people to that right-wing, nutjob site you posted.

September 19, 2011 at 6:21 a.m.
holdout said...

Did you even read my post annibelle? Better yet have a grown up read it for you. There is no link to anything and I never thought we should have gone to Iraq and I did see photo report in Time of an entire village of men women and babies dead from gas attacks in Iraq. And even if Saddam had posed nude on a nuke and flipped a bird at us we still didn't need to go there. Sheesh pay attention

September 20, 2011 at 11:38 p.m.
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