Obama Administration Considered Bailout For Solyndra
WASHINGTON (CBS / AP) — Days before a Bay Area solar panel maker collapsed, the Obama administration considered a bailout that would have provided an infusion of cash and a new board of directors, including two directors appointed by the Energy Department.
Officials rejected the plan, which was recommended in August by the investment banking firm Lazard Ltd. Lazard was paid $1 million for analyzing options related to the faltering company, Solyndra Inc.
Details of the bailout plan were among nearly 1,200 pages of documents released by the government Wednesday, hours before a House subcommittee was set to vote on a plan to subpoena White House documents related to Solyndra.
The Republican-controlled House Energy and Commerce Committee said a subpoena was necessary because the White House has denied or delayed requests for thousands of documents related to Solyndra. The Fremont-based company received a $528 million federal loan before filing for bankruptcy protection and laying off 1,100 workers.
An Energy Department spokesman said the administration was cooperating with House investigators and has provided more than 80,000 pages of documents. The administration turned over more than 15,000 pages of documents to the committee this week, including about 1,200 pages of communications between the White House and the Energy Department, Energy Department spokesman Damien LaVera said.
DOE officials also have participated in a committee hearing and made more than a half-dozen officials available for briefings with committee staff since March, LaVera said.
Congressional Republicans have been investigating Solyndra’s bankruptcy amid embarrassing revelations that federal officials were warned it had problems but nonetheless continued to support it, and sent President Barack Obama to visit the company and praise it publicly.
“Despite all the allegations and insinuations, the record shows that the decisions related to this loan we made on the merits after extensive review by the loan program” office, LaVera said.
The bailout plan considered by the Energy Department would have converted much of the U.S. loan to equity in the company worth as much as 40 percent, the emails show.
Lazard was hired to look at Solyndra’s financing after the company received a $528 million loan in 2009 and $69 million in private money earlier this year in a restructuring deal approved by the Obama administration. Under the second deal, the private investors moved ahead of U.S. taxpayers in case of a default on the loan, a fact that GOP investigators have sharply criticized.
Without an infusion of new cash, Lazard wrote in an Aug. 17 memo to the Energy Department, Solyndra was almost certain to fail, which would “likely result in little recovery to the DOE.” The department rejected the refinancing plan sometime after Aug. 28, and Solyndra shut its doors on Aug. 31.
An Energy and Commerce subcommittee was to vote Thursday on subpoenas for White House Chief of Staff William Daley and Bruce Reed, chief of staff to Vice President Joe Biden.
Rep. Cliff Stearns, R-Fla., who chairs the energy panel’s investigations subcommittee, said the White House has been “stonewalling” on Solyndra, releasing some documents but not all.
“They feel that the inner circle of the West Wing is off bounds and we have no right to ask this information,” Stearns told Fox Business News this week. “I think the American taxpayers deserve an answer.”
“I mean, we’re just talking about what happened on Solyndra. It’s nothing to do with national security,” Stearns added. “We’re asking where the taxpayers’ money went. And frankly, we’re just trying to understand, did the White House actually push this (loan) out, knowing that it was going to fail?””
Daley announced last week that he had ordered an independent review of similar loans made by the Energy Department.
He said the review by former Treasury official Herb Allison would assess the health of more than two dozen other renewable energy loans and loan guarantees made by the Energy Department program that supported Solyndra.
Allison, who oversaw the Troubled Asset Relief Program, part of the 2008 Wall Street bailout, is not looking at the Solyndra case, officials said. Instead he will evaluate other loans worth tens of billions of dollars and recommend steps to stabilize them if they appear to have similar problems.
Energy Secretary Steven Chu has said he welcomes the White House review. Chu is scheduled to testify Nov. 17 before the energy panel.
(Copyright 2011 by CBS SF. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)