OMB warned WH to cut losses on Solyndra

posted at 11:01 am on August 2, 2012 by Ed Morrissey

Congressional investigators probing the Obama administration’s actions in the collapse of Solyndra have discovered that the White House’s own budget office warned against the second cash infusion for the now-defunct solar panel manufacturer.  Analysts at the Office of Management and Budget also warned that the second cash infusion would violate the law.  Their concerns were overridden by Jack Lew, who then headed up OMB, and subsequently got promoted to chief of staff for Barack Obama after the loss of more than a half-billion dollars in loan guarantees:

Details about the debate emerge in internal government documents. They show that Energy Department officials argued that Solyndra might be able to pull out of its downward spiral if given an emergency infusion of cash.

They also show that career OMB staffers circulated a series of e-mails emphasizing the risks of restructuring the loan. In congressional testimony last year, the agency’s deputy director suggested that career staffers made the final determination about what to do and “used their best expertise.”

The House energy committee is expected to release the results of its 18-month investigation into Solyndra this week. Its report, parts of which were obtained by The Washington Post, suggests that then-OMB Director Jack Lew let the refinancing move forward without intervening, even though some OMB analysts believed that a refinancing plan that favored private investors might violate the law. Lew is now White House chief of staff.

The analysis in January 2011 put the cost of an immediate default at $141 million, with a postponed default estimated — too low, it turns out — at $385 million.  That is almost 3:1 odds on a company that couldn’t produce solar panels at a competitive price even after a huge taxpayer-financed loan. Even at that time, the OMB analysis pointed out that very big hole in the Solyndra/Department of Energy business plan.

The difference in default cost came directly from the risk produced from subordinating the taxpayers to a new round of private investors.  The analyst who authored the report sent an e-mail to express her puzzlement about why the DoE would blithely surrender its senior position, especially given the risks:

Colyar said in e-mails that the Energy Department appeared to be giving away its “upper hand” in financing negotiations with private investors, creating additional risk. At the time, Solyndra had failed to meet the terms of its loan and was on the edge of bankruptcy because disbursements from the loan had been frozen.

Colyar said in one e-mail that she was “vastly confused by DOE’s decision to negotiate away their senior position in this transaction.” She also questioned whether the Energy Department underestimated how much taxpayers could recoup if the company were shut immediately and its California factory sold. The proceeds of an immediate sale would be “significantly HIGHER than DOE’s estimate,” she wrote in a January 2011 e-mail, meaning that the government “is better off liquidating the assets today than restructuring under DOE’s proposal.”

Instead of heeding her advice, Lew overrode the concerns and pushed for the second round of investors to attempt a rescue.  We ended up losing nearly four times what taxpayers would have lost had Lew and the DoE cut their losses when it became clear that Solyndra was a bad investment.  Why did the Obama administration take that risk?  The investors in Solyndra included George Kaiser, one of Obama’s bundlers from the 2008 election.

Lew got a promotion after this decision, while taxpayers got the shaft.  If that’s the incentive system in this administration, don’t be surprised to see many more Solyndras as Congress pulls back the curtain on Obama’s green-tech subsidy program, which got tens of billions of dollars from his bigger flop, the 2009 stimulus bill.  Congress will have to work overtime to get a sense of just how badly those dollars were spent.


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OMB warned WH to cut losses on Solyndra

…JugEars knows better!

KOOLAID2 on August 2, 2012 at 11:03 AM

BREAKING NEWS: White House supplying Romney campaign with prime ad material.

aunursa on August 2, 2012 at 11:03 AM

…theft!

KOOLAID2 on August 2, 2012 at 11:04 AM

Rewarding failure is exactly what 52% of voters did in 2008…

tom daschle concerned on August 2, 2012 at 11:05 AM

Details about the debate emerge in internal government documents. They show that Energy Department officials argued that Solyndra might be able to pull out of its downward spiral if given an emergency infusion of cash.

How the heck did these documents not get heavily redacted and/or declared protected by Executive Privilege?

Happy Nomad on August 2, 2012 at 11:08 AM

I wonder why Obama never thought of forcing people to buy Solyndra’s solar panels the way he’s forcing all of us to buy health insurance.

Bitter Clinger on August 2, 2012 at 11:12 AM

Illegal… and willfully illegal too.

petefrt on August 2, 2012 at 11:12 AM

once this bunch is gone in jan, there are going to be some many piles of snakes and heaping piles of crap that will be uncovered it will get boring reading about them. almost.

t8stlikchkn on August 2, 2012 at 11:13 AM

Since the media will stay hush on this Romney and the PACS need to do a campaign blitz about these facts.

