* Did not evaluate failed loan to Solyndra
* Chu: will review ideas, but program is working
* Republicans: Investigation will continue
(Adds quotes, details, background)
By Roberta Rampton
WASHINGTON, Feb 10 The U.S. Energy
Department relies on too many consultants and committees for
managing its loans and needs to beef up its management,
concluded a review commissioned by the White House in the wake
of publicity over failed solar panel maker Solyndra.
Herb Allison, a former investment banker known for his work
helping government agencies manage large, complex financing
programs, reviewed the energy loan program and recommended an
overhaul in oversight of the $23.769 billion portfolio.
Over the lifespan of the loans, the Energy Department has
estimated that $2.9 billion may go unpaid, in line with
Allison's valuation of $2.7 billion.
Allison cautioned in the review released on Friday that the
assessment was a snapshot of the portfolio rather than a
forecast of eventual losses. The review was done in 60 days and
did not include a detailed look at each loan's performance and
risks, he said.
Allison, who helped both Republican and Democratic
administrations fix problems stemming from the 2008-09 financial
crisis, did not review the Energy Department's $535 million loan
guarantee to Solyndra, which filed for bankruptcy last year and
has become a sore spot in the 2012 U.S. election campaign.
The 75-page report is unlikely to quell criticism of
President Barack Obama over the failed loan, which features in
at least two attack ads on television, and is regularly reviled
in speeches by Republican presidential candidates.
But it gives the Obama administration grounds to show it is
learning from its experience in clean energy loans, said Salo
Zelermyer, a senior counsel at the Energy Department during
President George W. Bush's administration.
"They can hold up a large report done by a reputable outside
official, a third party," said Zelermyer, now with Bracewell &
Giuliani, a lobbying and law firm.
STRUGGLING TO FILL VACANCIES
Energy Secretary Steven Chu said he would review the
recommendations to find ways to strengthen the program.
But he said the program was working as intended, and noted
that the review rated the overall risk of the loan portfolio as
"slightly lower" than the department's projections.
"We have always known that there were inherent risks in
backing innovative technologies at full commercial scale, and it
is very likely that there will be other companies in the
portfolio that won't succeed, but the vast majority of companies
are expected to pay the loans back in full, on time, and with
about $8 billion in interest," Chu said in a statement.
Allison said the Energy Department had
struggled to fill vacancies in key positions overseeing the loan
portfolio. "At least one manager is acting head of several
departments," he said.
Decisions on loans should be made by individual managers
with expertise, Allison said, instead of using a committee
process "where collective responsibility can obscure individual
UNLIKELY TO BE THE LAST WORD
Allison's report is unlikely to be the last chapter in the
The Senate Energy committee has invited Allison to testify
next month on his analysis and recommendations, said its
chairman, Jeff Bingaman.
The Energy Department's inspector general - an internal but
independent watchdog - has been investigating Solyndra in tandem
with the FBI, which raided the company in September.
Republicans in the U.S. House of Representatives have
mounted an investigation into the loan, and vowed on Friday to
continue to fight the White House for access to additional
documents and testimony.
"This report reveals broad-based weaknesses, but it does not
answer some of the most fundamental questions about how these
risky bets were made over the objections of experts," said Fred
Upton and Cliff Stearns of the House Energy and Commerce
Committee, which has led the probe.
Allison's recommendations will not likely temper the
political criticism, said David Victor, a political scientist at
the University of California, San Diego.
"By design, these loans are to help commercialize
technologies that the private sector, on its own, won't invest
in fully. Thus, by design, they carry risk. Some will fail,"
(Editing by Peter Cooney)