Research Briefing

Obama White House Will Release It’s Own “Independent Review” Of The Dept. Of Energy Loan Program… That Has Already Been Independently Reviewed

The White House Plans To Release The Results Of An Independent 60 Day Review Of The DOE’s Loan Programs This Week. “The White House says it plans to release the results of an independent 60-day review the Energy Department's loan programs next week. In late October, the Obama administration said it was ordering a review of the Energy Department's loan programs in the face of growing criticism over a number of loans — including several auto-sector awards - and the bankruptcy of solar panel startup Solyndra LLC, which had received $528 million in government loans.” (David Shepardson, “White House To Release Energy Loan Review,” The Detroit News, 2/2/12)

• White House Spokesman Eric Schultz: “As we've said all along, we are going to release it publically, but we've also said all along that we're going to take time to review it, assess its findings and prepare for anticipated questions. We'll look forward to releasing the report by the end of the next week.” (David Shepardson, “White House To Release Energy Loan Review,” The Detroit News, 2/2/12)

In October 2011, The Obama Administration Launched A Supposedly Independent Review Of The DOE Loan Program

In Wake Of Solyndra, The Obama White House Said It Would Conduct An Independent Review Of The DOE Loan Program.  “The White House directed a well-known businessman on Friday to conduct an independent review of government loans to energy companies, as House Republicans announced they would consider subpoenaing records related to a 2009 loan to a California manufacturer of solar-energy equipment that is now bankrupt.” (Jackie Calmes, “Leader Picked For Review Of U.S. Loans on Energy,” The New York Times, 10/28/11)

• The White House Review Of Solyndra’s Loan Program “Indicated Some Concern That It Needed To Get Out Ahead Of The Congressional Investigation.” “In enlisting Herbert M. Allison Jr., a former executive who helped the Bush and Obama administrations rescue the financial system, the White House indicated some concern that it needed to get out ahead of the Congressional investigation into the loan portfolio of the Department of Energy and, in particular, the half-billion-dollar loan to the California manufacturer, Solyndra.” (Jackie Calmes, “Leader Picked For Review Of U.S. Loans on Energy,” The New York Times, 10/28/11)
• “On The Defensive,” The White House Ordered The Review In Response To Rising Criticism Over Solyndra. “On the defensive over a half-billion-dollar loan to a now-bankrupt solar company, the White House on Friday ordered an independent review of similar loans made by the Energy Department, its latest response to rising criticism over Solyndra Inc.” (Erica Werner and Matthew Daly, “White House To Review Energy Department Loans,” The Associated Press, 10/28/11)
• “White House Officials Said The Review Would Assess The Health Of More Than Two Dozen Other Renewable Energy Loans And Loan Guarantees Made By The Energy Department Program That Supported Solyndra.” (Erica Werner and Matthew Daly, “White House To Review Energy Department Loans,” The Associated Press, 10/28/11)

THERE HAVE BEEN MANY INDEPENDENT REVIEWS TARGETING THE DOE LOAN PROGRAM

Non-Partisan Government Accountability Office

“At Least Three Reports” Warned The Obama Administration That The Energy Department Did Not Have “The Controls Needed To Manage” Solyndra. At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program that provided more the loan to Solyndra Inc., a now-bankrupt solar panel manufacturer.” (Matthew Daly, “White House Worried About Solyndra Default,” The Associated Press, 9/15/11)

Government Accountability Office:  “The Administration Didn’t Do Its Due Diligence” When Celebrating The $535 Million In Stimulus Funds For Solyndra. “It's not his statements the administration will regret; it's the loan guarantees. The President was celebrating $535 million in federal promises from the Department of Energy to the solar startup. The administration didn't do its due diligence, says the Government Accountability Office. ‘There's a consequence if you don't follow a rigorous process that's transparent,’ Franklin Rusco of GAO told the website iWatch News.”(Scott McGrew, “Solyndra Filing A Disaster For Obama,“ NBC Bay Area News, 8/31/11)