ObamatheMessiah on August 2, 2012 at 11:14 AM

As if anyone in the world has as much economic acumen as TFGRP. Who the hell do these people think they are lecturing a former community organizer???

Bishop on August 2, 2012 at 11:15 AM

…but…butt the bundlers have to be paid!

KOOLAID2 on August 2, 2012 at 11:16 AM

These pigs don’t take seriously their role of stewardship of the people’s money. It’s Monopoly money to them. A half billion dollar loss is nothing to them. They still get their stupid SES paycheck and at the end of the year, their inflated bonus.

freedomfirst on August 2, 2012 at 11:17 AM

President Wrecking Ball, hell bent on bringing down the foundation that is America.

Pure evil.

fogw on August 2, 2012 at 11:18 AM

This would only be a horrible scandal if our President were not a Democrat, black, a messiah, or some combination of those attributes.

GardenGnome on August 2, 2012 at 11:20 AM

Their concerns were overridden by Jack Lew, who then headed up OMB, and subsequently got promoted to chief of staff for Barack Obama after the loss of more than a half-billion dollars in loan guarantees

Helluva job, Lewie!

TXUS on August 2, 2012 at 11:28 AM

Wait, does this man Obama is a “felon?”

magicbeans on August 2, 2012 at 11:29 AM

Ah, massive corruption and incompetence, and enormous waste of taxpayer dollars.

Or in other words, just a routine day in the Obama administration.

AZCoyote on August 2, 2012 at 11:31 AM

man = mean

magicbeans on August 2, 2012 at 11:31 AM

Unstinkingbelievable

Crickets chirping big time…..hey mitt did you pay any taxes?
-lsm

cmsinaz on August 2, 2012 at 11:31 AM

Makes me wonder just how much of that green investment money gets ploughed right back into Obama’s campaign war chest.
Obama’s many fundraisers with the Solyndras of the world are replete with a good percentage of our taxpayer money just going home to re-elect Obama.
It’s a symbiotic financial relationship. Obama pays them our money and then they “donate” a good percentage of our money back to Obie via his campaign.

marybel on August 2, 2012 at 11:36 AM

aunursa on August 2, 2012 at 11:03 AM

Now if they would just use it.

Cindy Munford on August 2, 2012 at 11:40 AM

Why is any of this a surprise?

The particle-banger at DOE is a true believer, and he’s prepared to throw as much of OUR money down his green-tech rathole as it takes.

His boss knows nothing, has no clue about anything, but he knows the greens are a core Dem constituency that must be fellated aggressively, so he’s happy to let Chu shake the federal wallet over these outfits.

JEM on August 2, 2012 at 11:46 AM

Follow the money.

How much of the $500 million pumped into Solyndra has found it’s way back into Obama’s campaign fund? If that wasn’t the motive Obama’s either stupid or he has a design on turning us into a communist state by destroying our economy from within.

Is he stealing our money, is he stupid or is he lying two-faced commie?

I say, yes to all of the above.

fogw on August 2, 2012 at 11:46 AM

I wanna see Rudy Giuliani or Chris Christie as AG, and I want them and their staff working around the clock starting February. I’m sure prison guards union will fully support this idea as massive overtime pay will be at stake.

Archivarix on August 2, 2012 at 11:50 AM

It’s almost as if total morons are running the executive branch. But that couldn’t be the case, could it?

St Gaudens on August 2, 2012 at 12:01 PM

The proceeds of an immediate sale would be “significantly HIGHER than DOE’s estimate,” she wrote in a January 2011 e-mail, meaning that the government “is better off liquidating the assets today than restructuring under DOE’s proposal.”

But then they’d be “Vulture Capitalists” just like that heartless bastard Romney. Much better to piss away hundreds of millions of dollars that taxpayers had to sweat to earn so that liberals could feel morally superior.

Socratease on August 2, 2012 at 12:05 PM

They pulled off the perfect crime.

docflash on August 2, 2012 at 12:15 PM

Helluva job, Lewie!

TXUS on August 2, 2012 at 11:28 AM

“Awww, shucks. Wasn’t really a big problem at all. I was just doing my master’s bidding,” said Jack, with a simpering little grin and an all-over shiver of joy.

Solaratov on August 2, 2012 at 12:49 PM

They pulled off the perfect crime.

docflash on August 2, 2012 at 12:15 PM

Not so ‘perfect’. The regime seems to have established a clear pattern of the (grand) theft of public money to reward party loyalists; and a lot of people are seeing it. It’s not as though they’re actually trying to hide it from anyone. They assume, evidently, that they can break the law – the Chicago way – and no one will do anything about it, because they – supposedly – hold all the power and will never lose it.
There will be a reckoning after January, 2013.

Solaratov on August 2, 2012 at 12:59 PM