Obama campaign spokeswoman Lis Smith attempted to push back against charges that President Obama has engaged in crony capitalism, the practice of rewarding prominent donors with taxpayer dollars.
The most publicized example of crony capitalism touted by Republicans is that of Solyndra, the solar panel firm championed by influential Democratic donors that received a $535 million taxpayer-guaranteed loan in 2009, only to file for bankruptcy two years later. Solyndra was forced to lay off more than 1,800 workers, according to the U.S. Department of Labor.
Thanks to a deal negotiated by Obama’s Department of Energy (DOE), Solyndra’s private investors, such as Obama bundler George Kaiser, were given priority over taxpayers with respect to the first $75 million recovered in the event of the company’s collapse.
Smith defended the Solyndra loan to the Detroit News, saying “the company was widely praised as successful and innovative both before and after receiving the Department of Energy loan guarantee.”
In addition to striking some as insensitive to the employees who lost their jobs, Smith’s comment is patently false.
Although President Obama did praise Solyndra as “the true engine of economic growth” in 2010, a host of administration officials were skeptical that the company was a worthwhile investment.
Emails uncovered by Congressional investigators reveal that officials at the Office of Management and Budget (OMB) and the DOE, who were responsible for reviewing Solyndra’s loan application, were concerned about the company’s viability in the days before the loan was formally announced. In particular, the officials noted that the administration’s own forecasting model predicted that Solyndra “runs out of cash in Sept. 2011.”
Solyndra filed for bankruptcy on Sept. 6, 2011.
Days before President Obama’s visit to Solyndra in May 2010, California venture capitalist and top Obama bundler Steve Westly emailed White House adviser Valerie Jarrett to urge the president to avoid Solyndra due to the company’s financial struggles.
“The president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.” Westly wrote.
Jarrett relayed these concerns to Ron Klain, former chief of staff to Vice President Joe Biden, who wrote back: “Bottom line is that we believe the company is okay in the medium term, but will need some help of one kind or another down the road.”
One OMB staffer wrote in email around the same time: “Hope [Solyndra] doesn’t default” before Obama’s visit.
Klain was correct that Solyndra would need further help down the road. In early 2011, the DOE opted to restructure Solyndra’s loan agreement by waiving certain repayment requirements and prioritizing private investors over taxpayers in an effort to attract new capital. OMB officials, however, questioned the wisdom of the decision.
“While the company may avoid default with a restructuring, there is also a good chance it will not,” one OMB staffer wrote in an email.