WASHINGTON (Reuters) - The White House said on Friday it would conduct an independent review of the Energy Department's loan portfolio following the collapse of Solyndra, the solar panel maker that went bankrupt last month after receiving a hefty federal loan guarantee.
Herb Allison, a former Merrill Lynch banker who played an important role helping the U.S. government during the financial crisis, will review the department's loans in the next 60 days and issue a public report on how to improve the program, the White House said.
"He is tough, always tells it like it is, and we look forward to his thorough and candid assessment," White House Chief of Staff William Daley said in a statement.
The announcement comes as Republicans in the House of Representatives step up their probe into a $535 million Energy Department loan guarantee to Solyndra, which is also being probed by the FBI.
Republicans have criticized President Barack Obama, a champion of "clean" energy sources such as solar and wind, for not doing more to encourage traditional energy exploration, which they say would create more jobs.
"Finally, officials at the White House are acknowledging that the program responsible for Solyndra may not have been the jobs program that was promised to the American people," said Representative Cliff Stearns, the Republican leading the Energy Committee's investigation.
The review also comes a year before the 2012 presidential election and could be aimed at reducing political fallout for Obama from Solyndra's failure.
"The administration needs to take charge and show it is taking it seriously," said Larry Sabato, a University of Virginia political science professor.
"It's half a billion dollars (loan guarantee) in a time of austerity and clearly people felt it was inappropriate," Sabato said.
The House Energy and Commerce Committee threatened on Friday to subpoena the White House for access to e-mails about the guarantee. It has questioned whether Obama campaign donors who were investors in the project played a role in decisions on the loan.
The White House and Energy Department have denied the allegations.
Energy Secretary Steven Chu, slated to testify before Republicans investigating the Solyndra loan program on November 17, said he looked forward to receiving Allison's recommendations.
"I ... have directed my staff to make sure that the Department provides all necessary assistance and information," Chu said in a statement.
The White House has released more than 900 pages of e-mails on the issue, part of a stack of about 70,000 pages of internal government documents Republican investigators have obtained on the deal.
Allison's brief goes beyond Solyndra to look at the DOE's entire loan portfolio of $35.9 billion -- $24.5 billion of which have been finalized.
That includes "green energy" loans like the one given to Solyndra, as well as loan guarantees for new nuclear plants and for grants and loans for more energy-efficient vehicles.
Allison was chosen by the Bush administration to run Fannie Mae after the government seized the mortgage buyer and the smaller housing finance firm, Freddie Mac, at the height of the 2008 financial crisis.
He was national finance chairman to John McCain during the Republican senator's first run for the presidential nomination in 2000.
In 2009, Allison oversaw the Treasury Department's $700 billion bank bailout, known as the Troubled Asset Relief Program.
He can hire outside experts to help review the portfolio and prepare his report, which will establish an "early warning system" to identify potential concerns, the White House said.
Pietro Nivola, a senior fellow at the Brookings Institution, said the investigation allowed the White House to show it was addressing the concerns raised by Solyndra.
"It sends the signal that they've gotten the message, they're not complacent ... and they don't want this sort of thing to happen over and over again," Nivola said.
Additional reporting by Ayesha Rascoe, Rachelle Younglai and Jeff Mason in Washington, and Nichola Groom in Los Angeles; Editing by Peter Cooney