• Solyndra Was One Of Five Companies The Energy Department Failed To Properly Assess, Leaving The GAO “Greatly Concerned.” “Government auditors are questioning whether the administration may have made other bad bets on clean energy. Frank Rusco, a Government Accountability Office director who helped lead a review of the Solyndra loan and the Energy Department’s loan guarantee program, said GAO remains ‘greatly concerned’ by its 2010 finding that the agency agreed to back with loans five companies without properly assessing their failure risks. The companies were not identified in the report, but the agency has since acknowledged that Solyndra was one.” (Carol Leonnig, “After Solyndra Failure, Auditors Wonder What Other Bad Bets Obama Officials Made, The Washington Post, 9/1/11)

GAO Investigation Revealed Obama’s Department Of Energy Favored Some Loan Applicants And Disadvantaged Others. “That's when the Government Accountability Office issued an unusually blunt assessment of the Energy Department's loan program in general, concluding that the department had ‘treated applicants inconsistently, favoring some and disadvantaging others.’” (Matthew Most and Brian Ross, “Solyndra Collapse A ‘Waste’ Of Half A Billion By Obama, GOP Critics Say,” ABC News , 9/1/11)

Obama’s Energy Department Announced The Loan Guarantee Before Receiving Final Legal Reviews, Which The GAO Said “Showed Favoritism And Put Taxpayers At Risk.” “The department made the announcement before final marketing and legal reviews were in hand – an omission Government Accountability Office auditors chided, in a 2010 report, as the type of shortcut that showed favoritism and put taxpayers at risk.” (Ronnie Greene, “Recurring Red Flags Failed To Slow Obama Administration's Race To Help Solyndra,” iWatch News, 9/13/11)

GAO Auditors Are Worried That Similar Green Companies May Default Due To The DOE’s “Rush” To Provide Loans. “GAO auditors fear that similar defaults could happen with other projects, possibly including the other four it found weren’t properly vetted. The GAO last year uncovered the department’s rush to provide Solyndra its loan — less than 60 days after Energy Secretary Stephen Chu was sworn in to the fledgling administration — without completing required reviews.” (Carol Leonnig, “After Solyndra Failure, Auditors Wonder What Other Bad Bets Obama Officials Made,” The Washington Post, 9/1/11)

The Energy Department “Bypassed Required Steps” For Funding Awards To Five Of Ten Applicants That Received Conditional Loan Guarantees. “In July 2010, the Government Accountability Office said the Energy Department had bypassed required steps for funding awards to five of 10 applicants that received conditional loan guarantees. The report did not publicly identify the companies that were not properly vetted, but congressional investigators say one of them was Solyndra. The company was the first to receive a loan guarantee after the program was expanded under the 2009 stimulus law.” (Matthew Daly, “White House Worried About Solyndra Default,” The Associated Press, 9/15/11)

“A July 2010 Report By The Government Accountability Office Found That The Department Committed To Back The Loans Without Completing Required Studies Of Market, Legal And Technical Issues.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los Angeles Times, 9/26/11)

• “‘Without This Information, It Is Not Clear That The Program Could Have Fully Evaluated The Risk Of The Loans It Committed To,’ Said Frank Rusco, An Analyst For The GAO.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los Angeles Times, 9/26/11)
• ‘‘Questions Have To Be Raised About The Quality Of Their Analysis,’ Said Analyst Shyam Mehta Of GTM Research In Cambridge, Mass.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los Angeles Times, 9/26/11)

The Government Accountability Office Criticized The “Arbitrary” Way Energy Loans Were Doled Out And Found That Of The First 18 Loans “None Were Properly Documented.” “The Government Accountability Office has been highly critical of the way guaranteed loans and grants were doled out by the Department of Energy, complaining that the process appears ‘arbitrary’ and lacks transparency. In March 2011, for example, the GAO examined the first 18 loans that were approved and found that none were properly documented.” (Peter Schweizer, “Obama Campaign Backers And Bundlers Rewarded With Green Grants And Loans,” Newsweek, 11/12/11)

