White House worried about Solyndra "optics" in January

(Reuters) - White House staffers were worried in January about the political fallout of the bankruptcy of solar panel maker Solyndra, weeks before the Department of Energy agreed to restructure its $535 million federal loan guarantee, an email between senior staffers of the Office of Management and Budget shows.

"While the company may avoid default with a restructuring, there is also a good chance it will not," the January 31, 2011 email said. "If Solyndra defaults down the road, the optics will arguably be worse later than they would be today."

The staffer also noted that a future failure of the company "will likely coincide with the 2012 campaign season heating up."

The email was released by the House of Representatives Energy and Commerce Committee as part of its investigation into Solyndra's loan guarantee.

The committee held a hearing on the matter earlier this week at which Republican lawmakers accused the Obama administration of ignoring signs of financial trouble at the solar panel maker in its haste to grant the loan guarantee and participate in a groundbreaking of Solyndra's federally backed factory in California.

Republicans control the House.

The Solyndra debacle has also been fraught with accusations of political favoritism, as the company's biggest shareholder -- Argonaut Ventures -- is backed by Obama fundraiser George Kaiser.

Solyndra filed for Chapter 11 bankruptcy protection earlier this month, saying it could not compete with overseas rivals with cheaper products. Agents from the Federal Bureau of Investigation searched the company's offices two days later.

The DOE created the loan guarantee program for green energy projects under the Bush administration in 2005, but the first loan guarantee -- Solyndra's -- wasn't extended until 2009 when the program received stimulus funding.

Solyndra's loan guarantee was then restructured by the government earlier this year to avoid a cash crunch.

Six months later, Solyndra approached the DOE about a second restructuring of its loan guarantee. DOE officials informed the company on August 30 that a second restructuring was not possible, and the company announced its intent to file for bankruptcy the following day.

(Reporting by Nichola Groom in Los Angeles; Editing by Eric Walsh)