White House debated Solyndra warnings-Democrat memo

Mon Oct 3, 2011 2:43pm EDT

Related Topics

 * Two venture capitalists warned about Solyndra stability
 * Klain, Jarrett, Summers debated merits of loan, visit
 * OMB highly critical of Energy Dept oversight of loan
 * Summers agreed government is "crappy" venture capitalist
 By Roberta Rampton and Mark Hosenball
 WASHINGTON, Oct 3 (Reuters) - The White House and
congressional Democrats released new internal documents on
Monday that they said show top officials were aware and
concerned about the financial stability of Solyndra well before
the company filed for bankruptcy.
 An internal memo summarizing more than 700 pages of new
e-mails represents the latest step by the White House and
Democrats to counter Republican charges that the Obama
administration showed favoritism to Solyndra because its
investors included Argonaut Private Equity, a private fund
owned by Obama fundraiser George Kaiser.
 The solar panel manufacturer received a government loan
guarantee in 2009 under a new program designed to spur the
renewable energy industry, and had been highly touted by the
Obama administration before it ran out of cash and filed for
bankruptcy in August.
 The documents highlight a divide between the Energy
Department, which promoted the project, and the Office of
Management and Budget, where analysts were concerned about
loans made to Solyndra and other clean energy companies.
 The e-mails also show the extent to which top White House
officials were aware of Solyndra before the company became a
political embarrassment -- officials including Lawrence
Summers, then-director of the National Economic Council, Ron
Klain, chief of staff to Vice President Joe Biden, and Valerie
Jarrett, senior advisor to Obama.
 Klain and Jarrett debated the merits of having Obama visit
Solyndra's factory in May 2010 given concerns about the
company's stability.
 "The reality is that if (Obama) visited 10 such places over
the next 10 months, probably a few would be belly-up by
election day 2012 -- but that to me is the reality of saying
that we want to help promote cutting edge, new economy
industries," Klain said in an e-mail to Jarrett, according to
the Democrats' memo.
 The Republicans leading an investigation into the company
and the government's investment did not immediately have a
response to the memo.
 The U.S. Energy Department defended the due diligence done
on the loan guarantee to the company, and noted the U.S. solar
industry has been hit hard by plunging prices.
 "With China offering more than $30 billion in government
financing to solar manufacturers last year, the United States
simply cannot afford to stand on the sidelines while jobs go
overseas," said Damien LaVera, a department spokesman.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Solyndra: bright forecasts as cash ran out  [ID:nS1E78M1Z5]
US saw no hope for Solyndra in August       [ID:nS1E78L1UW]
Green investors say loan process rigorous   [ID:nS1E78K08U]
LINK: DOE on Solyndra           r.reuters.com/tar83s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 WARNINGS FROM VENTURE CAPITALISTS
 Venture capitalists close to the Obama administration sent
up red flags about the company, the new e-mails showed.
 In May 2010, as the White House planned a visit by Obama to
Solyndra, venture capitalist Steve Westly e-mailed Jarrett,
warning her that the company's finances were shaky.
 "A number of us are concerned that the president is
visiting Solyndra," said Westly, who was a prominent member of
Obama's campaign team in California in 2008.
 "Many of us believe the company's cost structure will make
it difficult for them to survive long term," he wrote.
 "If it's too late to change/postpone the meeting, the
president should be careful about unrealistic/optimistc
forecasts that could haunt him in the next 18 months if
Solyndra hits the wall, files for bankruptcy, etc."
 The Energy Department defended Solyndra. And after the
visit, one of the company's lobbyists, the Glover Park Group,
had also said the company was on the way to profitability.
 GOVERNMENT IS "CRAPPY" VENTURE CAPITALIST
 As early as December 2009, only months after the government
had finalized the loan guarantee, a partner with private equity
firm Redpoint Ventures warned Summers about the investment.
 Brad Jones, a founding partner of Redpoint, said the
government's spending on clean energy was "haphazard," citing
Solyndra as an example. Redpoint was an investor in Solyndra.
 "While that (loan) is good for us, I can't imagine it's a
good way for the government to use taxpayer money," Jones told
Summers in an e-mail.
 Summers agreed that the government is a "crappy" venture
capitalist. "If (you) were closer to it, you'd feel more
strongly," Summers told Jones.
(Editing by Cynthia Osterman)


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