Congressional Auditors Found Energy Department Gave “Favorable Treatment” To Solyndra, Bypassing Required Steps.  “A few weeks later, congressional auditors announced that Energy Department had given favorable treatment to some loan-guarantee applicants. A Government Accountability Office report found that the department had bypassed required steps for funding awards to five applicants, including Solyndra.” (Carol D. Leoning, Joe Stephens, and Alice Crites, “Obama’s Focus On Visiting Clean-Tech Compaines Raises Questions,” The Washington Post, 6/25/11)

Energy Department’s Own Inspector General Warned Loan Program Lacked Transparency And Accountability

The Energy Department’s Inspector General Has Said Obama’s Clean-Energy Loan Program Is Lacking In “Transparency And Accountability.” “Agents for Energy Department Inspector General Gregory Friedman, who has called the department’s clean-energy loan program lacking in ‘transparency and accountability,’ joined in the search yesterday at the Fremont, California, headquarters of Solyndra, which filed for bankruptcy protection on Sept. 6.” (Jim Snyder, “FBI Raids Bankrupt Solyndra as Lawmakers Question Panel Maker’s Finances,” Bloomberg, 9/9/11)

• Inspector General: Obama’s Department Of Energy Failed To Maintain Emails About How Loan-Guarantees Were Awarded. “Earlier this year, the Energy Department’s inspector general criticized the agency for not maintaining e-mails discussing how loan-guarantee winners were selected.” (Carol Leonnig, “After Solyndra Failure, Auditors Wonder What Other Bad Bets Obama Officials Made, The Washington Post, 9/1/11)

A 2009 DOE Inspector General Report Noted That The “DOE Lacked The Necessary Quality Control For The Loan Guarantee Program.” “A 2009 report by the Energy Department's inspector general warned that the DOE lacked the necessary quality control for the loan guarantee program, which was created in 2005 to support clean-energy projects that could not obtain conventional bank loans due to high risks.” (Matthew Daly, “White House Worried About Solyndra Default,” The Associated Press, 9/15/11)

DOE’s Inspector General Found That The Loan Guarantee Program Couldn’t Always Demonstrate That They Resolved The Companies’ Risks Before Giving Out The Loans. “Concerns about the program and its risk controls were raised several times by the Energy Department's inspector general, Gregory Friedman. In a March 2011 report, Mr. Friedman said his office ‘found that the Loan Guarantee Program could not always readily demonstrate, through systematically organized records, including contemporaneous notes, how it resolved or mitigated relevant risks prior to granting loan guarantees.’ A report in 2009 also faulted the loan-guarantee program's controls.” (Deborah Solomon, “Solyndra Said To Have Violated Terms Of Its US Loan,” The Wall Street Journal, 9/28/11)

The Energy Department’s Inspector General Found That Contracts Were Steered To “Friends And Family.” “The Department of Energy’s inspector general, Gregory Friedman, who was not a political appointee, chastised the alternative-energy loan and grant programs for their absence of ‘sufficient transparency and accountability.’ He has testified that contracts have been steered to ‘friends and family.’” (Peter Schweizer, “Obama Campaign Backers And Bundlers Rewarded With Green Grants And Loans,” Newsweek, 11/12/11)

Solyndra’s Private Sector Auditor Had “Substantial Doubt”

Auditor PricewaterhouseCoopers Said It Had “Substantial Doubt” About Solyndra’s “Ability To Continue.” “A report last year by auditor PricewaterhouseCoopers said Solyndra had suffered recurring losses from operations and negative cash flows, raising ‘substantial doubt about its ability to continue as a going concern.’” (Matthew Daly, “White House Worried About Solyndra Default,” The Associated Press, 9/15/11)